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Brazil to Promote Sustainable Economic Recovery of MSMEs with IDB Support

Brazil will promote sustainable economic recovery for micro, small and medium-sized enterprises (MSMEs) amid the  COVID-19 pandemic with a $250 million credit and $5 million in Non-Reimbursable Investment Financing approved by the Inter-American Bank Development (IDB).

These operations will increase the availability of medium and long-term financing for productive investments by MSMEs and entrepreneurs, ensuring support for investments related to climate, vulnerable regions, and women’s businesses.

Financing will be channeled through the Brazilian Development Bank (BNDES), which will allocate resources to MSMEs and individual entrepreneurs through accredited financial institutions.

In addition, concessional resources from the Clean Technology Fund will be combined to finance company investments in battery energy storage systems. Use of BNDES digital channels is expected to improve MSME access to credit lines.

On the other hand, resources from the IDB Clean Technology Fund’s Non-Reimbursable Investment Financing will be channeled to the Energy Efficiency Guarantee Fund, which will grant guarantees under concessional conditions to accredited financial institutions. The objective is to expand credits for SME investments in battery energy storage systems.

The program will allocate at least 30 percent of its resources to climate-related investments, at least 30 percent to women’s MSMEs, and 40 percent to MSMEs in vulnerable regions.

The project is estimated to directly benefit 4,856 MSMEs and entrepreneurs with demonstrated administrative, technical, financial, legal, and environmental capacity to implement eligible investments. Nonetheless, the final number of beneficiaries will depend on demand.

This operation is aligned with the IDB’s Vision 2025 - Reinvesting in the Americas: A Decade of Opportunities, a plan to achieve recovery and inclusive growth of Latin America and the Caribbean in the areas of MSME digitization, gender and inclusion, climate change, and economic integration.

The $250 million credit is made up of $240 million from the IDB and $10 million from the Clean Technology Fund. IDB funds have a 25-year repayment term, a 5.5-year grace period, and an interest rate based on LIBOR. The Clean Technology Fund credit has a repayment term of 20 years, a grace period of 8 years, and an annual interest rate of 0.98 percent.

About us

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.

Contacts

Borges De Padua Goulart Janaina

Borges De Padua Goulart Janaina
Additional Contacts

Fonseca Silva,Daniel Fernando

Fonseca Silva,Daniel Fernando
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