Brazil will promote new models for private investment in infrastructure to boost service quality, the socio-environmental impact of investments, and economic growth and productivity with a $20 million loan approved by the Inter-American Development Bank (IDB).
The Banco Nacional de Desenvolvimento Econômico e Social (National Bank for Economic and Social Development, BNDES) will use both IDB’s and its own resources to finance Public-Private Partnership (PPP) project preparation services.
The PPPs could help close that gap by leveraging private capital, but more importantly, by improving the quality of services through the introduction of private-sector innovation and technology to promote better public services and more operational efficiency.
This operation can improve Brazil’s mechanisms for preparing PPP projects, which would help significantly boost the number of projects and promote actions to ensure that infrastructure projects will be effectively implemented and meet their intended objectives.
The program’s resources will be used to hire consultants, including technical, legal, and financial advisory firms to help public agencies prepare PPP projects. Specifically, external consultants’ services will focus on preliminary analyses, complete-cycle PPP project preparation, technical studies, legal advice, financial and operational consultancy, communication counseling, and knowledge dissemination, among others. Throughout the cycle, efforts will be made to ensure that best international practices are used for projects that create value for users and government.
This program is expected to combine the knowledge of BNDES and IDB, paving the way for the development of new collaboration models between the public and private sectors, increasing the impact of the projects and promoting greater viability of infrastructure projects.
Its direct beneficiaries will be the federal and subnational governments and entities under their jurisdiction, which will see an increase in private sector investment under the PPP modality on infrastructure projects in the areas of sanitation, public lighting, roads, ports, and digital networks, among others.
This credit aims to support the efforts of numerous Brazilian agencies that have been working hard to boost investment in infrastructure projects that are environmentally sustainable, financially responsible, and economically relevant for the country’s development.
The IDB’s $20 million loan is for a 25-year term, with a 5.5-year period of grace and an interest rate based on LIBOR. Brazil will provide an additional $10 million in local counterpart funding.