Transcript BNDES: Financing the Brazilian Development

BNDES: Financing the Brazilian development
UN Group Meeting - “Rethinking the Role of
National Development Banks”
Demian Fiocca
Vice President – BNDES
December, 2 2005
www.bndes.gov.br
1
Macroeconomic Performance
GDP Growth rates
crisis
% year
5,0%
3,0%
1,0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
-1,0%
-3,0%
-5,0%
Source: IBGE
In the last years, economic growth was frequently
interrupted by financial and Balance of Payments
stress that affected aggregate demand.
www.bndes.gov.br
2
Macroeconomic Performance
A new development cycle
From 1995 to 2001 the current
account deficits didn´t foster
investments.
Now, invesments grow along
with domestic savings.
Source:IPEADATA
www.bndes.gov.br
3
Macroeconomic Performance
Public investment has fallen...
Investiment as % of GDP
25
20
15
18,9
19,5
17,7
18,8
10
5
3,7
2,7
2,7
1,8
0
1970-79
Source: Brazilian Planning Ministry
www.bndes.gov.br
1980-89
Public Sector
1990-99
2000-03
Private Sector
4
Investments are necessary
… as a consequence, infrastructure
investments dropped over the last 20 years
Yearly infrastructure growth in the selected sectors (%)
23.9
Railways
16.0
9.8
Power
Generation
9.8
4.1
-0.3
1951/1963
www.bndes.gov.br
4.9
1.0
-1.6
1964/1980
Paved
Roads
3.8
-0.5
1981/1993
1.5
1994/2002
5
Growth and Long Term Finance
… credit can help infrastructure…
Credit/GDP
ratio is
growing but
it is still low
in
comparison
to other
economies
www.bndes.gov.br
1990
1997
2003
U.S.A.
103,3
132,5
173,6
U.K.
112,2
116,4
141,3
Germany
93,3
110,1
117,4
France
91,3
82,0
87,8
Japan
170,1
175,0
104,6
China
79,5
95,0
135,5
South Korea
81,2
113,2
119,9
India
24,0
22,8
30,5
Brazil
23,1
33,0
33,2
Chile
47,7
62,1
75,0
Mexico
17,1
21,3
18,1
6
BNDES Highlights
 Founded on June 20, 1952
 100% owned by the Federal Government
 Latin America’s largest development bank
 Key instrument for the Federal Government
Policies
 Brazil’s main provider of long-term financing
 Brazilian Export Bank
 Equity investor through BNDESPAR
www.bndes.gov.br
7
BNDES: A historical perspective
1950
Infrastructure (Energy and Transport)
Steel
1960
Heavy Industry - Consumer Goods Small and Medium-Sized Enterprises
Technologic Development
1970
Import Substitution
Petrochemicals, Pulp & Paper, Steel
Capital Goods
1980
Energy
Agribusiness
Competitive Integration
1990
Private Infrastructure and Exports
Privatization : Management of Privatization Program
Urban and Social Development
Today Industry - Infrastructure - Exports
Social Inclusion – Development of Capital Markets
www.bndes.gov.br
8
BNDES and Multilateral Institutions
 Adequate return
 Good asset quality indicators
Economic Indicators
BNDES
US$ million
Net Assets
Net Worth
Net Income
Disbursements
Capitalization
ROA
ROE
Non performing Loans
www.bndes.gov.br
IDB
(31/12/04) (31/12/04)
61,769
5,317
511
13,748
8,18%
0.95%
14.11%
0,64%
67,346
18,511
1,176
3,768
27.49%
1.72%
6.60%
0,43%
World
Bank
(30/06/04)
229,213
35,463
(2,404)
10,024
15,47%
-1,04%
-6.55%
0.59%
9
BNDES: Funding

FAT - Worker Assistance Fund
Permanent financing or quasi-equity

Foreign Funding
Government Agencies and Multilateral Institutions
IDB, JBIC, World Bank, KfW.
Market Funding
Bonds, Loans, Structured Notes (ABS)
www.bndes.gov.br
10
Funding 2004 – Cash Flow
Excellent source of funding without budgetary effects.
FAT- Worker
Assistance
Fund
13%
Sale of Assets
9%
Treasury
Agent
5%
Others
3%
Return on
Investment
70%
Source: BNDES Financial Area
www.bndes.gov.br
11
Annual Disbursements
R$ Billion
40,1
38,2
US$ Billion
35,1
33,9
25,6
23,4
12,6
2000
13,7
12,8
11,7
10,9
2001
2002
13,7
2003
2004
out/05
Converted to US dollar on the disbursement dates
www.bndes.gov.br
12
Credit Market in Brazil
The BNDES responds for 19% of the
total credit in the economy
Other directed
resources
Leasing e Public Sector
7%
16%
19%
BNDES
www.bndes.gov.br
58%
Free resources
13
Credit Market in Brazil
BNDES credit has a counter-cyclical effect
Source: Brazilian Central Bank
Free Credit grew more than BNDES Financing
www.bndes.gov.br
14
Credit Market in Brazil
Source: Brazilian Central Bank
BNDES participation increases during the
downturn periods of credit/GNP ratio
www.bndes.gov.br
15
BNDES Selected Goals
 BNDES
credit
analysis
takes
into
consideration factors beyond the financial
return of the project, seeking the promotion
of economic and social development.
 Spread reductions:




1,0 p.p. to less developed regions
0,5 p.p. to higher priority sectors
3,5 p.p. to MSMEs
Special programs (railways, capital equipment)
 Variable upside required:
 Equity and Quasi-equity participation
www.bndes.gov.br
16
Disbursements according to operation type
BNDES works in association with commercial banks
%
46
2000
2001
Direct Operations
46
55
54
59
54
45
46
ouct/2005
39
47
1999
52
1998
1997
62
54
41
2004
61
53
2003
48
2002
38
Indirect Operations
Source: BNDES Financial Area
www.bndes.gov.br
17
Disbursements Characteristics
Private firms absorb 98% of the BNDES
disbursements
91
77
78
91
97
98
23
9
1996
94
98
1997
1998
3
2
3
4
6
6
2
1999
2000
2001
2002
2003
2004
2005*
Public firms
www.bndes.gov.br
94
22
9
1995
97
96
Private firms
18
18
Disbursements of the BNDES
by Sectors of Activity
Focus on infrastructure and industry
30%
30%
35%
11%
37%
14%
12%
7%
38%
8%
7%
17%
10%
5%
5%
52%
2001
Industry
46%
48%
40%
2002
2003
2004
Trade and Services
Converted to dollar on the disbursements
date
9www.bndes.gov.br
Farming and Forestry
48%
2005
Infrastructure
Remark: Excludes secondary market
transactions
Source: BNDES Financial Area
19
Disbursements by Firm Size
Large number of operations with MSMEs
Number of
Operations
7,062
8,424
US$ Million
2,624
9,793
1,310
87,435
Micro and Small
Medium
Large
Micro and Small
Medium
Large
Excludes secondary market transactions
www.bndes.gov.br
20
Disbursements by Firm Size
Support to MSMEs and create jobs
3,291
2,387
2,470
2,021
1,794
2001
2002
2003
2004
2005
October
Converted to dolar on the disbursements date
www.bndes.gov.br
21
Job Creation – BNDES Effects
Firms supported by the BNDES presented a much higher
growth of formal job creation than firms not supported.
www.bndes.gov.br
22
Job Creation – BNDES Effects
Effect is stronger in the smaller firms
www.bndes.gov.br
23
The Brazilian Development Bank
www.bndes.gov.br
www.bndes.gov.br
24