IDB Provides $1 Billion for Reforms to Enhance Business Environment and Promote Investment in Brazil

WASHINGTON — The Inter-American Development Bank (IDB) approved a $1 billion (R$5.5 billion) loan to support Brazil’s ambitious policy reform agenda under its Ecological Transformation Plan. This operation is designed to unlock private investment by improving financial conditions and the business environment, as well as strengthening governance and institutional capacity.

At the heart of this initiative is Eco Invest Brasil, a pioneering collaboration between the IDB and the Brazilian government that is designed to provide more favorable financial conditions, in addition to novel financing tools for policymakers to overcome one of the oldest and most pressing barriers to investment, currency volatility. 

“The Eco Invest goal is to attract more private capital to the country through financial innovations such as blended finance and tools to manage foreign-exchange volatility,” said IDB President Ilan Goldfajn. “Our collaboration intends to unlock investments in Brazil, creating jobs and opportunities that will generate tangible benefits for Brazilians.”

The National Treasury Secretary, Rogério Ceron, emphasized that “the innovations promoted by Eco Invest and the green investment agenda, with support from the IDB, are foundational and powerful. We are talking about advances that amplify Brazil’s potential for greater productivity and better employment and income conditions, in a way that aligns with social and environmental responsibility.”

Eco Invest is expected to mobilize resources of approximately $10.8 billion (60 billion reales) by 2027, primarily through the private sector, by providing a blended-finance facility. Additionally, Eco Invest will also offer a project-preparation facility, a liquidity facility, and an FX-derivative program.

To achieve these objectives, the program supports a governance framework for the Ecological Transformation Plan, structured under an agreement between the executive, legislative, and judiciary branches of government. It also sets issuance standards for sovereign sustainable bonds and develops a national bioeconomy strategy, among other measures.

The loan also has a fiscal component to strengthen Brazil’s business environment by leveraging  recently approved tax reform. 

This IDB loan is part of a broader, multilateral effort to enhance the resilience and sustainability of Brazil’s economy. The financing, through a policy-based loan, has a maturity period of 20 years, a grace period of 5.5 years, and an interest rate based on the Secured Overnight Financing Rate (SOFR).