BNDES: A bank with a history and a future

Transcription

BNDES:
A bank with a
history and a future
BNDES:
A bank with a history
and a future
BNDES:
A bank with a history
and a future
BNDES: 60 years advancing
development in Brazil
In 2012, the Banco Nacional de Desenvolvimento Econômico e Social (BNDES – the Brazilian Development Bank)
celebrated its 60th anniversary. At this special time, the institution has drawn on its memory and is using its history
as a basis to reflect upon its future plans for the development of the country.
Since it was founded in 1952, the BNDES has been a real driving force behind change, financing projects and
enterprises that have advanced Brazil’s development. As a result, the BNDES’ story, to a certain extent, and that of
Brazil’s economic development blend together.
Over recent years, our economy has stabilized, gathered strength and fortified its fiscal and exchange bases,
making its way back to an upward path of sustainable development. There are, however, significant challenges
that must be faced before we can usher in a large cycle of public and private investment, which is able to boost the
aggregate rate of investment in the economy closer to 25% of Gross Domestic Product (GDP). Only through added
investment and innovation will it be possible to reduce regional and social inequalities, improve social and urban
infrastructure; boost progress in industry; and sustain solid increases in productivity to guarantee competitiveness
in the Brazilian economy in a fiercely competitive world. Only through innovation and investment will it be possible
to ensure an increase in Brazilian exports, especially in high-aggregate-value goods and services, and to foster
socio-environmental sustainability. Only through more investment and more access to credit for micro and small
businesses can social and production inclusion be feasibly achieved, thus ensuring the consistent and irreversible
reduction in poverty.
This publication tells the story of the path the BNDES has taken, with comments from employees, ex-employees,
clients and collaborators who have helped shape and build the institution. These comments form part of the
Bank’s archives, which, since 1982, has been compiling valuable records on its history. The wide array of views and
experiences of those who have taken part and continue to participate in this story are a reflection of the experiences
throughout the last 60 years. Images and documents – the result of research in the public, institutional and personal
records of those who have contributed – complete the project.
This work seeks to synthesize the BNDES’ important contribution to the country’s economic and social
development in its numerous sectors: infrastructure, basic inputs, regional development, the environment,
agribusiness, industrial development, trade and services, exports, social infrastructure and culture.
Over the past six decades, the country has faced a great many challenges, but has managed to move forward. The
results are positive. The BNDES’ historical moments, all presented here, should be seen as a source of inspiration
for new challenges and, especially, the vital improvement of our institution within a scenario of increasing banking
and financial competition. For the Brazilian economy, such an optimistic scenario is the result of heavily reduced
real interest rates, persistence in overcoming “short-term thinking,” and the unfounded financial indexing, which
had made our savings and credit system so atypical when compared to more advanced standards. Faced with this
challenging scenario, the BNDES needs to innovate and accelerate change to continue to be a leading, strong,
efficient and exemplary developmental institution.
Luciano Coutinho
President of the BNDES
Six decades overcoming obstacles
To celebrate its 60th anniversary since its foundation, among other events and activities held during 2012, the
BNDES decided to share its story in this new publication. The result of a partnership between the BNDES and
the Museu da Pessoa (People’s Museum), this project is part of a wider context, undergoing development since
2011, through historical research, the recording of interviews, as well as the collection of photographs and
documents relating to the history of the BNDES – record that will be included in the institution’s archives.
Over these last six decades, the Bank has experienced some different periods, the result of a variety of
historical contexts this country, and the rest of the world, have undergone. Brazil has changed, the challenge for
development has changed, and the BNDES has understood how to adapt to the new realities and face all these
changes. However, one thing has remained and will continue into the future as though it were the Bank’s brand:
the competence of its staff and its commitment to the country.
Throughout this book, we have sought to show that the BNDES’ efforts have remained in step with the
central initiatives of the federal government over the years, helping to create better economic conditions that
have transformed Brazil into a better country. The book is divided into five sections, four of which cover the
considerable challenges that have been taken on over the last six decades.
The first part covers the government’s efforts to develop the country’s industry, which had started even before
the Bank was founded, in 1952. This period stretches until the end of the 1970s, following the second oil crisis, an
event which defied economies around the world over and forced governments to revise their economic policies.
The second part addresses Brazil’s political transition, with the reestablishment and consolidation of
democracy, characterized by expanding inflation and a shrinking economy. The third section addresses the
period the currency was stabilized, a time that brought about significant improvements for the population.
The fourth part, chronologically ongoing, demonstrates that the current challenge is to establish a more
substantial regional balance and better distribution of wealth to transform Brazil into a country that is more
just and free of poverty.
The story told in this publication relies on observations from people who have taken part and others who
are now taking part in the construction of the BNDES. As such, the last part of the book is dedicated to those
who have been part of such history and who, through their comments, have contributed to preserving the
cherished values of the Bank. This is only a small sample of those who represent a small piece of the BNDES’
identity, selected from more than 200 interviews which make up a precious memory bank. A few specific issues
guided the selection of the passages chosen here, such as the role of the Bank and its growth over the years,
the experiences and changes in working life, the importance of preserving memory, and recalling certain
individuals who played a special part in this story.
The statements used in this publication were collected at different times: 1982, 1992, 2002 and 2011-2012.
During the last two stages, collecting people’s comments followed the methodology of the People’s Museum,
an organization that believes in the strength of each individual’s story as an element of social change.
Professionals from many different areas, occupying many different positions, were interviewed, including men
and women, new employees and those who have retired. This history is a work in progress. The BNDES, upon
creating a memory program involving the systematic gathering of comments, is valuing its employees, while
giving a human and humane touch to its own history. It is part of such history that we will accompany over
the next few pages.
Museum of the Person
11
Designing the future
12 Towards industrialization and
urbanization
Contents
Brazil | 1950s
15 Planning the country
The background to the creation
of the BNDES
21 An instrument for economic
development
The creation of the BNDES
28 The BNDES and the Target-based
Development Plan
The JK administration
36 Crisis and transformation
The Jânio Quadros and
João Goulart administrations
42 Moment of transition
BNDES | 1960-1964
46 About-turn! About-face!
The Castelo Branco and
Costa e Silva administrations
50 New paths and a new role
BNDES | 1964-1969
57 Brazil, the wonder child
The Médici and Geisel administrations
65 Growing with Brazil
BNDES | 1970-1979
Since its foundation, the BNDES has contributed to the
recovery, expansion and modernization of the Brazilian railway
network, supporting projects such as the Ferrovia Paulista S.A.
(FEPASA – Paulista Railway). São Paulo, 1977
71
In search of lost time
72 Putting on the brakes
The Figueiredo administration
75 Adjusting the framework
BNDES | 1979-1984
82 Noting the difference:
the entry of the ‘S’ [1982-1990]
89 The citizens’ constitution
The Sarney administration
92 New adjustments
BNDES | 1985-1990
98 The challenge of democracy
The Collor and Itamar Franco
administrations
105 A new role
BNDES | 1990-1994
149
113
Competitive and sustainable
development
150 An historic change
Lula’s first administration begins
The challenge of stability
152 Development with inclusion
114 A battlefield
158 The return to growth
The Fernando Henrique Cardoso
administration
117 Returning to growth
BNDES | 1995-1998
122 Towards the globalized world
The commercial opening of Brazil |
1995-2002
124 Opening frontiers
BNDES | 1995-2002
129 New efforts: Solidarity Community
and Brazil in Action | 1995-1998
131 The return of social agenda
BNDES | 1996-2002
136 Valuing diversity: BNDES and culture
138 Facing the storms
FHC’s second administration
141 Much more effort
BNDES | 1998-2002
BNDES | 2003-2004
Lula’s first administration
161 Expanding the agenda
BNDES | 2003-2006
168 Accelerating growth
Lula’s second administration
170 Renewal to support development
BNDES | 2007-2010
177 A setback in the way
Lula’s second administration
179 Constructing the future
BNDES | 2008-2010
186 The BNDES and socio-environmental
development
190 The path to sustainable growth
The Dilma Rousseff administration
193 Valuing the past to build the future
197 A bank of memoirs
207 The storytellers
213 References
215 Credits for images
216 Technical index
The BNDES provided support to set up
the Brazilian steel industry in the 1950s.
Today, Brazil has one of the largest and
most modern, integrated steel sectors in
the world
Designing the
future
Towards industrialization
and urbanization
[Brazil | 1950s]
W
hen the BNDES was founded, on June 20, 1952, Brazil was very
different. Since then, many areas simultaneously underwent
several swift changes. It was at that time that the country started
to modernize. The BNDES accompanied such changes and recognized the
need to be dynamic, taking part in many of these transformations.
At the beginning of the 1950s, Brazil was basically an agricultural country,
with very few companies. Coffee and sugar still sustained the economy,
making it highly vulnerable. A great deal of the products consumed in the
country were still imported. The number of products coming from the United
States (US) surpassed those coming from European countries.
Society and the ways of life were very different. The Brazilian population,
of around 52 million, was almost four times smaller than it is today. Trams
still rolled around the country’s largest cities, which were still not actually
that big. In the few urban centers that existed, life was much calmer. It
is thought that, at the end of 1950, there were around 400,000 vehicles,
including passenger cars, buses, motorcycles, trucks and ambulances. Today,
the number of automobiles has topped 70 million.1 The use of telephones was
limited to just a few regions; some 70% of phones were concentrated in the
Federal Capital – Rio de Janeiro at that time – and in the state of São Paulo.
Making an interstate call was a very time-consuming operation.
The 1950s was a defining decade for the direction Brazil would take. The
country edged into a very enthusiastic period, and the transformations that
took place at that time created a general feeling of optimism. A number
of novelties arrived in the country, laying the way for new habits. The first
television broadcast in Latin America was made in São Paulo: TV Tupi went
on air in September 1950. TV sets were still very small and were all imported,
while programs were broadcast live; videotape did not exist nor, therefore,
did reruns. Another novelty was the inauguration of the first supermarkets,
something that established a new form of consuming, quite different to what
people had become used to: self-service.
1
12
Departamento Nacional de Trânsito (National Transport Department). 2012 fleet. Available at: <http://
www.denatran.gov.br/frota.htm>. Accessed on: September 10, 2012.
Renewal was the order of the day: a large soccer stadium, Maracanã, was
built to host the 1950 World Cup Soccer Championship, held in Brazil that
year. At the time, it was the largest stadium in the world, and Brazil’s first
world cup title would also be claimed in this decade, albeit some years later
in Sweden, in 1958. Culture, too, was being renewed. São Paulo’s Modern Art
Museum’s 1st International Biennial took place in 1951, and the public had
access to 2,000 works of art from 21 countries. Brazilian cinema gathered
more strength with a movement founded by a group of young filmmakers
dedicated to focusing on the reality of the country and producing lowerbudget films. Cinema Novo, or New Cinema as it became known, introduced
innovations and topics yet unexplored in Brazil. At the end of the decade,
bossa nova would transform Brazilian popular music, winning over
thousands of fans all across the world.
