1. 1 Istanbul, Turkey, April 26, 2012 35th ADFIAP Annual Meetings Tiago Soeiro Development Financing in an uncertain world: the BNDES experience

2. 2 BNDES Highlights  Founded on June 20, 1952  100% State-owned company under private law  Key instrument for implementing the federal government’s industrial and infrastructure policies  Main provider of long-term financing in Brazil  Emphasis on financing investment projects  Support for micro, small and medium-sized companies  Brazilian Export Bank Brazilian Development Bank

3. 3 Infrastructure Heavy Industry – Consumer Goods Small and Medium-Sized Enterprises 50s60s70s80s90s00s Today Technologic Development Time Line Imports Substitution Energy Agribusiness Exports Privatization Program Urban and Social Development Social Inclusion Innovation Sustainability Small Business

4. 4 The strategic role of development financing Long-term financing is aimed at Long-term financing is aimed at More and better work opportunities More and better infrastructure More and better competitive capabilitiesMore and better competitive capabilities As markets are pro-cyclical A development bank is an instrument of systemic stabilityA development bank is an instrument of systemic stability But… Attention!! Scale and scope matters… Banks must have adequate resources and instrumentsBut… Attention!! Scale and scope matters… Banks must have adequate resources and instruments

5. 5 Disbursements Converted to US dollar on disbursement dates The crisis has changed the size of the BNDES Source: BNDES 34 82.3 96.3 71.6 49.8 24.1 19.8 13.8 11.7 0 20 40 60 80 100 200320042005200620072008200920102011 US$ billion Long Term Long Term + Countercyclical

6. 6 Source: Brazilian Central Bank Credit to GDP and BNDES share The crisis BNDES’ Counter-cyclical role

7. 7 BNDES Non-Performing Loans Brazilian Financial System Average NPL - Default Rate Source: BACEN (Mar. ’12) 3.6% 0.50% 3.10% 0.60% 2.10% 0.68% 0.11% 0.15% 0.20% 0.15% 0.14% 2002200320042005200620072008200920102011

8. 8 Instruments  Direct operations  Indirect operations  Financing & guarantee for SMEs  Export finance  Project finance  Equity investments  Grants Development banks: scale and scope matters

9. 9 Indirect Operations Accredited Financial Institution ENTERPRISE Indirect Operations Companies financed through an accredited financial institution Information & Relationship

10. 10 Indirect Operations Disbursements and Number of Operations

11. 11 During the crisis: pro-active policies sharply decrease the cost of capital Source: BNDES Growth Rates (3Q2008= 100) GDP Household consumption Government Investment Exports PSI Investment Support Program in which interest rates are reduced set-09 out-09 nov-09 dez-09 jan-10 fev-10 mar-10 abr-10 mai-10 jun-10 jul-10 ago-10 set-10 out-10 nov-10 Média abr-nov/10 214.5 Início do PSI PSI launched BNDES’ monthly disbursements to acquire capital goods (R$ million)

12. 12 Statements and beliefs

13. 13 Development, financing and the State Contemporary State: focus on building up competences => more and better jobs. Developing financing for the long term demands => more State and more Market. Public banks are essential for systemic stability and the permanent availability of investment financing. To be effective, a Development Bank must have the necessary means: resources and instruments.

14. 14 Istanbul, Turkey, April 26, 2012 35th ADFIAP Annual Meetings Development Financing in an uncertain world: the BNDES experience www.bndes.gov.br/english /