MercoPress. South Atlantic News Agency

Brazil’s development bank sees economy picking up as loan requests increase

BNDES President Luciano Coutinho: “demand for capital goods is increasing”

Company inquiries about tapping Brazil's BNDES state development bank for loans is up 30% the past two months, a strong sign of potential growth in the near future for a sluggish economy, the bank's president revealed in the US.

BNDES, the country's largest source of long-term corporate credit is likely to disburse 150 billion Reais (72 billion dollars) of new loans this year, up from 139.7 billion Reais in 2011, BNDES President Luciano Coutinho told reporters at the Americas Society in New York.

“It depends on how much demand increases in November and December. It usually is seasonally strong, but this time it seems stronger,” said Coutinho. “We also foresee the current demand for capital goods is increasing,” he said.

Pre-approval for loans is up about 20% from a year ago, a good sign for economic growth in Brazil, but roughly one-fifth of pre-approvals go no further, Coutinho said.

Economic growth is expected to accelerate in Brazil in 2013 to 4% from about 1.5% this year, according to a weekly central bank survey of economists published on Monday.

BNDES is a strong tool from the Brazilian government to prop corporations and grant long term credit for agriculture, infrastructure and industrial equipment. The key for the success of BNDES is that its rates are par to inflation or even lower depending on the Brazilian government interest to develop or support a particular project.

Brazil’s development bank annual lending is higher than that of the World Bank.