Ideological differences gave rise to intense debates and drove the politicaleconomic world forward. The direction the country should be taking was high
on the list of discussion topics, and the political dispute over the monopoly of
oil was one of the most heated.
A truck responsible for selecting
and editing scenes for TV Tupi.
Rio de Janeiro (RJ)
Honoring the name
From the moment it takes the name Bank, the institution
has to loan money with a return; if it is “National,”
it needs to be active throughout the country; and if
it concerns “Economic Development,” it should be
committed to progress. I have the impression that the
name itself positively conditioned staff at the BNDES to
operate under these terms: seeking return, operating
throughout the country, and supporting the economy.
Juvenal Osório Gomes, economist, interviewed in 1982
In October 1950, Getúlio Dornelles Vargas was
reelected2 and the people, with their customary good
humor, did not let the moment pass, singing a marching
song in recognition that the politician who had spent
15 years as president was back: “Put up the old man’s
portrait once again / Put it back in the same old place /
The old man’s smile will get everyone to work.” Even
while he was not in government, Vargas continued
to be the most influential figure in Brazil’s political
universe due to the immense popularity he had won by
consolidating the labor laws in 1943, which protected
workers’ rights.
Getúlio Vargas was sworn in as President of the
Republic in 1951, ready to fulfil his campaign promises
in a nationalist policy focused on the labor issue and the
process of industrialization that had started during the
Estado Novo, or New State. A number of measures were
taken to encourage the country’s economic development.
Without a doubt, one of the most important of these
measures was the founding of the Banco Nacional de
Desenvolvimento Econômico (BNDE – National Economic
Development Bank) in 1952, to embody a policy of
fostering industrialization in the country.
The following year, the developmentalist proposal
was re-confirmed with the creation of the Petróleo
Brasileiro S.A. (Petrobras). By means of Law Nº. 2,004,
of October 3, 1953, the government granted this
institution a monopoly for oil exploration and
production in the country, thus meeting the nationalist
call from a large part of the public which had, for years,
been rallying Brazil with the O petróleo é nosso! (The oil
is ours!) campaign. Oil companies in Brazil would be
mere service providers or suppliers of materials, holding
trade agreements with Petrobras.
The two new State-owned bodies would help
build a modern country, pushing the way forward
for a production structure that was well on its way to
becoming much more dynamic.
2
14
Getúlio Vargas was the President of the Republic in two different periods.
The first time, between 1930 and 1945, may be split into two periods:
between 1930 and 1934, when he was head of the provisional government;
between 1934 and 1937, after having been elected by the National
Constitutional Assembly of 1934; and between 1937 and 1945, the period
known as the New State, taking place after a State coup and being notable
for its authoritarian government. The second period was short-lived: it
started in 1951, following his reelection by means of a democratic vote, and
continuing until his suicide in 1954.
Planning the country
[The background to the creation of the BNDES]
S
ince the 1930s, the Brazilian government had sought new references
to strengthen the economy, considering its essentially agrarian status
and the events that were taking place on the world stage. The 1929
international financial crisis, caused by the collapse of the New York Stock
Exchange, had directly affected Brazil with a sharp fall in the price of coffee, the
country’s main export product. The effects of the 1929 crisis showed that Brazil
needed to diversify its range of products so that it would not be so dependent
upon coffee. It was also necessary to start industrialization with a view to
reducing expenditure on imports and stabilizing the balance of payments.
During the New State, Getúlio Vargas had started to create large-scale
State-owned companies, such as the Companhia Vale do Rio Doce (Vale do
Rio Doce Company) in 1942, the Companhia Siderúrgica Nacional (National
Steel Company) in 1943, the Companhia Nacional de Álcalis (National Alkalis
Company) in 1943, and the Companhia Hidro Elétrica do São Francisco (São
Francisco Hydroelectric Company) in 1945. Despite the already existing
companies, Brazil’s economy was still vulnerable and dependant upon
imports for the vast majority of domestically-consumed products.
In spite of all the consequences and all the suffering caused by the
Second World War, Brazil took advantage of the moment to boost its own
economy. The war had a profound effect upon the trade of European nations,
stimulating the demand for products from other regions. In such a situation,
Brazil’s raw materials were in demand, and the country’s economy grew.
By the end of the global conflict, the country’s exchange reserves had
mushroomed notably, thus allowing industrial expansion.
The international situation fostered a strengthening of relations with
the US, allowing resources to flow into Brazil, which in turn led to the
implementation of a number of enterprises. In addition to this, in 1942, the
Brazilian government managed to invite an American technical team that
became known as the Cooke Mission, due to the name of its leader, Morris
Llewellyn Cooke. At the same time, a Brazilian technical mission was put
together to accompany the work of the Americans.
15
The main objectives of the mission were to increase the production
of essential commodities; adapt Brazilian companies to more advanced
technology in order to produce substitutes for those products normally
imported; improve the means of public transport; and better channel
internal savings to the activities in the industrial sector. The Cooke
Mission is considered to be the first attempt to make an all-encompassing
diagnosis of not only the Brazilian economy, but also its problems within a
perspective of fostering the development of the country. Some years later,
in 1948, Brazil also welcomed the Abbink Mission, led by John Abbink and
Otavio Gouveia de Bulhões.
The constant shift in the world scenario since World War II had ended
stimulating the economic development of the country even more, as well
as giving rise to a new period of industrialization, which became even more
effective when the Plano Nacional de Reaparelhamento Econômico (the National
Plan for Economic Renewal) was created in 1951. Among this plan’s targets was
the expansion of basic infrastructure services, most importantly in transport
and energy, which were seen as obstacles to the process of industrialization.
However, there was the issue concerning the lack of basic resources to
implement the Plan for Economic Renewal. The Brazilian government had
reached an agreement with the US government for economic cooperation
from the International Bank for Reconstruction and Development (IBRD)
and the Export-Import Bank (EXIMBANK), as well as a visit from a new team
of technical experts to aid in Brazil’s program for economic development.
However, a counter-contribution was needed from the Brazilian State to
guarantee that resources in foreign currency were sent and that the plan
was implemented. In order to obtain these resources, it was decided that a
compulsory loan be created, which would be paid off through an additional
charge in income tax.3 In 1951, the Fundo de Reaparelhamento Econômico
(Economic Renewal Fund) was created, making it possible for the Vargas
government, in its second term in office, to implement its development plan.
The group comprising almost 200 American and Brazilian technical
experts received the name the Comissão Mista Brasil-Estados Unidos – CMBEU
(the Brazil-United States Joint Commission), operating between July 19, 1951,
and July 31, 1953, under the wing of the Ministry of Finance. During this
period, the CMBEU analyzed Brazil’s main economic problems. The teams
forming the new commission took advantage of the studies carried out by the
Cooke Mission and the Abbink Mission as reference material.
3
16
Law Nº. 1,474, of November 26, 1951, provided a legal basis for the additional charge.
Via the hands...
Once the war ended, the United States was responsible for a great deal
more than half of the world’s total industrial production, and therein lay
the possibility of taking from within to distribute elsewhere. They started
taking an interest in rebuilding Europe and Japan, and building Brazil. The
United States represented financial capitalism that was different to that of
Europe, and they did not hesitate to create an industrial capitalist system
in other countries that would rival their own. There were no European
capitalists that would admit this: least of all the English. For the English,
financial capitalism was a tool of industrial capitalism and, therefore, they
were not about to create an industrial culture that would compete with
their own outside England. The United States, therefore, entered into an
advanced phase of evolving capitalism, and we benefitted from this. Thanks
to this, we were able to start discussing the problem of development and
planning, and this became part of our lives via the hands of Americans.
The Brazil-United States Joint Commission was one of the organs through
which the United States tried to exercise its supremacy over the world
economy and organize it in its own way. This does not mean to say that the
style in which they organized it was hostile to our own development.
Project 1 and attachments of the BrazilUnited States Joint Commission, referring
to the Estrada de Ferro Santos-Jundiaí
(Santos-Jundiaí Railway)
Project 2 of the Brazil-United States Joint
Commission: modernizing couplings
and brakes, and purchasing wagons for
the Cia. Paulista de Estrada de Ferro
(Paulista Railway)
Ignácio de Mourão Rangel, economist, interviewed in 1982
All the energy
I have taken part in two large-scale planning studies
involving electrical energy. We had worked hard
searching for information, so the contribution that
Itamaraty asked me to make made sense. My work was
recognized, and it qualified me to come up with this
small memorandum, highlighting general information
on electrical energy. It was most definitely this document
that led to the suggestion that I take part in the BrazilUnited States Joint Commission when it was created. On
the commission, I became informally responsible for the
electrical energy sector, for almost all that was studied
in this area. When I was not taking part directly, I was at
least aware of it.
Lucas Lopes, engineer and economist, interviewed in 1982
At the heart
As an intellectual interested in studies of Brazilian public
life, I took part in the discussions in the Brazil-United States
Joint Commission, which led to the idea of founding the
Bank. I had a very good relationship with the president of
the Brazilian side of the Commission, the engineer Ary Torres,
and also with Roberto Campos and Glycon de Paiva. These
were people who were at the center of deliberations and who,
with the support of President Vargas, of course, organized
the creation of the BNDES. The BNDES is at the heart of the
development process.
Hélio Jaguaribe, political scientist, interviewed in 2002
17
Different to previous missions, the Joint Commission
achieved concrete results. The aim was to create
the right conditions to increase the flow of public
and private, domestic and foreign investment in
order to accelerate Brazil’s industrial and economic
development. The immediate objective was to prepare
specific projects for capital investment in basic sectors,
which were capable of ensuring balanced growth in the
national economy.
In an interview given to the Diário de São Paulo
newspaper, the president of the CMBEU’s Brazilian
division, Ary Torres, commented on the commission’s
work and the focus on efforts:
Even before the commission had officially been
installed and before our American colleagues had arrived,
we held some extraordinary meetings with the directors
of the country’s leading railroads, who revealed the
specific situations of their respective lines and provided
a preliminary summary of the technical and financial
assistance that would be needed.
Following this, preparations for detailed projects
began, which both the Exim Bank and the International
Bank require to justify the concession of credit in
foreign currency.
The commission’s technical experts visited the
railroads to complete their collection of data and to
establish an extremely close working relationship with the
railway engineers. At the commission’s headquarters, in
Rio, a specialized technical office was set up, covering the
Permanent Track, Locomotion and Transport sectors. If
the insecure nature of transport immobilizes our internal
means of distribution and our means of exchange with
overseas markets, then the lack of energy is suffocating
our industrial development. Many companies are obliged
to enter into the costly process of installing their own
sources of energy. The commission focused its efforts
on the electrical energy sector in which six projects had
already been approved.
