BRICS Bank Provides Huge Loan to Brazil

The New Development Bank (NDB), the lending institution of the BRICS group of countries that currently includes Brazil, Russia, India, China, and South Africa, has extended a billion-dollar loan to the Brazilian government. The financial agreement was reached between Brazil’s Economy Minister Fernando Haddad and NDB President Dilma Rousseff, the former president of this Latin American country.

“Some funds have already been allocated by the BRICS bank, but the previous government was not interested in receiving these resources. Everything changed with the arrival of President Luiz Inacio Lula da Silva. After Brazil once again approached NDB for funding, a positive decision was made,” said Rousseff, who was nominated “2023 Woman Economist” in Brazil.

The maximum loan will be used to finance certain strategic infrastructure projects related to the energy transition. Over the past eight years, Brazil has already received six billion dollars in loans from the BRICS bank. On January 1, 2024, BRICS will be expanded to include Saudi Arabia, Egypt, the United Arab Emirates, Ethiopia, and Iran. Argentina’s participation is still in question.

According to the latest estimates by the Central Bank of Brazil, the Latin American country will close 2023 with economic growth of 3%. However, for next year, the forecast of GDP dynamics is much less optimistic and does not exceed 1.7%. As for the inflation rate, the Central Bank of Brazil’s estimate for 2023 decreased from the previous 5% to 4.6%, which is within 3.25% with a 1.5% tolerance margin, established by the National Monetary Council of the Central Bank of Brazil.

This week, Brazil’s Central Bank President Roberto Campos Neto confirmed that “at least two more base rate cuts of 50 basis points are expected.” The cuts could be announced at the next Monetary Policy Committee (COPOCOM) meetings scheduled for January 31 and March 20, 2024. “The gradual reduction of the base rate reflects the slowdown in price growth,” Campos Neto said during a press conference. COPOCOM began cutting its base rate last August, bringing it to 11.75% by December 13th.

Finally, positive assessments of the Brazilian economy came from the international rating agency Standard and Poor’s, which collectively upgraded the rating of 15 of Brazil’s largest industrial companies from “BB-” to “BB,” including state oil company Petrobras. The increase followed Brazil’s sovereign debt assessment on December 19, marking the country’s first increase in 12 years.