MICROCAPITAL BRIEF: IDB Loans $50m to BRDE to Support MSMEs in Southern Brazil in Retaining Employees During Pandemic

The Inter-American Development Bank (IDB), which is owned by 48 member nations, recently issued a loan of USD 50 million, with a term of 15 years and a 5.5-year grace period, to Banco Regional de Desenvolvimento do Extremo Sul (BRDE), which is owned by three states in southern Brazil. BRDE will on-lend the funds through its Recupera Sul credit line product in an effort to support micro-, small and medium-sized enterprises (MSMEs) in adjusting to the COVID-19 pandemic. The primary goal is to help these firms to preserve employment in order to hasten economic recovery after the pandemic, decreasing the burden on social programs.

BRDE was founded in 1961 by the states of Rio Grande do Sul, Santa Catarina and Paraná. The bank provides financial and technical assistance, with 70 percent of its work directed to micro- and small enterprises. For the 10 months ending October 2019, BRDE reported total income of BRL 1.2 trillion (USD 230 billion).

Based in the US city of Washington, IDB promotes “environmentally friendly” economic development via improved health, education and infrastructure in the 22 of its member countries that are located in Latin America and the Caribbean. During 2019, IDB reported issuing USD 13 billion in loans and grants, resulting in year-end assets of USD 136 billion.

IDB is a member of the IDB Group, whose other members are the Multilateral Investment Fund, which uses the trade name IDB Lab, and the Inter-American Investment Corporation, which uses the trade name IDB Invest. IDB Lab tests models for facilitating “inclusive growth.” IDB Invest promotes social and economic development through projects in agriculture and sustainable energy as well as providing finance and training to state and private enterprises. As of June 2020, IDB Invest has 385 clients in 25 countries.

By Sai Bommineni, Research Associate

Sources and Additional Resources

IDB press release
https://www.iadb.org/en/news/idb-support-financial-sustainability-msmes-brazils-south-region

BRDE description
https://www.brde.com.br/quem-somos/

BRDE 2019 annual report
https://www.brde.com.br/wp-content/uploads/2020/03/CARTA-ANUAL-2020..pdf

IDB 2019 financial report
https://publications.iadb.org/publications/english/document/Inter-American_Development_Bank_Annual_Report_2019_The_Year_in_Review.pdf

IDB homepage
https://www.iadb.org

Past MicroCapital news on IDB support of MSMEs in Paraguay
https://www.microcapital.org/microcapital-brief-paraguay-borrows-15m-from-idb-seeking-to-boost-productivity-among-8500-msmes/

Past MicroCapital news on IDB support of MSEs in Ecuador
https://www.microcapital.org-microcapital-brief-inter-american-development-bank-idb-lending-94m-to-mitigate-effects-of-covid-19-on-29k-micro-small-enterprises-mses-in-ecuador/

Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at
https://www.microcapital.org/products-page/.