BNDES has agreed to partner with the China Development Bank, signing a joint deal to raise up to US$1.3 billion towards financing various infrastructure, energy, oil and gas, mining, and sanitation projects that lie within Brazil's developmental interests. The agreement was an outcome of talks held during the Brazilian president's recent visit to China, which resulted in a series of agreements signed between the two nations.
Despite this being a new development in Brazil's financial sector, it is not the first time the country has taken such a step. BNDES financed numerous construction projects outside of Brazil. This resulted in a substantial increase in the backlog of construction companies. However, the bank's strategy fell apart in 2014 with the emergence of the Lava Jato corruption scandal. The scandal revealed that several Brazilian construction firms had been bribing officials across Latin America to secure contracts. As a result, from mid-2016 until the end of last year, BNDES stopped funding any projects outside Brazil.
This new deal with the China Development Bank is a sign that BNDES is set to re-enter the international market. It also indicates that Brazilian construction firms will be able to find more opportunities abroad. However, the road ahead will be fraught with difficulties around corruption and the mismanagement of funds. It remains to be seen whether these challenges will be addressed successfully by the Brazilian government and if the country's businesses will be able to effectively take advantage of the re-entry into the international market.
