BNDES loans are poorly dimensioned since 2011, says report

A report produced by CMAP (Public Policy Monitoring and Evaluation Council)showed that for every BRL 1 invested in loans and subsidies by the BNDES (National Bank for Economic and Social Development), BRL 0.12 to BRL 0.25 became additional investments, depending on the methodology applied.

This indicates that, according to the report, lending in the period was poorly focused and poorly dimensioned.

The survey considered the results practiced by the BNDES from 2011 to 2020, which represents between 12% and 33% of annual disbursements.

The information in this document came from the construction of a database with information about the relationship of companies with the BNDES and the performance of firms over time, covering 1,872 companies, 653 of which carried out operations with the Bank in the period considered.

This survey on loans was coordinated by the National Treasury, supervised by Secap (Secretary for the Evaluation of Public Policies, Planning, Energy and Lotteries) of the Ministry of Economy, with the participation of the CGU (Controladoria-Geral da União).

The results suggest that subsidies associated with credit operations are not related to an increase in firms’ investment rate, but to changes in their capital structure in the long run.

According to the calculated estimates, the availability of subsidies causes the company to increase the maturity of its long-term liabilities. On the other hand, the same analyzes showed that the offer of BNDES loans, regardless of the associated subsidies, is correlated with an increase in investment levels.

However, the impact of BNDES lending on investments made is relatively small.

“Considering that the volume of BNDES loans corresponded to approximately 4.42% of the total assets of the benefited companies and the volume of subsidies offered corresponded to approximately 1.51% of the total assets of the benefited companies, the median of the effect estimates suggests that each R$ 1.00 in disbursements and subsidies in credit operations was correlated with investment increments of approximately R$ 0.146”, points out the study.

For the authors, the results highlighted in the study are considered positive, but highlight that the effect was not very effective.

From the point of view of cost-benefit evaluation, the document points out that the exercise carried out by the National Treasury Secretariat indicates that the granting of loans by the BNDES in the period generated little return in terms of increased investments.

In turn, the granting of subsidies does not seem to have generated a significant return on the increase in investment, but was associated with changes in the capital structure of the benefited companies, with the extension of the term of their liabilities.

Finally, the concludes that the Bank’s performance interfered substantially, and in a negative way, on the allocation of productive capital, compromising the potential growth of the economy, among other developments.

O CNN Brazil Business contacted the BNDES, but until the publication of the article did not receive a response.