Published on July 24, 1952
In total, 41 projects linked to energy and transport
were presented. Each project focused on a bottleneck
that was holding the development of the country back.
To administrate the Renewal Fund and move these
projects forward, it was suggested that a development
bank be structured.
First time
Through the Joint Commission, this was the first time
that projects had been analyzed. Some projects were not
fully implemented. To have an idea, there were navigation
projects on the Tietê, Guaíba, and Jacuí Rivers etc. Some
things are being put back on the table now [1982] by the
Ministry of Transport, but they had already appeared in
the Joint Mission’s reports.
Amaury José Leal Abreu, engineer, interviewed in 1982
A culture of planning
When the Brazil-United States Joint Mission was created,
the idea was to organize a program for economic renewal,
given that Brazil’s economic infrastructure had been
substantially damaged during the war due to the scarcity
of imports and investments. Such damage was related
to rail, port and road systems. Basic products were also
significantly scarce: cement and energy, the raw materials
for industrialization. The Brazil-United States Joint Mission
was an attempt, primarily, to plan these infrastructure
sectors and, secondly, to rigorously create a planning
strategy. The Joint Commission, therefore, represented a
preparation to receive foreign resources and for a blend of
planning technology.
Roberto de Oliveira Campos, economist and diplomat,
interviewed in 1982
18
The role of the Economic Advisory Group to the
Presidency of the Republic should also be highlighted
since it was charged with studying and formulating the
main efforts put forth during the second term of the
Vargas government from a more technical perspective.
Under the command of the economist Rômulo Almeida,
the group comprised Ignácio de Mourão Rangel,
Cleantho de Paiva Leite, Jesus Soares Pereira and Tomás
Pompeu Acióli Borges, with Glycon de Paiva Teixeira
and Roberto Campos providing occasional input.
The majority of projects developed by the Economic
Advisory Group were connected to the energy sector.
Among these projects, those which deserve special
mention include the proposals to create Petrobras, the
Plano Nacional de Eletrificação (National Electricity
Plan), as well as a fund to guarantee projects in this
area, Centrais Elétricas Brasileiras S.A. (Eletrobras –
the Brazilian electric energy company) and the Plano
Nacional do Carvão (National Coal Plan). Other important
proposals in different fields included the creation of the
Campanha Nacional de Aperfeiçoamento de Pessoal de
Nível Superior (CAPES – Coordination of Improvement of
Higher Education Personnel), the Carteira de Colonização
do Banco do Brasil (Bank of Brazil’s Colonization
Portfolio), the Instituto Nacional de Imigração (National
Immigration Institute), the Comissão de Política
Agrária (Agrarian Policy Commission), the Comissão de
Desenvolvimento Industrial (Industrial Development
Commission), the Banco do Nordeste (Northeastern Bank)
and the implementation of administrative reform.
The Economic Advisory Group and the CMBEU
prepared the basic infrastructure projects that were
essential to nationwide economic development. The
National Electricity Plan provided a basis upon which
the Joint Commission could select projects to receive
support. The Economic Advisory Group collaborated
in proposing to create a development bank, which was
considered essential in providing the necessary push
for the national industrialization process. The Fundo
Nacional de Eletrificação (National Electricity Fund) fell
under the management of the BNDES4 as recommended
by the Economic Advisory Group. Until Eletrobras
was founded in 1962, the BNDES would also bear the
responsibility for providing support for the country’s
electrical energy projects.
4
Organizing projects
The Joint Commission never had its own resources other
than to keep its offices up and running. It studied the
projects, which were then presented to the EXIMBANK for
financing. Among the first projects were those for the Salto
Grande do Santo Antônio and Itutinga. We were already
working on these projects through Companhia Energética
de Minas Gerais S.A. [CEMIG – Minas Gerais State Energy
Company], so it was easy to adapt our presentation to the
Commission’s guidelines. We developed our projects with
expenditure agendas, considering the effects of inflation
and establishing the cash flow that would be required to
implement the project, guaranteeing the sources of the
funds. At a later stage, all this came together as a planning
strategy in Brazil, but at that time it did not exist. Previously,
if there were cash available when estimates were presented,
the project was started, then, when the money ran out, you
asked for some more. This was the working framework for
Brazil’s large-scale projects. The Joint Commission started to
put the projects in order, but it took a few months to do so.
The right reply
I think that at the same time as this body [the Joint
Commission] was created here in Brazil by the Americans,
other similar groups were created, with similar names, in
lots of countries. I doubt whether these groups remained
the same later, as they evolved differently, responding to
the specific conditions in the countries where they were
set up. Therefore, if we want to know why the BNDES was
what it was, we should look for the answer in Brazil, and
not in the plans of those who dreamed it up.
Although the Bank only came to be called ‘BNDES’ when ‘Social’ had been
added to its abbreviated name, in 1982, this text uses the current acronym.
19
Infrastructure
Eletrobras was founded in June 1962 and was extremely
important to the country’s development. At that time,
the installed capacity in Brazil was 5.8 GW. The country
now has 116.8 GW, of which Eletrobras provides 36%. The
Bank’s support for Eletrobras can be highlighted as an
example of its efforts in the infrastructure sector.
Eletrobras works predominantly with hydraulic and
nuclear energy, both of which are clean forms of energy.
Angra 1 and 2 have almost 2,000 MW and Angra 3 will have
almost 1,500 MW. We are also building a number of wind
farms in both the South and the Northeast. This means
there is about 500 MW of wind energy under construction.
This is rather significant in terms of generation. Besides this,
we are currently taking part in building Belo Monte with
a share of almost 50% in the project, which will provide
11,233 MW; Santo Antônio, with 3,150 MW; Jirau, with
3,750 MW; Teles Pires, with 1,820; and Angra 3, with 1,405
MW. So, in addition to the wind farms and a small amount
of experience in terms of solar energy, we have invested
heavily in the construction of generation sites. What is
important in all this is that the BNDES is fundamental in
financing these capital-intensive projects. They are projects
that demand a large sum of resources and support from the
BNDES has been unconditional, allowing this development
in the infrastructure of our country.
Armando Casado, director of Finance and
Investor Relations, Eletrobras
20
To provide some perspective, Casado highlights the continuing
partnership with the BNDES and the importance of investment
in infrastructure for the growth of the country:
Having energy and having the capacity to have clean
energy at a low cost can deeply benefit our country.
Wind energy plays a particularly important role as it
has an asymmetrical relationship in terms of reserves. In
other words, the winds come mostly when the reserves
are empty. This means that wind energy is essential for
us to maintain the balance in the levels of our reserves.
This is why wind energy, which is a complimentary
form of energy, is so important to Brazil’s energy grid.
No one would dare consider discussing these sorts of
project without having them screened by the BNDES
and its financial support. These new projects are being
considered in the Amazon and are being made possible by
transmission lines, such as that in Rio Madeira consisting
of 2,520 km of dual-circuit line. This is of a continental
magnitude and it makes one proud to speak of projects on
this scale.
The creation of the Eletrobras centralized the technicalfinancial and administrative aspects of the energy sector. In
the photograph is Furnas, one of its subsidiary companies, at
the beginning of the 1960s
An instrument for economic
development [the creation of the BNDES]
T
he Brazilian Development Bank was founded on June 20, 1952, by
Law Nº. 1,628, as a government agency with administrative autonomy
and registered as a company, initially under the jurisdiction of
the Finance Ministry. The Bank’s initial capital, 20 million cruzeiros, was
provided by the National Treasury. Throughout its first years, the main
source of resources was the Economic Renewal Fund, made up of additional
charges on income tax,5 and obligatory deposits from the technical reserves
of insurance and capitalization companies. The BNDES was responsible for
negotiating foreign loans to finance the Renewal Plan and to implement
related financial operations. Besides financial support, the BNDES had to
carry out economic analyses and identify the country’s main problems,
thereby defining a course of action. The BNDES took on a structuring
role and became a direct agent in those sectors that required long-term
investment. With this, it was up to the State to not only guarantee and foster
industrialization, but also take responsibility for modernizing the country.
A reason for being
It was the Joint Commission that suggested the creation of the BNDES, and
it was minister Horacio Lafer that did so. As part of Lafer’s cabinet, Guilherme
Arinos coordinated the wording of the statutes. The Bank’s objective was
to raise the counter-funding in cruzeiros to match foreign financing so as to
implement projects approved by the Joint Commission. Without this counterfunding, there would have been no foreign financing. This was the reason why
the BNDES was created and why its whole policy was formulated.
Headquarters of the BNDES on Rua Sete de
Setembro, 48, downtown Rio de Janeiro (RJ)
5
The additional amount charged on income tax was collected for five years and reimbursed over the
subsequent five years; at a later stage, this period was extended for a further 10 years.
No over theorizing
The main concern was to establish priorities, but the
problem was remarkably simple: there was no need for
any excessive theorizing. The first step in theorizing the
developmentalist thinking was to free up the bottlenecks
in the economy, and these were mainly in energy,
transport and infrastructure.
interviewed in 1982
The press at the time received the news of the
creation of the new government organ quite positively.
Expectations were the best possible despite a number of
doubts concerning the politicization of the institution.
A passage published in the O Estado de S. Paulo
newspaper on July 27, 1952, illustrates the moment
rather well: Inaugurating the work of the recently
founded Economic Development Bank, the minister of
Finance, Horacio Lafer, stressed that the mission of this
credit institution would be to implement government
decisions, allocating the maximum amount of resources
in the recovery of public services that are essential to our
country. With this recovery, the government is certain that
production will increase, the cost of living will fall, and
our wealth will develop.
If the recovery program, which covers transport
services and better distribution of electrical energy, is
implemented as it has been outlined, it is possible that the
government’s promises will not have been hollow words.
It is also up to the Bank to supervise the use of resources
obtained from domestic and foreign financing, so as to
ensure that investments will not be made differently to the
way they were planned.
There is no doubt that the new Bank will improve the
organization of national credit, and it may contribute to
Brazil’s economic development. However, this credit will
only be definitively organized when Congress votes on the
different projects it is currently studying in relation to the
Republic’s banking system.
What we were lacking
I believe that it was the smartest thing that had been
done because, over time, I realized the main problem
for underdeveloped countries, in their structural
transformations driven by industrial development, was
of a financial nature since there was no way to finance
projects in the long-term; there was no banking system
suitable for this and international financing at the time
was both rather difficult and highly monitored. It was
controlled by the World Bank. What we were lacking was
a large financing institution to enter the specialized field
and rally the mass of resources required for the changes
the economy was going to demand in the 1950s.
