Brazil's government raised $10 billion from multilateral and development banks to fund South American infrastructure projects to enhance trade and reduce transportation time to Asia.
The planning ministry said that the Brazilian development bank was expected to distribute $3 billion to this effort for funding projects that Brazilian states and municipalities proposed to connect to this network.
Brazil Raises $10 Billion From Banks
The Inter-American Development Bank will contribute $3.4 billion, the Development Bank of Latin America will provide $3 billion, and the regional fund Fonplata will give $600 million to funding countries in the region.
Planning minister Simone Tebet said, "We want other banks to join later, such as the World Bank and the New Development Bank (NDB) of the BRICS." The resources from the banks will be transferred into a fund whose governance is still under development.
Tebet explained that the initiative began from a mapping exercise conducted by the federal government in collaboration with the 11 Brazilian states bordering neighboring countries.
The mapping exercise has identified 124 projects within the country deemed essential for five regional integration routes. Tebet added that these routes would be roughly completed by 2027.
The minister claimed that federal funding had already been allocated for these projects, which were part of the portfolio of 9,200 projects under Brazil's Growth Acceleration Program. However, the resources from the institutions' funds will be directed toward enabling neighboring countries to connect their logistics infrastructure network to these points.
"Brazil is accustomed, through the Atlantic, to focus on coastal states targeting Europe. Now, with this open market in Asia, it is evident by numbers and mileage that the easiest route is through the Pacific," Tebet said.
She estimated that the potential time savings in transportation to Asia could reach up to 20 days once the routes were completed.
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RIO DE JANEIRO, BRAZIL - DECEMBER 07: Simone Tebet, Brazil's planning and budget minister attends the 63rd Summit of Heads of State of Mercosur and Associated States at Museum of Tomorrow on December 07, 2023 in Rio de Janeiro, Brazil.
Brazilian Infrastructure Amid Pandemic
Infrastructure Minister Tarcísio Freitas reported that the pandemic and domestic political concerns may jeopardize the ability and willingness of firms to bid for major infrastructure concessions in Brazil.
Freitas noted that it could mean trouble for key concession auctions in 2021 and 2022, including impacting the proposed Ferrograo railway, which would connect Brazil's midwestern soy belt to northern ports.
He said they were going through a pandemic, and many companies were having difficulties with cash, which was Brazil's crucial phase of its 2019-2022 concession plan. The government has forecasted to bring 250 billion reais ($47.7 billion) in investment between 2019 and 2022.
The right to operate Via Dutra, the main highway linking Sao Paulo and Rio de Janeiro for 30 years, was among the major concessions on the list. Freitas said that the number of candidates interested in the concession will be limited due to the high costs involved.
Furthermore, the winner will be expected to invest some 15 billion reais ($3 billion) in the roadway over that period.
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