A revision of the investment plan for Brazilian companies whose projects are under analysis, consultation, or in prospect of approval by the BNDES (Brazilian Development Bank) has led to an increase of approximately 15% in the amount of investments scheduled for the 2008/2011 period.
The amount loaned by the bank should total 1.19 trillion reais (US$ 673 billion). The previous survey forecasted that investments would reach 1.03 trillion in 2010.
The president at the BNDES, Luciano Coutinho, highlighted the "private sector's display of confidence in the sustainability of the country's investment cycle." He stated that "as production capacity is used, the rate of use of installed capacity grows, and this keeps industrial capacity in line with the demand."
He stated that "if the country manages to invest more, there will be greater and safer growth," and that the BNDES wants to provide support to those investments.
During a lecture given to businessmen at the Rio de Janeiro Trade Association, Coutinho informed that the infrastructure projects mapped out by the BNDES represent an annual increase of 10% in the coming years, in the fields of energy, communications, railways, ports, and sanitation.
For the civil construction sector, the projected annual rate of increase in investments is 8%, and for the industrial sector, 12% for the next few years.
Since mid-2004, he said, investment in Brazil has been on the rise, and presently its growth rate is higher than that of the Gross Domestic Product (GDP), which is the sum of all riches produced in the country.
"An economy does not grow with stability if investment does not grow faster, because it is investment that creates production capacity ahead of demand, allowing the supply to grow and thus hold back price increases," he claimed.
The president at the BNDES also highlighted that the rate of investment relative to the GDP, which currently stands at 16.8%, may reach up to 21.1% this year: "We need to add four [percentage] points in investment in order to sustain stable growth," he said.
US$ 34.3 billion
The Brazilian Development Bank (BNDES) should end the year of 2007 having loaned 62.5 billion Brazilian reais (US$ 34.3 billion). In early October there was a volume of 90 billion reais (US$ 49.4 billion) in projects approved and funds loaned over the last 12 months had already reached 60 billion reais (US$ 32.9 billion).
Considering the good performance of the last 12 months and the average growth in the rate of fixed direct investment in the country, 14% a year, forecasts for 2008 show that the bank's loans may reach 70.5 billion reais (US$ 38.7 billion), out of a total private sector investment of 125 billion reais (US$ 68.6 billion).
BNDES president Luciano Coutinho recognizes that there is a difference between demand and offer. "Among the volume of projects approved and the volume of funds loaned there is a difference of 30 billion reais (US$ 16.5 billion). Therefore, it is natural for the volume of loans to rise. We are certainly going to increase the loans next year."
During a luncheon with Brazilian president Luiz Inácio Lula da Silva, Coutinho heard a suggestion that the "BNDES should speed up its activities, maintaining the support to the growing investment".
He also admitted the possibility of establishing a loan target of 100 billion reais (US$ 54.9 billion), as suggested by Lula. "Of course, if we maintain the growth identified over the last three years, it (the target) may reach the level the president suggested.
But I don't yet want to make a prognosis," stated Luciano Coutinho, who preferred to remain conservative. He added that he "would like to get there, but we have to work week by week, month by month."