Celso Monteiro Furtado, economist, interviewed in 1982
22
The Pedro II railway station, 1972, now the Central do
Brasil station, Rio de Janeiro (RJ)
The Board of Directors comprised the president of
the Bank and three others: two managing directors
and a deputy managing director. The government
chose three individuals from the Brazil-United States
Joint Commission to take part in founding the BNDES:
engineer Ary Frederico Torres, who had also presided the
CMBEU’s Brazilian team, was named the first president
of the BNDES; economist Roberto Campos was named
managing director of the Economics Department; and
geologist Glycon de Paiva became managing director of
the Technical Department. The first deputy managing
director was journalist José Soares Maciel Filho.6
The Board of Directors comprised engineer Lucas
Lopes (also from the CMBEU), Cleantho de Paiva Leite
(member of the Presidency of the Republic’s Economic
Advisory Group), Guilherme Arinos (Getúlio Vargas’
Chief of Staff), João Daudt de Oliveira (president of the
Federation of the Foreign Chambers of Commerce in
Brazil), João Pedro Gouvêa Vieira (legal consultant to
the Ministry of Aviation) and Paulo Quartim Barbosa
(director of several private enterprises in São Paulo).
The first projects the BNDES supported followed the
guidelines established by the Brazil-United States Joint
Commission, concentrating their focus on infrastructure
projects, especially in the transport and energy sectors.
In August 1952, the BNDES approved the first financing
contract, with the Estrada de Ferro Central do Brasil (the
Central do Brasil Railway), one of the main integrating
arteries of the country, linking Rio de Janeiro, São Paulo
and Belo Horizonte. The Central do Brasil project was
divided into six parts, allowing it to expand and undergo
urgent refurbishment. More support in this area was
provided to the Santos-Jundiaí Railway.
6
José Soares Maciel Filho was greatly trusted by Getúlio Vargas and the
writer of many of his speeches. The authorship of Vargas’ testament letter
was attributed to him, but the truth was cleared up by Lutero Vargas:
Maciel simply typed the document. The archives of the Getulio Vargas
Foundation’s Center for Research and Documentation on the Contemporary
History of Brazil have the two documents: the hand-written letter by Vargas
and Maciel’s typed copy.
23
A better conclusion
It was much more important to create entities for
financing or to foster industrial growth than try to
apply information that would be inefficient, expensive
and questionable, since said information had not been
adapted to the reality of a country as heterogeneous as
Brazil. We felt that it was essential to start from a basic
concept and create dynamic entities. We went as far as to
ask whether this might be a contradiction to the idea of
making more productive use of Brazilian resources, because
the creation of such entities represented specific allocation
of resources and, thus, less flexibility in their global use.
We came to the conclusion that this was much more
important than leaving the resources in the general fund,
subject to use in secondary, non-strategic objectives –
or, in other words, enormous waste on a national scale.
Dialectically, we thought that, although the idea of a
single cash center, and flexibility in the public budget and
the national financial budget was the proper approach,
at that time, the right thing to do was allocate important
resources to essential areas.
Rômulo Barreto de Almeida, attorney and economist,
interviewed in 1982
For large-scale projects
The BNDES’ activities focused on the energy and transport
sectors, as well as, mainly, basic industries. That is,
energy to support large-scale projects, such as the São
Francisco hydroelectric project, Furnas, CEMIG and others.
Transportation, with an emphasis on the structure of
ports and railways, besides basic industries in steel
production, heavy machinery and chemicals.
Cleantho de Paiva Leite, economist, interviewed in 1982
24
The Joint Commission also recommended that special
attention be paid to the network of silos, warehouses
and refrigerated storage, demonstrating concerns over
the storage problem. The Bank supported projects in this
area in a number of Brazilian states.
The BNDES began operating in the facilities
belonging to the Ministry of Finance in the city of Rio de
Janeiro. In 1953, it moved into its own headquarters at
number 48, Sete de Setembro street, also in downtown
Rio. In this same year, the organizational process was
concluded, and the BNDES was structured into six
departments: Economic, Technical, Financial, Legal,
Control and Administrative. The number of staff totaled
150, including attorneys, economists, engineers,
technical assistants and administrative assistants, with
the latter making up the larger part.
Since its beginnings, there was concern over
implementing public recruitment, through exams
and academic achievement, to hire staff, which was
an important instrument in protecting the institution
from favoritism and politicization. The first public
recruitment process was held in 1954.
Quite large
In the 1950s, the number of projects approved per year
was rather small, and there were very few of them.
However, they were enormous projects with studies
taking six or seven months. In the beginning, the majority
of financing was directed to State-owned companies.
Technicians had a great degree of freedom to operate.
When a project was received, a working group was
created to analyze it. This group was entirely free to study
the project and give its opinion. This way of working was
even encouraged by those in senior management.
Henrique Carneiro Leão Teixeira Neto, engineer,
interviewed in 1982
A cold, meaty study
I joined the BNDES in 1953, one year after it was
founded. We were appointed to join the organization,
but afterwards we had to take a public recruitment
exam. Lots of people signed up, and I had the good
fortune of passing in first place, not only in my specialty;
taking all the categories into account, I got the highest
score on the test. The Bank had commissioned a study
on meat packing companies. It hired three top level
technicians from the Ministry of Agriculture, and they
developed a program for the construction of a network
of slaughterhouses and meatpacking units. At this
point, I was given my first project to analyze – for the
construction of a slaughterhouse and meat packing unit
with a peculiar name; Mouran, deriving from the names
Moura Andrade. After that, I spent time in other sectors:
paper, pulp and highways.
Attílio Geraldo Vivácqua, engineer, interviewed in 2002
Also in 1953, a working group was put together
consisting of technical staff from the BNDES and the
Economic Commission for Latin America (ECLA),
an organ created by the UN which, since 1948, had
conducted studies on economic development strategies
that were suitable for the region. Economist Celso
Furtado was called in to head the BNDES-ECLA Joint
Group. The idea was to compliment the work of the
Brazil-United States Joint Commission and support the
BNDES in obtaining and analyzing macro-economic
data. The group paid special attention to the problems
in transport and energy, which were the main obstacles
to continuing economic growth in the country. The final
results of the work were published in the report Esboço
de um Programa de Desenvolvimento para a Economia
Brasileira (Outline of a Development Program for the
Brazilian Economy) – 1955-1962. These studies later
became the backbone of the Plano de Metas (Targetbased Development Plan) put together by the Juscelino
Kubitschek government.
25
Everything was important
I joined the BNDES in 1953. The Bank was still being
shaped. They had brought in previous employees from
the Department of Roads and Highways, from the
railways, ports and electrical energy, as well as divisional
heads from the federal government. Salaries were high
precisely to be able to call in such professionals. But
working at the bank meant an eight-hour shift, while
in the government it consisted of just six hours. I was a
civil engineer and went into the Department of Projects.
There were the Economics Department, the Legal
Department and the Administrative Department. I was
head of the department and, later, managing director.
I worked in the areas of aluminum, paper and railways,
but I spent most of my time in the transport sector. We
were driven to do different things; you never got bored
of the same area: electrical energy, electrical power
stations, the chemical industry, cement, pulp and paper.
I also worked in the area of cement. All the projects,
everything was important.
Antônio Carlos Pimentel Lobo, engineer, interviewed in 2002
Musical chairs
At the start of 1953, [João de Mesquita] Lara was brought
into the BNDES. He had been invited to organize the
Statistics and Documentation Service, and he called
on me to work as a technical assistant. During the first
semester, there was a crisis in the administration of
the BNDES. The first president, Ary Torres, resigned;
he founded the Instituto de Pesquisas Tecnológicas
[Institute of Technological Research], where I worked
as a consultant in 1974. Ary Torres was the first
president of the BNDES, because he was the head of
the Brazilian division of the Brazil-United States Joint
Commission; Roberto Campos was one of the leading
advisors. Afterwards, Campos resigned and returned
to a diplomatic career. Ambassador Walder Sarmanho
was then appointed president, and Cleantho de Paiva
Leite, managing director. The deputy managing director,
Maciel Filho, throughout almost the entire period,
took on the Deputy Management of the BNDES and of
Superintendência de Moeda e Crédito [SUMOC – Bureau of
Currency and Credit].
In July 1953, a new Board of Directors took office
at the Bank. In July 1953, Ambassador Walder Lima
Sarmanho7 was appointed president of the BNDES, and
the attorney and politician Francisco Antunes Maciel,
and the attorney and economist Cleantho de Paiva Leite
were named managing directors. According to Roberto
Campos,8Ary Torres resigned because he lived in São
Paulo and found it difficult to accompany the work of
the bank from there. Campos and Glycon de Paiva also
left the Board at the same time.
The first two directors, Campos and Paiva, returned
to the BNDES in 1954, after Vargas committed suicide.
When Eugenio Gudin took over at the Ministry of
Finance in 1954, Glycon de Paiva was named president,
and Roberto Campos, managing director. Between
1958 and 1959, during the government of Juscelino
Kubitschek, Campos also fulfilled the task of presiding
over the Bank he had helped to create.
Throughout its first years, the BNDES brought
together technicians from the Brazil-United States Joint
Commission, from the Economic Advisory Group to the
Presidency of the Republic and from ECLA. These people,
with different ideological beliefs, understood how to set
aside their differences for the benefit of a greater project –
the economic development of the country.
José Pelúcio Ferreira, economist, interviewed in 1982
26
7
Walder Sarmanho was Darcy Vargas’ brother and, therefore, Getúlio’s
brother-in-law.
8
Cf. CAMPOS, Roberto. A criação do Banco Nacional de Desenvolvimento
Econômico. in:______. A lanterna na popa. Memórias 1. 4.ed. Rio de
Janeiro: Topbooks, 1994, p. 206-207.
