How BNDES, Brazil’s Development Bank, benefits the country’s wealthiest

BNDES stands for Brazilian National Economic and Social Development Bank. While the institution has been of paramount importance to the Brazilian economy, it has also arguably failed in its mission – especially that “social” part.

The bank is financed by compulsory contributions from Brazilian workers. In theory, that money would facilitate small companies’ access to cheap credit, helping them to develop into more robust players. In practice, however, the bank has been used to benefit large corporations by securing them loans at below-market rates.

Until last year, BNDES offered loans at rates that were lower than the Selic benchmark interest rate. While the Selic was at 9.25 percent, companies were given loans rates of 7 percent.

According to a study published by BNDES itself, one-third of the credit offered by the bank goes to micro, small, and medium-sized companies (defined by annual turnover of up to 300 million BRL). Meanwhile, the large corporations get the remaining two thirds.

Truth be told, that ratio used to be far more unbalanced. Thirty years ago, micro, small, and medium-sized companies used to receive only 16.3 percent of the money loaned by BNDES (see chart below).

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