SAO PAULO, Aug 27 (Reuters) – The Brazilian government on
Tuesday proposed major banks join forces to provide financing
for companies bidding on major infrastructure projects, the
latest sign that authorities are worried about participation in
the upcoming tenders.
The finance ministry’s secretary of economic monitoring,
Antonio Henrique Silveira, said the government proposed that
private and public banks form a syndicate to finance the
projects. He said that the government will also create a
guarantee fund to reduce the risks for banks.
The announcement came after Finance Minister Guido Mantega
met earlier in the day with the heads of top banks including
Banco do Brasil Banco Bradesco, Itau
Unibanco, BTG Pactual and others.
President Dilma Rousseff’s government is placing big hopes
on the multi-billion dollar infrastructure projects as a way to
jump-start an economy that has been stuck in a rut for the last
three years.
However, many businessmen warn that the low rate of returns
offered, coupled with concern over government interference and
scarce global liquidity, is making those road, railway, ports
and airport projects less attractive.
The government has already increased the rate of return for
several projects and improved financing terms via public banks.
Mantega in the past has been critical of private-sector banks
for not lowering their lending rates at a faster pace as the
economy struggles to recover.
Silveira said that the government will create a $4.5 billion
infrastructure guarantee fund to reduce risks for the banks
financing the projects.
After a decade of red-hot economic growth fueled by a
consumption boom, Brazil is feeling the effects of years of
anemic investment that crippled infrastructure and dragged down
productivity.
