$5.4 billion from the IDB will be applied to a credit line and foreign-exchange coverage for foreign investments.

SÃO PAULO – IDB President Ilan Goldfajn joined Brazil’s Treasury Secretary, Rogério Ceron de Oliveira, representing Minister of Finance Fernando Haddad; Minister of Environment and Climate Change Marina Silva; and Central Bank President Roberto Campos Neto to sign letters of intent encouraging external investments in actions to mitigate and adapt to climate change by protecting these investments from exchange-rate volatility. The leaders signed the documents today, as finance ministers and central bank presidents from the G20 countries convened in São Paulo. 

Exchange risk is a factor that hinders investments in emerging markets like Brazil, contributing to the current deficit in investment in sustainable infrastructure and other large-scale green projects.  

The efforts announced today aim to offer innovative financial solutions and credit to encourage investments and offer currency protection to projects that promote ecological transformation and the transition to sustainable practices and technologies.  

The IDB will support the Foreign Private Capital Mobilization and Currency Hedging Program under Brazil’s National Climate Change Fund with a $2 billion line of credit and technical support.

With the Central Bank, the IDB will support the development, liquidity and efficiency of the long-term exchange-rate protection market in foreign currency. The IDB will offer the Program a limit of $3.4 billion for exchange-rate coverage; capacity to acquire derivatives for coverage under better conditions, facilitated by its AAA rating; and Treasury services.  

This support will allow the Central Bank and financial institutions to offer investors more access to, and lower costs for, exchange-rate protections.  

The Program also introduces financial innovations that seek to offer investors interested in Brazil alternatives to improve the prospects of their investments, including a long-term liquidity facility operated by the National Climate Change Fund, which will be able to use resources from the IDB credit line.  

"The transition to a low-carbon economy is a global need, and for Brazil, it is also a unique opportunity. We have a clean-energy matrix and reforestation potential, and we need to take advantage of this window, while there is a global movement to relocate production chains. Private capital is critical for economies like Brazil, which is why we truly celebrate this joint initiative to facilitate and protect foreign investments in the country," said Secretary Ceron.  

“The Ministry of Environment and Climate Change operates in the two strategic axes of sustainable development: confronting crimes against our country's natural heritage and creating a new cycle of economic and social prosperity. Today's event with the IDB represents another concrete step in building a sustainable base economy that helps combat inequality," said Minister Silva.  

“The environment and climate is a topic of great importance. Society increasingly demands that the economy be sustainable and inclusive. This close collaboration between the Federal Government, Central Bank, the IDB and the private sector is crucial. It ensures that incentives are targeted effectively, ensuring that ecological-transition efforts are inclusive and equitable,” said Campos Neto.  

"We need to change the level of financing to face the impacts of climate change. The financial innovations that the government of Brazil and the IDB are promoting have the potential to increase the level of green investments. This program will help Brazil on its journey to ecological transformation and strengthen a more resilient, sustainable and prosperous economy," said Goldfajn.  

The government of the United Kingdom will also provide $1 million to the IDB to support the Program, as part of ongoing collaboration through the UK Sustainable Infrastructure Programme, which has invested $50 million in Brazil to mobilize private investment in the country’s climate transition.