The Inter-American Development Bank today announced the approval of the option of lending in local currency for the existing multi-billion dollar Conditional Credit Line for Investment Projects (CCLIP) agreement in effect with Brazil’s Banco Nacional de Desenvolvimento Economico e Social (BNDES).
The CCLIP, launched in 2004, allowed the BNDES to support the expansion, integration and financing Brazilian micro, small and medium-sized enterprises with medium and long-term loans for investment projects and for permanent working capital to make firms more competitive.
The modification, authorized by the IDB Board of Executive Directors in accordance with the new IDB Framework for Lending in Local Currency, will allow BNDES to request local currency disbursements in reais and the conversion of outstanding loan balances into local currency if they wish to.
The CCLIP allows BNDES to use resources from three successive operations of up to $1 billion each in a nine-year term. The first of the three loans has been disbursed almost completely with operations totaling $990 million in US dollars. Request by BNDES of a second program is expected soon.
The reformulation of the CCLIP also involves other innovations, such as flexibility in determining the amortization schedule and terms; and prices based on actual cost of financing.
The program’s resources under the CCLIP will total $ 6 billion and loans will have the guarantee of the Federal Government of Brazil. Since 1995 the IDB, the oldest and largest regional development bank, has supported five successful multi-sectoral credit line programs with BNDES for a total of $4.5 billion.
The BNDES, the only significant source of medium and long-term financing for financial intermediaries in Brazil, grants credit for micro, small and medium-sized companies, which play a fundamental role in the modernization of industry, services and productive processes.