In a significant move aimed at advancing South American integration and enhancing trade while reducing transportation time to Asia, the Brazilian government has successfully orchestrated the raising of $10 billion from multilateral and development banks for infrastructure projects.
The Brazilian development bank, BNDES, is set to contribute $3 billion to this endeavor, primarily for funding projects proposed by Brazilian states and municipalities seeking to connect to this regional network, as announced by the Planning Ministry.
Simultaneously, the Inter-American Development Bank (IDB) will provide $3.4 billion, the Development Bank of Latin America (CAF) will allocate $3 billion, and the regional fund Fonplata will contribute $600 million to support various countries in the region. Planning Minister Simone Tebet expressed the desire to involve additional banks in the future, including the World Bank and the New Development Bank (NDB) of the BRICS.
These funds will be directed into a dedicated fund, the governance of which is still in the process of being developed.
Minister Tebet revealed that the initiative stemmed from a comprehensive mapping exercise conducted by the federal government in collaboration with 11 Brazilian states bordering neighboring countries. This exercise identified 124 essential projects within Brazil, all of which play a pivotal role in five integration routes across the region.
According to Tebet, these routes hold the potential to be completed by 2027.
The minister explained that federal funding was already allocated to these projects, which are part of the portfolio of 9,200 projects outlined in Brazil's Growth Acceleration Program (PAC). However, the resources from the consortium of institutions will now be directed toward enabling neighboring countries to connect their logistics infrastructure networks to these key points.
Tebet highlighted that while Brazil has traditionally focused on coastal states targeting Europe through the Atlantic Ocean, the increasing importance of the Asian market has become evident in terms of numbers and mileage. She estimated that once these integration routes are finalized, potential time savings in transportation to Asia could reach up to 20 days.
However, Minister Tebet noted that while the potential benefits are significant, there is currently no estimate regarding the extent to which Brazil's trade flow could grow as a result of these initiatives.