The revitalization of the Port of Rio de Janeiro was one
of the first projects supported by the BNDES. 1950s
First projects to be supported | 19529
•
Central do Brasil Railway – remodeling the
permanent track, new routes, workshops for
equipment and the purchase of 2,265 wagons
•
São Francisco Hydroelectric Company − CHESF
•
•
Central do Brasil Railway – suburban trains in the
city of Rio de Janeiro
Comissão Estadual de Energia Elétrica (State Electrical
Energy Commission) – Rio Grande do Sul
•
•
Santos-Jundiaí Railway
Usina Hidrelétrica de Salto Grande (Salto Grande
Hydroelectric Power Plant) – São Paulo
•
Rede Viação Paraná-Santa Catarina (Paraná-Santa
Catarina Road Network)
•
Companhia Mato-Grossense de Eletricidade (MatoGrosso Electricity Company)
•
Rede Mineira de Viação (Minas Gerais Road Network)
•
Companhia de Eletricidade do Alto Rio Grande (Alto Rio
Grande Electricity Company) − Itutinga, Minas Gerais
•
Departamento Estadual de Estradas de Rodagem
(State Highways Department) – Rio de Janeiro
•
Companhia de Energia Elétrica de Catanduva (Catanduva
Electrical Energy Company) – Espírito Santo
•
Estrada de Ferro Noroeste do Brasil (Noroeste do
Brasil Railway)
•
Usina Termelétrica de Piratininga (Piratininga
Thermoelectric Power Plant)
•
Companhia Paulista de Estradas de Ferro (Paulista
Railway Company)
•
National Alkalis Company
•
Companhia Docas de Santos (Santos Dock Company)
•
Companhia Metalúrgica Barbará (Barbará Steelworks
Company)
•
Porto do Rio de Janeiro (Port of Rio de Janeiro)
•
•
Departamento Nacional de Portos, Rios e Canais
(National Department of Ports, Rivers and Canals)
Ministry of Agriculture – acquisition of different types
of agricultural equipment
•
The state of Rio Grande do Sul – to build a network of silos
•
American & Foreign Power − Light
•
Banco Exportação do Estado de Minas Gerais (Export
Bank of the State of Minas Gerais) – credit proposal to
purchase agricultural equipment
9
Cf. BNDE – the Brazilian Development Bank. Exhibition on the Economic
Renewal Program − 1952. Rio de Janeiro, 1952. Mimeo.
27
The BNDES and the Targetbased Development Plan
[The JK administration]
T
Cover of the Diário de Natal
(Rio Grande do Norte),
newspaper, August 24, 1954
28
he years of 1954 and 1955 were marked by upheaval in Brazil. Besides the
worsening economic crisis, the political crisis intensified, culminating in
the suicide of Getúlio Vargas in 1954. With this, violent protests exploded
on the streets throughout the country. Newspapers and North-American
diplomatic representation came under attack. The Vice-President, João Café
Filho, took power, supported by a team consisting of politicians, businessmen
and members of the military in opposition to the government.
New presidential elections were held in October 1955, the victor being
Juscelino Kubitschek (JK), the candidate of the Partido Social Democrático
(PSD – Social Democrat Party). Sectors of the União Democrática Nacional
(UDN – National Democratic Union), however, represented by the journalist
Carlos Lacerda, and a few military members doubted the results at the polls.
Furthermore, the opposition feared that the victory of JK and João Goulart
(Jango) could mean a return to Vargas’policies.
There was enormous pressure to prevent the new president from taking office
in a clear attempt to implement a State coup. The incumbent president, Café
Filho, fell ill, and the president of the House of Representatives, Carlos Luz,
took the helm of the country, refusing to punish those in the military coup. The
minister of Defense at the time, General Henrique Lott, in agreement with the
election result, not only mobilized an operation that included occupying several
government buildings, radio stations and newspaper offices, but also ousted
Carlos Luz. Nereu Ramos, president of the Senate, assumed the government,
declared a state of siege, censored the press and guaranteed that Juscelino took
office the following year.
Upon assuming control in February 1956, Juscelino
Kubitschek ordered an end to both the state of siege
and censorship of the press. The JK government became
known for its Target-based Development Plan, a set of
projects relating to energy, transport, foodstuffs, base
industries and technical education. Construction of a
new capital was promised in the Central-West region,
which Juscelino, in the end, included in the Plan as
quantitative and qualitative analysis.
Total success
In the 1950s, the importance of the BNDES lay in having
been the main financier of Juscelino Kubitschek’s Targetbased Development Plan, with the majority of the goals
enjoying total and utter success. The Energy Program, for
instance, was essentially financed by the BNDES, CEMIG,
and the hydroelectric companies of São Paulo state, Barra
Bonita, Jupiá, and basically all those located along the
Tietê River valley. The BNDES was concentrated on two
sectors: electrical energy and transport. At the end of the
Juscelino administration, the steel manufacturing era
began. The BNDES was the largest supporter and financier
for the construction of large steel manufacturers, such as
Usinas Siderúrgicas de Minas Gerais S.A. [Usiminas –
Minas Gerais Steelmills] and Companhia Siderúrgica
Paulista S.A. [COSIPA – São Paulo Steelworks Company].
Such construction began towards the second half of the
Juscelino administration and ended in 1960 or 1961.
A consistent center
Shortly after, the BNDES-ECLA Mixed Group was created.
The idea was to become a consistent center dedicated
to all-embracing research on Brazil. All Latin-American
countries were in the initial stages of industrialization.
Structural changes needed to be made. We conducted
a study, which took 18 to 20 months to complete
and which was published by the BNDES: Projeções da
Economia Brasileira [Projection on the Brazilian Economy].
It was the first study focused on a collective projection
on the Brazilian economy and which revealed the
need for more significant financing efforts than were
originally imagined. The economy was headed towards
an industrial system, which required more coordinated
efforts. The importance of this study is that it gave rise
to a development plan; however, the construction of
Brasília, the financial push towards its construction, was
not in our plans. Obviously, this upset JK’s Target-based
Development Plan.
Celso Monteiro Furtado, economist, interviewed in 1982
Amazing!
JK’s Target-based Development Plan incorporated the
ideas discussed at ISEB [Instituto Superior de Estudos
Brasileiros – Brazilian Institute for Higher Studies]
in a much more practical manner. It was individuals
essentially connected with the BNDES who established
the theoretical formula behind the Target-based
Development Plan. Brasília had not even been thought
of, not by ISEB, ECLA or the BNDES. Nobody was thinking
of moving the capital out there. Juscelino epitomized
his administration with this investment. At the time,
it was highly criticized, even within the BNDES. We did
not understand it too well, and we thought it was just
another of Juscelino’s political deals. We did not believe
that it would lead to anything substantial. Today, when
I visit the states of Mato Grosso, the north of Goiás,
Tocantins and Pará, I can see how the region has grown;
it is so amazing! None of the theoretical masterminds
could see such a possibility – only Juscelino.
Roberto Saturnino Braga, engineer, interviewed in 2002
29
School for planning
In 1956, Juscelino called me in to be a department head at the BNDES. There,
I was responsible for coordinating the Target-based Development Plan. There
was a lot to resolve. What we had to do was define the matter of cost and price
in such a way that we needed to fully differentiate these two aspects. The Bank
turned itself into a school for planning. Based on planning, the constant idea is
that, to develop the project, it is necessary to establish the sort of institutional
change that should be introduced so that a new sector substitutes another. To
a certain extent, we were learning these things at our own cost.
To coordinate the plan, the National Development Council was created,
and the president of the BNDES was its executive-secretary.10 The Council
played a parallel administrative role, with autonomy to decide on the course
of projects. Connected to the Development Council, a number of study groups
were organized, some of which were transformed into executive groups, whose
task involved conducting research and establishing the measures required to
implement companies in their respective sectors. These included the Grupo
Executivo da Indústria de Construção Naval (GEICON – Executive Group for
Naval Construction Companies) and the Grupo Executivo da Indústria Mecânica
Pesada (GEIMAPE – Executive Group for Heavy Machinery Companies). Of
these, the Grupo Executivo da Indústria Automobilística (GEIA – Executive
Group for the Automobile Industry) was the most important.
10 At that time, Lucas Lopes, then president of the BNDES, took over the leadership of the council. When
Lopes took office at the Ministry of Finance in 1958, his post at the Bank was occupied by Roberto
Campos, who remained there until July 1959. When the government came to an end, the work was
conducted by Lúcio Meira.
The Furnas power station was built in the 1950s
to resolve the energy crisis which threatened the
supply to Brazil’s socio-economic centers –
São Paulo, Rio de Janeiro and Belo Horizonte
The Target-based Development Plan was developed
based upon studies done by the BNDES-ECLA Joint
Group, whose aim was to continue and expand the
industrialization process through a policy to substitute
imports. With this, the BNDES played an essential role in
the success of the plan, both in terms of its creation and
in terms of its administration and financing.11 The State’s
leading role in fostering economic development was
increased with planning and implementation coordinated
by the Development Council and the BNDES.
Between 1956 and 1960, the Bank financed projects
focused on hydroelectric power plants, highways and
transmission lines, in addition to projects in the steel,
and pulp and paper sectors. Concerning the production
of electrical energy, some 46 projects were financed
across the nine programs into which the plan was
divided. The most important were: the construction of
the Três Marias and Furnas power plants (the largest
energy project in the entire program) in Minas Gerais;
the Light power plants in São Paulo; and the expansion
of the Paulo Afonso power plant in Pernambuco.
A glorious time
I joined the BNDES in 1957. It was a glorious time
because of Juscelino’s Target-based Development
Plan. In fact, the plan was based on a macrostructural
framework that the BNDES-ECLA team had drawn up. At
that time, Ignácio Rangel discussed how infrastructure
was going to be financed, how public mortgages were
going to be created – all ideas he had aimed at paying
for infrastructure in an original way, with no taxes. It
was one thing to start the Target-based Development
Plan, but it was another thing to move it forward. Efforts
were aimed at building a development plan based on a
philosophy that had been undergoing a nurturing process
since Vargas’ time. Heavy industrialization was being
implemented in Brazil, and it was a great adventure.
We began to see the map of a continental-sized country
taking shape. The Juscelino administration built Brasília
and, therefore, moved development into the heart of the
country. We were trying to implement the automobile,
naval, as well as heavy machinery and equipment
industries – this was the group I was working with. All
sorts of Brazilian and foreign companies appeared –
German, Swedish, Japanese and others –, it was probably
the first wave of global direct foreign investment, that is,
it came from many different sources.
Maria da Conceição de Almeida Tavares, economist,
interviewed in 1982
11
For more information, see BNDES – Banco Nacional de Desenvolvimento
Econômico e Social. O BNDES e o Plano de Metas. Rio de Janeiro, 1996.
Homemade
The entire Target-based Development Plan was formulated
at the BNDES. Lucas Lopes took part and had several
technical committees. Celso Furtado, for example, was
the ECLA representative because, even though we did not
agree with the macroeconomic ideas of this commission,
we thought it would be useful to have its cooperation. At
that time, a number of executive groups were formed –
the Executive Group for the Automobile Industry (GEIA),
the Executive Group for Naval Construction Companies
(GEICON), the Grupo Executivo da Indústria Química
(GEIQUIM –Executive Group for Chemical Companies).
Roberto de Oliveira Campos, economist and diplomat;
interviewed in 1982
Keeping everyone happy
When he took office, JK put together working groups
outside the government structure, with each one
responsible for a specific goal. Several people from
the BNDES took part. Juvenal Osório, for example,
was responsible for the Executive Group for Chemical
Companies. Effectively, they started implementing
each goal. The Brasília project was drawn up and
construction started. To keep the people from Minas
Gerais and São Paulo happy, Usiminas and COSIPA were
given the go-ahead.
Irimá da Silveira, engineer, interviewed in 2002
Engineer, yes; economist, no!
