Brazil to Increase Connectivity in Small Municipalities with IDB Support

The Inter-American Development Bank (IDB) approved a $100 million loan to Brazil's federal government to improve digital connectivity and expand fixed broadband coverage in the country.

The "Credit Expansion Program for Investments in Telecommunications Networks," approved by the IDB's executive board, will be executed by Brazil's Ministry of Communications (MCOM).

The program will benefit some 2.5 million people by enabling the expansion of digital connectivity coverage in small municipalities and advancing Brazil's digital transformation.  

The financing will leverage Fund for the Universalization of Telecommunications Services (FUST) resources through the fund’s financial agents, contracted by the MCOM-led FUST Management Council.

The program is structured around two components. The first component will facilitate access to credit for small Internet service providers that invest in fixed broadband infrastructure in municipalities under 30,000 inhabitants, including the deployment of fiber optic cables and the installation of telecommunications equipment with energy-saving functions along existing infrastructure and rights-of-way, among others.

The second component will help reduce information asymmetries between small Internet service providers and financial credit institutions through the implementation of an information technology system. This system will complement the credit rating mechanisms currently employed by financial institutions.

This is the sixth operation under the Conditional Credit Line for Investment Projects (CCLIP) "Brazil More Digital" approved in April 2021.

This US$100 million loan has an amortization term of 24.5 years, a five-year grace period, an interest rate based on SOFR, and a local counterpart of US$1.5 million.