- IDB APPROVES CONDITIONAL CREDIT LINE OF UP TO $1.2 BILLION TO SPUR AGRICULTURAL PRODUCTIVITY AND RESILIENCE
- NORTHEAST REGION IS FIRST TO BENEFIT FROM PROGRAM WITH $230 MILLION LOAN
The Inter-American Development Bank (IDB) has approved a credit line of up to $1.2 billion to help improve productivity and resilience in Brazil’s agricultural sector and boost revenues and access to basic services in rural areas.
The funding consists of a Conditional Credit Line for Investment Projects (CCLIP) and resources will be allocated over a period of up to 10 years in some 10 individual operations. These may include financing loans for investment projects and will be made available to the federal government, states, or municipalities, along with national or regional development banks that make subloans for investments contributing to the sustainable development of agriculture.
This lending mechanism, which is aligned with the 2020-2031 Strategic Plan of the Ministry of Agriculture and Supply (MAPA, after its Portuguese initials), will provide Brazil with a financing instrument for rural development in three strategic sectors:
Agricultural services. The aim is to boost productivity on a sustainable basis, contributing to climate change mitigation and adaptation by improving the quality of agricultural support services. These include: generation and transfer of technologies, technical assistance in production and in business management, food safety and health, land titling, environmental regularization, and increasing producers’ access to these services.
Basic and productive infrastructure. The goal is to improve productivity and market access, reduce product losses, improve energy and water use efficiency, and enhance the quality of life through the development of resilient infrastructure. This includes access roads, irrigation systems, rural electrification, and drinking water and sanitation.
Environment and natural resources. The objectives are: promoting conservation and sustainable use of natural resources, reducing greenhouse gas emissions, and enhancing adaptation to climate change. This involves initiatives to improve natural resource management, such as watershed management, development of payment mechanisms for environmental services, agroforestry-based plans, and the development of biodiversity products.
Brazil’s Northeast Region is the first to benefit from the credit line through a $230 million loan to improve the agricultural sector’s income and market access and help make regional agriculture, including livestock, more competitive.
The program will be implemented by MAPA with support from the National Institute of Colonization and Agrarian Reform (INCRA). It will encourage the adoption of agricultural technologies, including those related to climate change adaptation and mitigation, by integrating producers into value chains, strengthening legal certainty and environmental regularization of rural property, and improving phytosanitary conditions on fruit farms.
This operation is in line with Vision 2025 – Reinvesting in the Americas: A Decade of Opportunities, created by the IDB Group to promote economic recovery and inclusive growth in Latin America and the Caribbean, in the areas of digital economy, gender and inclusion, and climate change.
The loan for Brazil’s Northeast Region is for a 23.5-year term, with a 7-year grace period, and interest rate based on LIBOR. There will be an additional $40 million in local counterpart funds.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.