Long-Term Finance in Brazil: The role of the brazilian development bank (BNDES)

Abstract

This article examines the origins and evolution of long-term financing in Brazil. The need for government intervention in the form of a development bank is explained. Particularities of the Brazilian experience with its state-owned National Development Bank (BNDES) are described and analyzed. The final section tackles the challenges and limitations of the Brazilian system of long-term financing following the global credit crunch of 2008, when BNDES disbursements boomed because of major but unsustainable changes in its capital structure. The article concludes that the system for development finance in Brazil has become ineffective and spurs macroeconomic instability.