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Brazilian development bank BNDES is expecting high demand for new loans this year due to the country's economic recovery.
With a stronger recovery loans issued by BNDES could reach 90bn reais (US$28.5bn), the bank's president, Paulo Rabello de Castro (pictured), said at a press conference.
New loans from BNDES amounted to 70.8bn reais (US$22.3bn) last year, down 20% from 2016 and marking the fourth consecutive year of contraction. It was also the lowest level of loan disbursements since 2007.
The lending decline was due to the still-present impact of the deep recession in 2015-16 and the economic recovery in 2017 could not offset that impact, said Castro in response to a question from BNamericas.
Saddled with high levels of inventory, the industrial sector's demand for new loans has been very weak, Castro added.
After contracting 3.5% in both 2015 and 2016, the economy grew an estimated 1% last year, according to the finance ministry, who expects growth to accelerate to 3% this year.
Loans for infrastructure projects by BNDES increased 4% last year, totaling 26.9bn reais.
Demand was driven by electricity-related projects, which saw the issuance of new loans jump 44% to 13.8bn reais.
"Loan demand for infrastructure projects remains high, mainly from the energy sector," said Castro. "In other areas, we also have loans under evaluation regarding urban mobility projects in the city of São Paulo," he added.
Demand for new infrastructure loans is expected to be concentrated in the first months of the year due to the general elections in October, said Castro, without giving a 2018 forecast for the infrastructure-related lending.
Brazilians will vote for president, state governors, senators and lower house lawmakers.
During election years, local and federal governments are subject to limits regarding infrastructure loans and new projects in order to reduce the risk of politics influencing such decisions.