Vice President Geraldo Alckmin and the president of the New Development Bank (NDB, also known as Bank of BRICS), Dilma Rousseff, signed a letter of commitment on Tuesday (4) to allocate a total of US$ 1,075 billion, planned for this year in Brazil, to the state of Rio Grande do Sul, devastated by floods.
The announcement was made by Dilma on May 14. Alckmin is in Beijing, China, leading a delegation made up of six other Brazilian ministers (in addition to being vice president, Alckmin is also Minister of Development, Industry, Trade and Services) to take part in Cosban, the Sino-Brazilian High-Level Concertation and Cooperation Commission.
In a press conference with Alckmin at the Brazilian Embassy in Beijing, Dilma was asked about how free the state of Rio Grande do Sul is to allocate resources. The NDB president said that flexibility to allocate resources in case of disasters is essential.
''I went through three disasters [as president]. You're going to face risks in Rio Grande do Sul: there's the problem of removing waste, and cleaning up. You only start rebuilding after that. You have the problem of rebuilding streets, roads… 150 roads and bridges have been affected,” said Rousseff.
She said NDB's flexibility has to do with a characteristic of the bank that sets it apart from other international financial institutions: “The bank does not impose conditions on its member countries.”
Without giving names, Dilma gave an example of what happens in other cases: “We don't impose conditions of any kind. We don't do what was done in the past: Oh, the electricity sector needs money, but if you don't privatize it, we won't give you money.”
Global financial institutions such as the World Bank or the International Monetary Fund usually demand compensation from governments and, in many cases, impose policies on these governments as a condition for new loans. Generally, these demands include social spending cuts, harming the most vulnerable people.
"The bank respects the priority of the government in question (...) we're not going to impose conditions on Rio Grande do Sul or tell them how they're going to reconstruct the state.
We’re going to look at whether the resources are being properly allocated, but this will be done together with the state, with the Brazilian Development Bank (BNDES, in Portuguese),” explained Rousseff.
The resources
Of the total of US$1.115 billion, US$620 million will be allocated via BNDES, Bank of Brazil and BRDE, the Regional Development Bank of the Far South (specifically US$20 million that the bank already had from the NBD). The rest is US$200 million that will go directly to the state government of Rio Grande do Sul for the “development, construction and reconstruction of basic infrastructure," such as highways, bridges, urban roads and other facilities. Another US$295 million is a new investment through BRDE, approved by the Foreign Financing Commission (Cofiex, in Portuguese) of Brazil’s Ministry of Planning and Budget.
Rousseff also explained that part of the investments were funds approved by NDB’s previous management.
Out of a total of US$ 1.7 billion allocated to the BNDES for energy transition and environmental protection projects (approved by the Brazilian Senate in June 2023), the NDB decided to allocate US$ 500 million to Rio Grande do Sul.
Around US$ 100 million of the loans to the Bank of Brazil that had not yet been earmarked were allocated for agricultural infrastructure projects “because Rio Grande do Sul is a major producer of grains and animal proteins, so it will be used in storage and logistics infrastructure projects," said the president.
The ministers who went to China to attend Cosban's VII Plenary Session were Rui Costa, from the Civil House; Simone Tebet, from the Ministry of Planning and Budget; Carlos Fávaro, Minister of Agriculture and Livestock; Wellington Dias, Minister of Social Development; Márcio França, Minister of Entrepreneurship Micro-enterprises and Small Businesses; and Paulo Teixeira, from the Ministry of Agrarian Development.
The agenda includes a seminar with 400 Brazilian and Chinese businesspeople on Wednesday (5) and a meeting in the Great Hall of the People between the Brazilian delegation and Chinese Vice President Han Zheng on Thursday (6).
Edited by: Rodrigo Durão Coelho
