Skip to Main Navigation
PRESS RELEASE July 14, 2017

Brazil: Towards A More Effective BNDES

Brazilian development bank would benefit from reforms to increase operational potential, says new World Bank study

WASHINGTON, July 14, 2017— Far-reaching reforms to modernize the state-owned National Bank for Economic and Social Development (BNDES) can help Brazil support productivity growth and job creation by making better use of investment capital, according to the new World Bank Group study, “Towards a More Effective BNDES,” which is now released.

The study provides the government of Brazil with recommendations to establish BNDES as a more effective and better-focused development bank, making it less dependent on the government for funding, and making it less vulnerable to interference by improving its decision-making processes and internal governance.

Authored by five experts in the Finance & Markets (F&M) Global Practice of the World Bank Group, the study aims to contribute to Brazil’s current debate on improving BNDES operations and strengthening its medium - to long-term role in the Brazilian economy. By establishing BNDES with the full capabilities of a development bank – providing technical assistance as well as financing to its clients – Brazil can better target investment capital toward the most promising small- and medium-sized enterprises (SMEs) that have the potential to create jobs, incomes and wealth.

“Strengthening BNDES can help unleash the full potential of the country’s most promising high-growth firms,” said Martin Raiser, World Bank Country Director for Brazil. “Development banks in other countries have increasingly refocused from pure lending to leveraging commercial funding through guarantees and other instruments and combining financial with technical assistance to foster innovation and job creation – experiences from which BNDES can benefit,” he added.

The catalytic role of BNDES in leveraging resources to finance infrastructure was also highlighted in the Study. The authors argue that the Brazilian Development Bank, rather than directly financing infrastructure, could help direct funds of private financial investors towards infrastructure projects in the form of PPP contracts, for example. The use of standardized debentures that provide guarantees during the construction period and pay interest during the life of the bond may also prove effective in attracting a massive amount of private resources to the financing of public infrastructure.

 “We hope that this study, by some of our leading experts on development finance, will make a strong contribution to the policy debate that is now underway in Brazil by providing a range of policy, operational and organizational options,” said Ceyla Pazarbasioglu, the Senior Director of the F&M Global Practice. “Long term finance has always been at the core of BNDES objectives, and that objective is even more relevant now, but the institution needs to improve how it operates.”

Clarifying the institution’s decision-making procedures and strengthening its internal governance processes can help improve the targeting of BNDES financial resources to highest impact activities. In times of tight constraints on government resources this is particularly important according to the study.

“One aspect of Brazil’s continuing debate is the government’s recent proposal to revise the interest rate for long term finance by introducing the “Taxa de Longo Prazo” (TLP) or “Long Term Rate.” Although the World Bank’s new study was finished before that reform was proposed, it is a well-designed reform providing a very meaningful solution to the concerns we raise in the paper,” said Claudio Frischtak, the lead author of the study.

Among the study’s main recommendations are for BNDES to:

  • Separate the decision to offer long term financing from the decision to provide subsidies;
  • Rethink its selection criteria for projects and companies, including in infrastructure; and
  • Revise its funding strategy to include domestic and international capital market and to reduce its reliance on Government borrowing and on the Worker Support Fund.

About the World Bank Group

The World Bank Group helps advance global policies that are consistent across global, regional, and national levels and across the public and private sectors, essential for inclusive growth and poverty reduction. It also supports the global agenda to address and mitigate the risks of globalization. Its financing and operational responses are designed to demonstrate pathways to achieving and implementing these policies. Development requires macroeconomic stability, supported by the surveillance, financial strength, and countercyclical role of the IMF. Together, the Bretton Woods institutions establish a framework for effective functioning of the development system. For more information, visit and


Candyce Da Cruz Rocha
+55 (61) 3329-1059
Washington, DC
Fernanda Zavaleta
+1 (202) 458-4838