The FINANCIAL — The new agreement is an amendment to a contract signed in 2019, allowing both institutions to provide flexibility and to widen the eligibility criteria of the current EUR 100m BDMG CLIMATE ACTION Framework Loan II, in order to support and accelerate lending to private sector business, at the onset of the Covid-19 crisis in Latin America, especially in Brazil. This flexibility will accelerate access to finance for SMEs and in particular micro-enterprises across the country to the tune of EUR 30m.
The EIB and BDMG are partnering to support a series of climate action projects in Brazil, including solar PV, small-scale hydropower and other renewable sources. In the COVID-19 context, the partnership has been adapted to help respond to specific needs of SMEs in this new challenging situation, by allowing faster loan disbursements to businesses.
EIB Vice-President, Ricardo Mourinho Félix responsible for Latin America said: “We are pleased to announce this amendment agreement to provide additional financial support to small businesses impacted by COVID-19 in Brazil. Fostering entrepreneurship is crucial for a sustainable economic and inclusive growth, in particular during the challenging times we are facing. The EIB special COVID-19 fast response aims at accelerating the uptake and deployment of funds by BDMG to Brazilian businesses. The agreement highlights our priorities in Latin America, helping to promote sustainable and inclusive economic growth by boosting productive investment.”
Sergio Gusmão Suchodolski, President of BDMG, said: “In light of the challenging scenario triggered by the pandemic, we at BDMG have intensified our partnerships and funding diversification strategy. This includes a more dynamic relationship with Multilateral Development Banks, in which our partnership with EIB is a key element. In 2019, we have partnered with EIB on a 100 million euros framework loan for projects focused on climate action. Now, adding flexibility in the use of part of these proceeds, we will be able to further expand our emergency programs and provide additional liquidity for small and medium enterprises, securing jobs and providing countercyclical relief for the State of Minas Gerais, Brazil. This additional flexibility is therefore an important step for deepening the partnership between our sister institutions, allowing the generation of sustainable and inclusive development in this challenging moment of our world”.
EU Ambassador to Brazil, Ambassador Ignacio Ybáñez Rubio, said: “Supporting private sector companies, especially SMEs as main drivers for jobs creation, is a major objective within the EU and its Member States. It is also an important part of its cooperation agenda with partner countries. Within the current pandemic context, it is even more important to align efforts to assure a sustainable recovery of businesses and reduce as much as possible the implicit negative socio-economic consequences derived from a slowdown of economic activity. We are proud to confirm that we have supported the establishment of this facility from the beginning, as this action forms part of the EIB’s External Lending Mandate that includes a guarantee from the EU. We applaud the conclusion of this agreement that, besides the original contract’s purpose of giving priority to climate action, which is in line with the current EU Green Deal approach, it also brings the possibility to use a part of the approved facility to finance relevant projects in a wide range of sectors where Brazilian SMEs are active.”