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Brazilian state development bank will focus on infrastructure

Staff Writer |
Brazilian state development bank BNDES will focus new loans on infrastructure and smaller firms while scaling back the use of subsidized interest rates for future contracts.

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Rio de Janeiro-based BNDES, Brazil's main source of corporate credit since it was founded in 1952, is preparing to repay the federal government about 100 billion reais ($32 billion) of capital injections by 2018, said Fabio Giambiagi, the bank's head of research and planning.

Giambiagi, who spoke at an event in Rio de Janeiro, said the pillars of BNDES's new disbursement policy will be funding much-needed infrastructure projects across Brazil and lending to small- and mid-sized companies that struggle to access credit markets.

BNDES will decrease the use of the so-called TJLP rate, a below-market rate at which it has traditionally pegged most loans, Giambiagi said, without elaborating.

"We have decided to become more rational with our disbursement decisions, so we can place more money at market-based conditions," Giambiagi said. He said the bank's new strategic plan will be announced within the next 45 days.

Brazil has cut its benchmark interest rate by 25 basis points to 14%, with a view to hauling the country's economy out of recession.

The so-called Selic rate was pared by the nine-member Copom in a unanimous decision. It cited uncertainty around needed adjustments and concerns over the relative stickiness of inflation.

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