I graduated in Engineering in 1958, but took the job as
assistant economist in July 1959. Two years went by, and
I was already working as an engineer, accompanying
electrical energy projects. I accompanied the work at
Furnas, the second machine room at the Paulo Afonso
plant, the Vale do Rio Pardo hydroelectric power plant,
the electrical power plants in Paranapanema and many
others. As I had not studied Economics, I could not pursue
a career as an economist, so I asked to be transferred
to assistant engineer. My request was denied due to a
lack of legal grounds, so I resigned. In October 1961, the
Bank was looking for an engineer, so I took the exam and
passed. On January 19, 1962, I joined as a hired engineer
and returned to the same energy division I had been
working in when I resigned.
Expedito Cursino Alves, engineer, interviewed in 2002
11
For more information, see BNDES – Banco Nacional de Desenvolvimento
Econômico e Social. O BNDES e o Plano de Metas. Rio de Janeiro, 1996.
31
All the credit
The country’s largest projects at the time were financed
by the Bank: Três Marias and Furnas were the largest
projects in the electrical energy sector. Working at the
Bank, we felt we had played a part in putting these
projects together. You felt as if the credit for the project
was also yours, part of your dedication and follow-up.
And all this made me stay at the Bank. At the start of my
life, I was not one for staying a long time in any one place.
I put the fact that I stayed there down to having moved
around a lot within the Bank. I started in the projects
section, went over to control, then became managing
director of the Administrative and Financial Division, so
there was a wide range of activities. In each one, I felt
motivated to commit myself.
Luiz Carlos Soares de Souza Rodrigues, engineer,
interviewed in 2002
Starting point
We arranged the first financing contract and fixed asset
in “Prazo Villares” and managed to raise an amount
that, at that time, was equal to 540 million dollars, a
considerable amount of credit, and placed at our disposal
to increase the production of special steels in São
Caetano do Sul. The automobile industry was establishing
itself in the country and required more special steel. We
saw a great opportunity to help stabilize the Aços Villares
company which, after the post-war period, suffered for
a long time. At this time, steel was very cheap, and you
could import everything, so companies underwent a
drawn-out squeeze. We made our first contacts at this
time, and we were very successful. This was the starting
point of our relationship with the BNDES.
Paulo Diederichsen Villares, engineer and businessman,
interviewed in 1982
Investments considerably increased the country’s
industrial structure, with an emphasis on the
capital goods and durable consumer goods sectors.
Implementing the automotive industry gave rise
to several projects connected to this initiative, not
only in the steel industry, but also in other sectors
deemed necessary in developing production sectors,
such as rubber and textiles. At this time, industrial
production in the country grew 80%, especially in the
steel, mechanics, electrical and transport equipment
industries. Approximately, the results were within
what had been expected, and some rates exceeded
expectations; for better or worse. The economy grew,
as had been forecast, at around 5% per year. The
coefficient for imports fell from 14% to 8% in 1960,
exceeding forecasts by about 10%. Inflation, however,
went way beyond any expectation at 13.5%, reaching
approximately 25% per year, between 1957 and 1960.12
12 Cf. VILLELA, André. Dos anos dourados de JK à crise não resolvida (19561963). In: Giambiagi et al. (Orgs). Economia brasileira contemporânea:
1945-2010. Rio de Janeiro: Campus, 2011, p. 38.
Dam at the Usina Hidrelétrica de Três
Marias (Três Marias Hydroelectric Power
Plant), Minas Gerais, 1960s
Celso Furtado (right) during a
SUDENE meeting in Recife (PE),
on May 21, 1961
It is also worth remembering, that, among the
study groups created by the federal government
during this period, was the Grupo de Trabalho para o
Desenvolvimento do Nordeste (GTDN – Working Group
for the Development of the Northeast), which was
headed by Celso Furtado. The idea was to reduce the
differences between the Northeast and the Center-South,
which the industrialization process only accentuated. In
1958, the serious drought that hit the region, increasing
unemployment and the migratory flow, led JK to ask
Celso Furtado to put together an economic policy plan
for the Northeast.
In December 1959, the Superintendência do
Desenvolvimento do Nordeste (SUDENE – Northeast
Development Department), directly linked to the
Presidency of the Republic, was established. Created
as a special goal for the Kubitschek government, the
SUDENE was the country’s first regional planning entity.
It was also designed to act as a centralizing body for
federal investments in the region. Designated by the
BNDES to coordinate the installation of the new entity
in Recife, Celso Furtado was responsible for SUDENE
strategies between 1959 and 1964.
Changes in the national economy had been
extremely intense over the past few years. The design
for a “modern” Brazil started to take shape. The
developmentalist policy brought about enormous growth
in cities. These changes also affected the lives of people.
The automobile, the television, household appliances13
and supermarkets started to become a part of day-today life in urban centers. At the end of the 1950s, Brazil
was no longer just an agricultural country. The share
of agricultural production in Gross Domestic Product
(GDP) was gradually dropping, while, at the same time,
the share of industry grew significantly. Data in the table
below exemplify this shift. There was also a drop in the
population that lived in the countryside. The 1955 census
recorded a figure of 64%, but in the 1960 census, this
number had dropped to 55% of inhabitants, while the
number of urban residences had grown from 37% in 1950
to 47% in 1960. This trend was further intensified over the
ensuing years, only being cut short in the 1980s.14
Share of agriculture and industry
in Gross Domestic Product 1950-1960
1950
%
1955
%
1960
%
AGRICULTURE
24.28
23.47
17.76
INDUSTRY
24.14
25.64
32.24
Warming up the motors
We were convinced that the automobile industry
was indispensable. During the war, we had suffered
a complete lack of transport. The Fábrica Nacional
de Motores (FNM – National Motor Factory) was our
salvation – a large FNM truck transported almost
everything in Brazil for a long time. A big problem
came along though, which concerned financing the
manufacturers of auto-parts, the industry’s spare parts.
This was the large amount of financings that came about
as a result, creating a new demand for BNDES. The Bank
took part in some of the projects which later on became
autoparts manufacturing centers.
Source: IBGE.
13 Since 1949, direct control over imports enabled the installation of domestic
appliance manufacturers in the country. In 1950, General Motors do Brasil
announced a new model refrigerator – the Frigidaire. Walita and Arno were
already manufacturing blenders. Cf. ALBERTI, V. O século do moderno:
modos de vida e consumo na República. In: GOMES, Angela de Castro;
PANDOLFI, Dulce Chaves; ALBERTI, Verena (Orgs.). A República no Brasil.
Rio de Janeiro: Nova Fronteira, 2002, p. 305.
14 Cf. ABREU, Marcelo de Paiva. O Brasil no século XX: a economia. In: IBGE –
Instituto Brasileiro de Geografia e Estatística. Estatísticas do Século XX.
Rio de Janeiro, 2003, p. 385-401.
33
Exciting work
I joined the Bank in 1958. The BNDES was responsible for the industrial boom
at the time. The BNDES had a hand in most of the large-scale undertakings
throughout Brazil, without exception. I had exceptional work colleagues:
economists, engineers, attorneys; it was a team that wore the company’s
colors. It is still like that today. I went to work in the Investment Control Sector.
There were two large sectors at the BNDES: the Project Sector, which analyzed
the viability of the projects and the priority of the sector. Once projects were
implemented, it was up to our department, of which Hildebrando Horta
Barbosa was the first head, to accompany the Bank’s financial investments,
with periodic visits and reports. It was very exciting work as I accompanied the
industrial development of the country: steel manufacture, railways... It really
was a first-rate school.
Alvaro Cesar Café, engineer, interviewed in 2002
The most interesting
The most interesting work that I accompanied closely was the creation of the
Inter-American Development Bank (IDB) in 1958. Cleantho Leite, when he was
still a managing director at the BNDES, made this request, and later he became a
director at the IDB. He prepared the contracts and preliminary documents –
the discussion concerning the creation of the Inter-American Bank. While he
was in this Working Group, he came here to Rio, to Rua Sete de Setembro street,
48, on the 6th floor. And I had the opportunity to read and accompany the
preliminary discussions on the formation of the IDB, the composition of capital,
the distribution, and discussions on how a Brazilian director could present a
justifiable position. The BNDES, indirectly, through Cleantho Leite, partly helped
in the birth of the IDB.
Jardy Sellos Corrêa, engineer, interviewed in 1982
Powerful
I took part in the working groups analyzing shipyards and naval construction.
At that time, Brazil had a powerful Merchant Navy. The shipyards were planned to
dynamically restock this expanding Merchant Navy. We were all very enthusiastic,
because it was a heavy industry that was installed predominantly in Rio de Janeiro,
and one that played a very important role nationally.
34
At other ports
My move to the BNDES came about due to the work of a commission appointed to
purchase port equipment, which was to be carried out with a 50-million-dollar loan from
the EXIMBANK. If I remember rightly, it was Contract 811. I was an engineer with what
was previously known as the Departamento Nacional de Portos e Vias Navegáveis [National
Department of Ports and Navigable Waterways]. The BNDES’ mission was to purchase
equipment for all the Brazilian ports with this credit from EXIMBANK. At the time, the BNDES
asked the Ministry of Transport and Public Works, which is now the Ministry of Transport,
for an engineer, and I was assigned. Afterwards, in 1956, I was invited to head the BNDES’
Ports and Navigation sector. They needed someone in this area of the Merchant Navy,
shipyards, naval construction, but I was transferred to the Target-based Development Plan’s
Development Council, during the time of President Juscelino Kubitschek, and I was responsible
for goals involving ports, dredging and naval construction.
Roberto Felix de Oliveira, engineer, interviewed in 1982
Presidents
•
Ary Frederico Torres | 1952-1953
•
Walder Sarmanho | 1953-1955
•
Glycon de Paiva Teixeira | 1955-1956
•
Lucas Lopes | 1956-1958
•
Francisco Antunes Maciel Junior | 1958
•
Roberto de Oliveira Campos | 1958-1959
Fund Management – Instruments of Creation
•
Economic Renewal Fund – Law Nº. 1,628, of June 20, 1952
•
National Electricity Fund – Law Nº. 2,308, of August 31, 1954
•
Fundo de Marinha Mercante (Merchant Navy Fund) – Law Nº. 3,381, of April 24, 1958
•
Fundo Portuário Nacional (National Ports Fund) – Law Nº. 3,421, of July 10, 1958
Federal Government Plans
•
National Plan for Economic Renewal. Vargas’ second administration | 1952-1954
•
Target-based Development Plan. Juscelino Kubitschek’s administration | 1956-1961
35
Crisis and transformation
[The Jânio Quadros and João Goulart
administrations]
O
pinions were divided when Brasília was inaugurated in April 1960.
