The Inter-American Development Bank (IDB), whose membership comprises 48 nations, recently loaned USD 750 million to Banco Nacional de Desenvolvimento Econômico e Social (BNDES), the Brazilian government’s development bank, to support micro-, small and medium-sized enterprises (MSMEs) in Brazil that have seen significant drops in revenue during the COVID-19 pandemic. The loan is expected to enable on-lending to 11,000 MSMEs via accredited retail financial institutions. The funding is intended for both working capital and the “acquisition of production-oriented assets.”
BNDES was founded in 1952 to provide long-term financing aimed at enhancing Brazil’s development through support for industrial and infrastructure projects as well as small and medium-sized businesses. BNDES also invests in education, health, sanitation and microfinance. As of June 2020, BNDES had total assets of BRL 748 billion (USD 132 billion), a loan portfolio of BRL 444 billion (USD 79 billion) and return on assets of negative 0.33 percent.
Founded in the US city of Washington in 1959, IDB issues grants, loans and technical support intended to promote economic development – including via improved health, education and infrastructure – in its member countries in Latin America and the Caribbean. The institution has a total of 48 member countries, of which 26 are located in the region. During 2019, IDB issued USD 13 billion in loans and guarantees.
IDB is a member of the IDB Group, whose other two members are IDB Invest, the trade name of the Inter-American Investment Corporation, and IDB Lab, the trade name of the Multilateral Investment Fund. IDB Invest promotes social and economic development by providing finance and training to state-owned and private enterprises. IDB Lab is an “innovation lab” that tests models for facilitating “inclusive growth.”
By Nathan Kiplagat, Research Associate
Sources and Additional Resources
IDB press release
https://www.iadb.org/en/news/brazil-uphold-msmes-financial-sustainability-during-covid-19-crisis
BNDES homepage
https://www.bndes.gov.br
BNDES financials 2020
https://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/conhecimento/bndes_em_campo/Informe_Contxbil_Inglxs_-_2T20.pdf
IDB homepage
https://www.iadb.org
IDB 2019 financials
https://publications.iadb.org/publications/english/document/Inter-American_Development_Bank_Annual_Report_2019_The_Year_in_Review.pdf
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