BNDES, AIIB sign cooperation for funding of development initiatives in Brazil

AIIB to provide funding of $2.93 billion) for development initiatives that aim to enhance transport infrastructure and energy connectivity across the Brazil

By: Muhammad Arif, Editor NSN.Asia

Rio de Janeiro: The Brazilian National Bank for Economic and Social Development (BNDES) and the Asian Infrastructure Investment Bank (AIIB) have signed a cooperation agreement to boost funding of R$16.7 billion ($2.93 billion) for initiatives that aim to enhance transport infrastructure and energy connectivity across the Brazil.

The memorandum for a cooperation was inked on November 18, 2024, on the sidelines of the G20 being held in Rio de Janeiro, Brazil, the Latin America’s largest economy.

This BNDES and AIIB partnership aims to boost funding for initiatives aligned with Brazil‘s Climate Fund and Growth Acceleration Program. These projects will focus on enhancing transport infrastructure and energy connectivity across the nation.

The AIIB funding will also help Brazil to improve digital networks and address water and sanitation needs in various regions. The cooperation extends beyond standard infrastructure development, officials of BNDES stated.

The financial package includes plans to aid reconstruction efforts in Rio Grande do Sul, a state recently hit by severe flooding. Additionally, the banks will support urban development projects in Belém, preparing the city to host the COP30 climate conference.

“The memorandum signed with AIIB proves that BNDES has resumed its mission of promoting economic and social development and that it has ample capacity to diversify funding and seek important international partners to finance sustainable and infrastructure projects that benefit both Brazil and Asia,” said BNDES President Aloizio Mercadante.

In his remarks, BNDES President Aloizio Mercadante stated that agreement with AIIB is a significant milestone and it demonstrates BNDES‘s renewed commitment to driving Brazil’s economic and social progress.

BNDES said in a statement that investments directed to growth-targeted projects must promote economic integration between Brazil and Asia in the sectors of transport infrastructure, energy connectivity and sanitation, among others.

The cooperation also aims to raise private capital for infrastructure projects, the Brazilian development bank added.

The deal also showcases the bank’s ability to diversify its funding sources and attract international partners. The AIIB, headquartered in Beijing, is a relatively new player in global development finance.

Established in 2016, it has quickly grown to include 109 member countries. Despite its Asian focus, the bank has shown interest in projects worldwide, including in Brazil.

This agreement reflects a growing trend of international financial cooperation. It aims to address global challenges like climate change and sustainable development.

The partnership also highlights Brazil’s increasing role in the world economy and its commitment to green growth strategies.

However, some observers caution against over-reliance on foreign investment for national development. They argue that such deals may come with hidden strings attached or compromise national sovereignty.

Critics also question whether large-scale infrastructure projects truly benefit local communities or mainly serve corporate interests. Despite these concerns, the BNDES-AIIB agreement represents a significant influx of capital into Brazil’s economy.

It has the potential to create jobs, improve infrastructure, and boost economic growth. The focus on sustainable projects also aligns with global efforts to combat climate change.

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank with a mission to improve social and economic outcomes in Asia

AIIB was launched by China for reducing trade barriers, opening up services for trade and investment, and harmonizing various regulatory barriers to trade.

As a Chinese initiative, AIIB has been vital instrumental for infrastructure development in Asia and beyond under yhe Belt and Road initiative of Xi jinping.

AIIB began operations in 2016 with 57 founding Members (37 regional and 20 nonregional). By the end of 2020, we had 103 approved Members representing approximately 79 percent of the global population and 65 percent of global GDP.