COVID-19: Brazil seeks financing support from multilaterals

The Brazilian government is seeking to arrange financial support from multilateral development banks (MDBs) in order to mitigate the social impact of the coronavirus pandemic.

As part of the efforts, the government is looking to raise up to US$4bn from MDBs, an official at the economy ministry told BNamericas.

The funds will come from the Inter-American Development Bank (IDB), International Bank for Reconstruction and Development (IRDB), the Development Bank of Latin America (CAF), German development bank KfW and French development agency AFD, according to the official, who could not be named.

Of the total, US$1.7bn will be used to finance an emergency income for low-income families and workers in the informal sector.

Starting April, the federal government began paying a monthly benefit of 600 reais (US$110) for a period of three months.

The remaining funds from the MDBs will be used in other social programs, such as Bolsa Familia, which is a program for low-income families.

Brazil has recently become an epicenter of the global coronavirus crisis in terms of number of infected people and fatalities. This has forced state governments to impose strict measures to limit the circulation of people, producing a severe impact on Latin America’s largest economy. 

Economists are projecting that Brazil will see a 2020 recession of more than 5%, which would be the worst economic contraction in the country’s history.  

The support from MDBs will not be restricted to social programs, as the government is also seeking infrastructure financing from those organizations.

World Bank support

The infrastructure ministry signed a memorandum of understanding with the World Bank to carry out technical evaluations for export logistics and regional development in the Arco Norte routes, in the country’s northern region.

The Arco Norte system comprises ports and logistics centers considered key for the flow of grain production in the region. The system is made up by the Porto Velho port in Rondônia state, Miritituba, Antares and Barbacoa in Pará state, along with Itacoatiara, Manaus and Itaqui in Amazonas state.

"We are signing this cooperation with the World Bank to concentrate efforts in Arco Norte and expand networks for export products in Brazil, thus encouraging the growth of agribusiness in the country", said Marcelo Sampaio, executive secretary at the infrastructure ministry.

The first studies have already started with a focus on waterways that could be created via concessions.