The modern city, designed by urban planner Lúcio Costa and with
its main buildings designed by Oscar Niemeyer, gained national and
international admiration. For some Brazilians, this daring idea seemed to
be mere utopia and, for some civil servants the transfer to the Central Plains
was a nightmare.
Moving the capital of the Republic from Rio de Janeiro to the CentralWest region not only represented a transfer of the federal government’s
administrative complex to another city, even taking into account all that this
implied, but it also meant occupying national territory, or, in other words, it
meant the occupation of Brazil’s interior region. The idea of a capital at the
heart of the country was not new;15 the proposal for the move even appears
in the first Constitution of the Republic, in 1891, which grants the National
Congress the power to “move the capital of the federal government.”
The map of the country’s highways was transformed by a network of new
roads which linked the capital to other regions. The design for the future
seemed to take shape with Brasília, a city of bold lines and wide avenues
planned for a large flow of automobiles, constructed in record time. The
slogan of the Kubitschek administration, “50 years in 5,” was epitomized
in Brasília. Transferring the capital was enough to change the outlay of the
country. But other changes were also underway and they would significantly
affect the life and history of Brazil.
15 The idea had existed at least since the 19th century and had been upheld by people such as the
diplomat Hipólito da Costa (editor of the Correio Braziliense newspaper, published between 1808 and
1823); statesman José Bonifacio de Andrade e Silva author of Thoughts on the Need for and Means of
Constructing a New Capital in Brazil in 1823; and historian Francisco Adolfo de Varnhagen, the Viscount
of Porto Seguro (author of studies on the need to move the capital further inland, including to the Central
Plains, between 1834 and 1877).
Euphoria swept over the country as a result of all the renewals that had
taken place during the so-called “Golden Years.” Television became popular
in Brazil, largely due to the introduction of videotape, which allowed people
in the cities of Rio de Janeiro, São Paulo and Belo Horizonte to watch the
inauguration of the new capital on their screens. In 1962, the country was
jubilant once again with its victory in the second World Cup Soccer Final, this
time in Chile.
Following a landslide victory in the 1960 election, with 48% of the votes,
Jânio Quadros was elected president of the small National Labor Party.16
During his presidential campaign, he promised to control inflation and
implement reforms in the domestic and foreign policies. While still just a
candidate, he visited Cuba with a view to fostering closer political relations.
Once sworn in, he began to adopt rather controversial measures, forbidding
the use of swimsuits in beauty contests, banning bikinis on beaches,
prohibiting amyl-nitrate during Carnaval, horse racing, cock-fighting and
hypnotism shows.
Construction of Brasília. The new
capital, planned by the architects
Lúcio Costa and Oscar Niemeyer,
is a symbol of the Juscelino
Kubitschek administration.
Without realizing it
When Juscelino left office, the economy was in crisis but he was unable to see
this. The Brazilian economy went into a long-lasting recession until it became
necessary to create institutions that would provide continuity to the new group
of activities.
16 The Liberation Party (PL), the Christian Democrat Party (PDC), the Republican Party (PR) and the
National Democratic Union (UDN) all supported his candidacy, as well.
37
Other issues
After leaving the BNDES in 1961, Jânio Quadros called on
me to negotiate the consolidation of Brazil’s foreign debt,
because we had run up a huge debt, issuing dollars –
because we had issued the so-called promises on exchange
sales, which were imports for future payment. Inflation
rose from 16% to 40%, which at that time was unheard of
and quite serious.
interviewed in 1982
The Wheat Agreements
When I joined the Jânio Quadros government, General
Faria Lima invited me to head up the Bank’s International
Agreements and Contracts Department. This was when
I found out all about the Wheat Agreements. Because of
American surpluses, they sent us wheat, and we turned it
into cruzeiros to lend and pay back in relation to the timing
of the arrangement. It was very interesting, and it certainly
strengthened the Bank’s resources at the time. I got to know
key people at the United States Agency for International
Development, and we built up a sort of friendship.
Carlos Santos Júnior, economist, interviewed in 2002
Jânio inherited an economy from Juscelino that had
a deficit in the balance of payments and high inflation:
rising from 12.5% in 1956 to 30.5% in 1960. Although a
large part of the targets had pre-established budgets,
spending on the public works program, especially the
construction of the new capital, coupled with the policy
for purchases of coffee surplus,17 contributed to the
creation of this imbalance.
Brazil moved into a period of sharp economic
downturn and, as a result, a squeeze on salaries. Workers
in several sectors throughout the country – transport,
banks and companies – went on strike. Jânio sought
to face the most urgent problems by negotiating the
foreign debt, depreciating the currency and suspending
subsidies on certain products, such as wheat and oil.
These were very unpopular steps, with a 100% hike in
the prices of bread and transport.
National Congress refused to support these
recessionary measures. In August 1961, the President
honored Fidel’s comrade Che Guevara, once again
displeasing conservatives, especially the UDN party.
In an attempt to divert a political crisis, Jânio Quadros
resigned, believing that Congress would question his
decision, but this did not happen. His resignation was
accepted, leaving the country baffled, and the political
crisis deteriorated.
Vice-president João Goulart (Jango) had to face
strong resistance from various sectors to occupy the
Republic’s top position. His inauguration was only made
possible by means of a maneuver in National Congress,
which instituted the parliamentary government
system, limiting the powers of the president. It was still
1951 when Jango assumed the presidency – a time of
enormous social pressure.
17 Cf. VILLELA, André. Dos anos dourados de JK à crise não resolvida (19561963). In: GIAMBIAGI et al. (Orgs). Economia brasileira contemporânea:
1945-2010. Rio de Janeiro: Campus, 2011, p. 39.
38
Without this...
In December 1962, the federal government sought to reinitiate its economic
planning by launching the Plano Trienal de Desenvolvimento Econômico
e Social (Triennial Economic and Social Development Plan), drawn up by
Celso Furtado. To implement it, João Goulart created the Ministry of Planning
and invited Furtado to head it up. The plan’s main objectives for the 19631965 period were: to combat inflation; renegotiate the foreign debt and
create incentives for economic growth. As part of the plan, there were also
provisions for the so-called “Basic Reforms,” most of which mainly concerned
tax, banking, urban, agricultural and university reforms.
The basic reforms brought together a set of measures designed to adjust
the economic structure in keeping with the social and political structure,
with the aim of reducing social inequality throughout the country. To do so,
the most important of the reforms was in agriculture since the countryside
concentrated the most significant inequalities. At that time, social movements
were already more organized, and they began presenting their demands in
the form of the rural workers’ movement, especially that united under the
Peasants’ Leagues.
Organized in 1955, by the attorney and politician from Pernambuco state,
Francisco Julião, the Leagues sought to defend the interests of rural workers.
The strength of the movement quickly grew and spread to other states in the
Northeast, gaining national representation in the beginning of the 1960s.
Surely, one significant victory stemming from this mobilization was the Rural
Workers’ Statute, which instituted professional working papers for field
workers, regulated their working hours, and establishing rights, including
weekly rest periods and remunerated vacations. In addition to this, Law
Nº. 4,214, of March 2, 1963, which established the statute, ruled that that no work
may be remunerated at a rate below the established regional minimum wage.
The agenda for agricultural reform did not, however, advance very far due
to resistance from the most conservative sectors in society. The fact that the
government was a minority in Congress made things difficult including the
performance of the stabilization plan, which depended upon political support.
The Profit Remittance Law, which nationalized the revenue of foreign
companies that was considered excessive, was not well received by the
foreign business community, triggering pressure from abroad. Attempts
to stabilize the economy, reforms and salary readjustments were harshly
criticized and spawned growing unrest. Measures in the Triennial Plan did
not have the expected effect. Inflation continued to soar, thus reducing the
population’s purchasing power.
The BNDES brought together the
best group of economists I have
ever seen. They were all colleagues.
I took responsibility for producing
the [Triennial] Plan. I would never
have taken the plan on for another
government under such difficult
conditions, in such a short term, if
I had not been so deeply indebted
to President João Goulart. Jango
called me in, and I could not resist.
So when I accepted, I immediately
sought out people from the BNDES.
Very few people came from SUDENE,
because SUDENE was only interested
in its own regional world. Those
with national foresight were from
the BNDES, and they helped me. The
general plan was drafted within the
BNDES; obviously on the fringes of
the Bank since there was no direct
agreement. Such collaboration was
unofficial, but the Bank put people
at my disposal full time. It was only
possible to pursue this plan because
the BNDES existed, that is to say
that the Bank’s resources existed,
with technical staff and information,
staff were engaged. Without these
resources, a plan could not have been
created in just four months.
Celso Monteiro Furtado, economist,
interviewed in 1982
39
To guarantee support for basic reforms, Goulart tried to organize a political
offensive with the help of the main left-wing groups. The strategy was aimed
at winning over the masses by holding a series of large rallies in the country’s
main cities, to try to tone down the Congress’ resistance to the reforms. The
first event, held on March 13, 1964, in Rio de Janeiro, came to be known as
the Central do Brasil Rally. Approximately 150,000 people attended the event,
which required security from the Army.
During his speech, broadcast on television, Goulart reaffirmed the need to
change the Constitution and announced new and important measures, such
as the disappropriation of private oil refineries. He also declared that private
properties located beside highways and dams that had increased in value as a
result of public investment were subject to disappropriation, and mentioned
that he would start an urban reform.
The response to the rally came in less than a week, with the “Family
March with God for Freedom”, a protest organized in São Paulo by the
conservative wing of the Catholic Church. The march managed to attract
twice the amount of people that were at Goulart’s event in Rio. The Central
rally had become a springboard for the coup. Some sectors of society frowned
heavily on Goulart’s policy, and under the pretext of his supposed communist
inclinations, they supported the military coup that instituted the dictatorship
in the country on April 1, 1964. At the time, Jango stated that he preferred to
steer clear of confrontation to avoid bloodshed.
The sharp slowdown in economic growth in 1963, the rise in salaries, the
lack of political support and escalating inflation were just some of the factors
that contributed to João Goulart being ousted. From the coup onwards,
authoritative legislation was adopted, and civil rights were suppressed with
the revocation of the Constitution. For 21 years, the country would remain
under a military regime.
Soon after the coup, the sectors deemed left-wing were violently
repressed, including the National Students Union (UNE), the General
Workers’ Confederation, the Peasants’ Leagues and Catholic groups, such
as the Catholic Youth University (JUC) and the Popular Action group (AP).
Thousands of people were arrested illegally.
The first post-coup political tool was the 1st Institutional Act, which
conferred legal power to the Executive branch to repeal mandates and suspend
the political rights of members of parliament, intellectuals, diplomats and
members of the Armed Forces. This act also conceded autonomy to the
Executive branch to declare a state of emergency with no prior need for
authorization from Congress. In 1964, General Humberto Castelo Branco,
promoted to Field Marshal, assumed the Presidency of the Republic.
