BNDES sets a new benchmark
Brazil's national development bank will move from a subsidized long-term lending rate to a new rate based on the government's borrowing costs, but will short-term pain translate into long-term gain?
After years of doling out cheap cash, Brazil’s
national development bank BNDES is taking a new path. The
state-owned lender is hoping to move away from benchmarking its
loans against a discounted interest rate and instead use
government borrowing costs as a reference point.
The move is part of a push for BNDES to shrink its role in
Brazil’s economy. The approach is intended to pave
the way for commercial banks eager to lend at competitive
rates. It may seem a logical pivot, but changing the benchmark
has provoked fierce opposition.
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