1. www.bndes.gov.br 1 UN Group Meeting - “Rethinking the Role of National Development Banks” Demian Fiocca Vice President – BNDES December, 2 2005 BNDES: Financing the Brazilian development

2. www.bndes.gov.br 2 crisis In the last years, economic growth was frequently interrupted by financial and Balance of Payments stress that affected aggregate demand. GDP Growth rates % year Macroeconomic Performance Source: IBGE

3. www.bndes.gov.br 3 A new development cycle Macroeconomic Performance From 1995 to 2001 the current account deficits didn´t foster investments. Now, invesments grow along with domestic savings. Source:IPEADATA

4. www.bndes.gov.br 4 Macroeconomic Performance Public investment has fallen... Investiment as % of GDP Source: Brazilian Planning Ministry

5. www.bndes.gov.br 5 Investments are necessary Yearly infrastructure growth in the selected sectors (%) 9.8 4.1 3.8 23.9 16.0 4.9 1.5 -0.3 -1.6 -0.51.0 1951/19631964/19801981/19931994/2002 Railways Power Generation Paved Roads … as a consequence, infrastructure investments dropped over the last 20 years

6. www.bndes.gov.br 6 199019972003 U.S.A.103,3132,5173,6 U.K.112,2116,4141,3 Germany93,3110,1117,4 France91,382,087,8 Japan170,1175,0104,6 China79,595,0135,5 South Korea81,2113,2119,9 India24,022,830,5 Brazil23,133,033,2 Chile47,762,175,0 Mexico17,121,318,1 Growth and Long Term Finance Credit/GDP ratio is growing but it is still low in comparison to other economies … credit can help infrastructure…

7. www.bndes.gov.br 7 4 Founded on June 20, 1952 4 100% owned by the Federal Government 4 Latin America’s largest development bank 4 Key instrument for the Federal Government Policies 4 Brazil’s main provider of long-term financing 4 Brazilian Export Bank 4 Equity investor through BNDESPAR BNDES Highlights

8. www.bndes.gov.br 8 1950 1960 1970 1980 1990 Today Infrastructure (Energy and Transport) Steel Heavy Industry - Consumer Goods - Small and Medium-Sized Enterprises Technologic Development Import Substitution Petrochemicals, Pulp & Paper, Steel Capital Goods Energy Agribusiness Competitive Integration Private Infrastructure and Exports Privatization : Management of Privatization Program Urban and Social Development Industry - Infrastructure - Exports Social Inclusion – Development of Capital Markets BNDES: A historical perspective

9. www.bndes.gov.br 9 BNDES and Multilateral Institutions 4 Adequate return 4 Good asset quality indicators US$ million Net Assets61,769 67,346 229,213 Net Worth 5,317 18,511 35,463 Net Income 511 1,176 (2,404) Disbursements 13,748 3,768 10,024 Capitalization 8,18% 27.49% 15,47% ROA 0.95% 1.72% -1,04% ROE 14.11% 6.60% -6.55% Non performing Loans 0,64% 0,43% 0.59% Economic Indicators BNDES (31/12/04) IDB (31/12/04) World Bank ( 30/06/04)

10. www.bndes.gov.br 10 BNDES: Funding  FAT - Worker Assistance Fund Permanent financing or quasi-equity  Foreign Funding Government Agencies and Multilateral Institutions IDB, JBIC, World Bank, KfW. Market Funding Bonds, Loans, Structured Notes (ABS)

11. www.bndes.gov.br 11 Funding 2004 – Cash Flow Source: BNDES Financial Area Excellent source of funding without budgetary effects. Treasury Agent 5% Return on Investment 70% Sale of Assets 9% Others 3% FAT- Worker Assistance Fund 13%

12. www.bndes.gov.br 12 Annual Disbursements R$ Billion US$ Billion Converted to US dollar on the disbursement dates

13. www.bndes.gov.br 13 The BNDES responds for 19% of the total credit in the economy Free resources BNDES Other directed resources Leasing e Public Sector Credit Market in Brazil

14. www.bndes.gov.br 14 Source: Brazilian Central Bank Credit Market in Brazil Free Credit grew more than BNDES Financing BNDES credit has a counter-cyclical effect

15. www.bndes.gov.br 15 Source: Brazilian Central Bank Credit Market in Brazil BNDES participation increases during the downturn periods of credit/GNP ratio

16. www.bndes.gov.br 16  BNDES credit analysis takes into consideration factors beyond the financial return of the project, seeking the promotion of economic and social development.  Spread reductions:  1,0 p.p. to less developed regions  0,5 p.p. to higher priority sectors  3,5 p.p. to MSMEs  Special programs (railways, capital equipment)  Variable upside required:  Equity and Quasi-equity participation BNDES Selected Goals

17. www.bndes.gov.br 17 % Disbursements according to operation type Source: BNDES Financial Area BNDES works in association with commercial banks

18. www.bndes.gov.br 18 Private firms absorb 98% of the BNDES disbursements Disbursements Characteristics

19. www.bndes.gov.br 19 Disbursements of the BNDES by Sectors of Activity Converted to dollar on the disbursements date Remark: Excludes secondary market transactions 9 Source: BNDES Financial Area Focus on infrastructure and industry

20. www.bndes.gov.br 20 Excludes secondary market transactions Disbursements by Firm Size Number of Operations US$ Million Large number of operations with MSMEs

21. www.bndes.gov.br 21 Converted to dolar on the disbursements date Disbursements by Firm Size Support to MSMEs and create jobs October

22. www.bndes.gov.br 22 Job Creation – BNDES Effects Firms supported by the BNDES presented a much higher growth of formal job creation than firms not supported.

23. www.bndes.gov.br 23 Effect is stronger in the smaller firms Job Creation – BNDES Effects

24. www.bndes.gov.br 24 The Brazilian Development Bank www.bndes.gov.br