Brazil Offers Incentives to Foreign Investors in Green Sectors

Rogério Ceron

Brazil is accelerating its energy transition and is looking for foreign direct investment (FDI) to help develop the Latin American country’s green projects. Brazilian Finance Minister Rogerio Ceron unveiled a program called Eco Invest Brasil to encourage the flow of foreign investment in climate change programs.

First of all, the government’s plan stipulates that investors will be offered a 25-year international insurance to cover exchange rate fluctuations. In addition, foreign investors will be able to receive loans at subsidized rates of up to 15% for a total of up to two billion dollars per year. Minister Ceron emphasized that “in case the real (Brazilian currency) undergoes devaluation, a specially created hedge fund will cover the difference.” Financial operations will be managed by the Inter-American Development Bank, with supervision vested in the Central Bank of Brazil. “The clean energy matrix,” Ceron told reporters, “distinguishes Brazil from many other countries in the world. To accelerate the energy transition, we decided to offer a competitive line so that the end cost would be favorable.”

Brazil’s monetary policy has been praised by the International Monetary Fund (IMF), which commended Brazil’s “timely and decisive” response to rising inflation. According to IMF Director Kristalina Georgieva, “Brazil’s central bank was one of the first central banks to raise the interest rate and then ease monetary policy when inflation returned to the target range.”