40
Industry
In 1939, Leon Feffer used the assets he had accumulated over 15
years of work in the paper trade to build a paper factory in Brazil.
To circumvent the problem of relying on pulp imports, Suzano
worked and researched, managing to develop a process which used
eucalyptus as a base product. This discovery made Brazil one of the
world’s largest potential leaders in the pulp and paper sector. From
then on, the company has continued working, basing its principles
on entrepreneurship and innovation. Today, as well as being the
second largest producer of eucalyptus pulp in the world, Suzano is
one of the ten largest producers of pulp in the global market.
Over what has been almost 90 years, the BNDES has played
and continues to play a very important role in the history of
the evolution and development of Suzano Papel e Celulose.
This relationship started in 1959, the year in which we received
authorization to take a loan out from what was then the BNDE.
This was the institution’s first contract to finance a pulp and paper
factory. The resources were used to increase our manufacturing
capacity. From then on, there have been many moments that have
marked the partnership between the Bank and our company. In
the 1970s, the Bank financed the expansion of Factory B (today
the Suzano Unit). (...) in 1990, the BNDESPAR (BNDES Participações
S.A.), a subsidiary of the BNDES, took a stake in the company Bahia
Sul Celulose when it financed the construction of the factory –
currently our Mucuri unit. In 1992, the Rio Polímeros company was
constructed, based on a pioneering project to implement a GasChemical Hub in Rio de Janeiro, with shareholders including Suzano
Petroquímica, Unipar, Petroquisa and BNDESPAR. In December 1999,
the BNDES approved financing for three projects in the industrial
area and one in Suzano’s forestry area: the Total Operational
Performance Program, the Pulp Automation Project, Capture of
Water from the Tietê River, as well as reforming and maintaining the
eucalyptus forests in the states of São Paulo, Minas Gerais, Espírito
Santo and Bahia. In 2005, the BNDES announced R$ 184.7 million in
financing for Suzano Papel e Celulose projects, to be used at Mucuri
(Bahia) and at Suzano and Rio Verde (São Paulo) as part of the
program to modernize and expand the pulp production capacity. (...)
Since 2010, when we announced the Suzano 2024 Plan, the BNDES
has once again supported our company at two important moments:
in 2010, the BNDES announced R$ 2.73 billion in financing for
Suzano Papel e Celulose to start building the Imperatriz pulp factory
in Maranhão, [and in] 2011, the Bank’s Board of Directors approved
a credit limit of R$ 1.2 billion for Suzano Papel e Celulose to use in
the company’s Investment Plan for the 2011-2015 period.
Antonio Maciel Neto, CEO of Suzano Papel e Celulose S.A.
Facilities at the Suzano Papel e Celulose Industrial Park
In 2010, Suzano began its new cycle by acquiring
Futuragene, a pioneering company in the
research and development of biotechnology.
Besides this, the renewable energy firm, Suzano
Energia Renovável, was created, with a focus
on manufacturing wooden pellets to generate
power. These new directions indicate a path
of development that has an eye on the future,
through the use of sustainable technologies.
Based upon this eagerness to constantly
question and recreate the future, Suzano is no
longer solely a pulp and paper manufacturer and
is now a forestry based company. As such, the
company is thriving on its way to 2024, the year
in which it will celebrate 100 years in business and
its commitment to forestry will be fully in place.
(…) These enormous steps forward have only been
possible by having the utmost respect for the
environment, by building reliable relationships
and with the certainty that its growth is walking
hand-in-hand with the development of society.
(…) Partnerships with the BNDES in various sectors
of the economy have contributed to development
and to reaching the level that Brazil is now at. They
are financial incentives that enable the growth
and technological preparation of our industrial
center, meaning we are able to compete equally
with international players. This, in my opinion, is
the most important tool that the BNDES has in its
hands to contribute to the growth of Brazil and
the various sectors of our economy.
Antonio Maciel Neto, CEO of Suzano Papel e Celulose S.A.
41
Moment of transition
[BNDES | 1960-1964]
A
s of the end of the JK administration, the positive scenario started
to buckle under a context of political and economic crisis, which
was reflected in the BNDES’ activities. At the start of the 1960s,
the slowdown in the economy, associated with inflation, led to a fall in
investments and, consequently, a decline in requests for the BNDES’
financing. The inflationary process also had a negative impact on the Bank’s
source of resources: the Additional Income Tax, which accounted for one
third of its income, fell because of rising inflation.
42
Motor assembly line at the WillysOverland do Brasil factory in São
Bernardo do Campo (SP)
In 1962, still during the parliamentary period, the
Bank once again began working with the new economic
plan developed by Celso Furtado at the request of
President João Goulart. The BNDES’ teams actively
participated in creating the Triennial Economic and
Social Development Plan, which was done in less than
four months.
In terms of estimates for industrial production
in the 1960s, expectations for growth were around
60% for steel ingots, an increase of 125% in the
manufacture of tractors and trucks, and 42% in
automobiles. The country’s installed manufacturing
capacity for electrical energy should have expanded by
approximately 56%. At that time, the Bank redirected
its resources into steel production.
Up until 1961, most of the BNDES’ investments were
concentrated in the area of infrastructure, mainly in the
energy sector, which received 61.8% of the total budget,
leaving the industrial sector with the sum of 35.2%. The
following year, these figures were inverted: 72.5% of its
allocated funds went to industry, with 23.3% going into
infrastructure.18 This trend continued over the following
years. In the industrial area, the focus remained on steel
production. In 1962, this sector received 61.4% of the
total resources allocated and the following year, 80.9%.
The creation of Eletrobras, in 1961,19 was one of the
reasons for reducing the financing in infrastructure. The
new organ was given the responsibility of administrating
the entire sector, which meant not only carrying out
studies, but also implementing projects, building
and operating power generation plants as well as
transmission and distribution lines for electrical energy.
The resources in the Federal Electricity Fund, which,
since its creation in 1954, had been under the control of
the BNDES, were transferred to Eletrobras.
18 Cf. TAVARES, Maria da Conceição et al. O BNDE durante os governos
Quadros e Goulart: uma agência pública de fomento na crise do modelo
de substituição de importações. In: CENTRO CELSO FURTADO. Memórias
do Desenvolvimento, ano 4, v. 4, Rio de Janeiro, Sept. 2010. Available at:
<http://www.centrocelsofurtado.org.br/arquivos/image/201109010958270.
MD4_0_089.pdf>. Accessed in: Oct. 2012.
19 Eletrobras was founded by means of Law Nº. 3,890-A, of April 25, 1961,
while the Jânio Quadros government still held power, and was inaugurated
on June 11, 1962, under the João Goulart administration.
Moment of transition
At the beginning of the 1960s, there was a patent shakeup in the political process, and a certain slowdown in
the rate of development. In 1962, a year in which we
grew, there was crisis. But it was also the period in which
the BNDES, in my opinion, established itself. It was the
moment the Bank went from being an infrastructure
financier to an industrial bank. In 1965, you only have to
look at the statistics to see it: the Bank invested almost
80% of its resources into the steel sector. It was a moment
of transition: the BNDES, which was the electrical energy
bank at that time, became an industrial bank.
Sebastião José Martins Soares, engineer, interviewed in 1982
Clarifying matters
I joined the BNDES in 1963, after passing a public
recruitment exam, and I was placed in the Economics
Department. The Bank’s structure was organized into two
departments of fundamental importance: the Projects
Department, which analyzed projects and requests for
financing; and the Economics Department, which conducted
studies. Each complemented the other in enabling feasibility
studies and later granting credit and controlling the
investments in the projects financed by the Bank. It was at
this time that we performed studies that would pave the
way for the gigantic leap into the area of chemicals, pulp
and paper, steel production, fertilizers and cement. One of
the first things to stress is the importance of the Bank as
an entity that helped to clarify several sectorial matters in
the Brazilian economy, suggesting sectorial policies and
afterwards encouraging the emergence of projects, which
the Bank itself would finance.
José Clemente de Oliveira, economist, interviewed in 1982
43
In 1963, the Fundo Nacional de Investimentos (FUNAI – National
Investment Fund) was created, enabling the BNDES to contribute to the
federal government’s development plan. The resources from Funai came
from a new 10% compulsory loan on the income tax of those working in the
executive branch, the civil service and the military. The collection of this
additional tax should have lasted for three years, with a progressive increase
between 1964 and 1966.
FUNAI would guarantee that the federal investments outlined in the
Triennial Plan continued. Investments were earmarked to strengthen the
country’s rural and industrial economies, with 35% and 65% respectively.
The strategy aimed to reduce the gap between the different regions in
Brazil (the North, Northeast and Central-West versus the Southeast and the
South), which had been widened due to industrialization in previous years.
However, the plan fell short and was unsuccessful. In fact, it could hardly be
implemented at all.
Some of the plan’s estimates were simply wrong, such as the inflation rate,
calculated at around 25%, a figure that was far lower than the 73% reached
in 1963. The low inflation rate during the period reflected the scarcity of
resources. According to data from the IBGE, the economy grew by just 0.6%
and industrial production fell 0.2% that year. Differently to the Target-based
Development Plan, the BNDES did not play the same role in the Triennial
Plan, in which it participated in a more modest and less official fashion, and
was limited to the initial creation phase. During this short period, the Bank’s
focus was steel production.
It meant a lot of work
We at the BNDES worked hard to
create Eletrobras. Several colleagues
and I took part in the company’s
founding committee. My job was to
revise the Federal Electricity Fund to
change the Single Tax on Electrical
Energy. A bill was drawn up, but it was
almost scrapped, because this was
finished just as Jânio Quadros was
leaving office. His resignation meant a
setback and things were a bit shaken
up, but afterwards the government
minister who took over moved things
on, and the single tax was eventually
revised. The tax rate was created,
providing a basis to calculate taxes,
and this boosted the fund’s resources
for financing power plants and
transmission lines, and Eletrobras,
when it was created in 1962, took
advantage of these resources for
investment.
Cid Salgado de Almeida, engineer and
economist, interviewed in 2002
44
Broadening horizons
At the beginning of the 1960s, the Bank was deeply
involved in two large-scale projects with two large steel
mills. You could not actually feel things draining away,
because the resources were being requested for these
projects. In fact, I was not at the Bank at that time. In
1960, 1961, and also in 1967, 1968, I did not work for
the BNDES. First I went to Bank of Brazil’s Foreign Trade
Portfolio and then to the Ministry of Trade and Industry.
But I saw that the Bank was concerned about investing
too much money in steelworks and not enough in the
other sectors. There was a time when the Bank managed
to put together enough resources for the steel projects,
and there was still enough left over for other projects, but
there were none. It then had to change direction, seeking
out small and medium-sized companies to see if it could
find projects in which to invest its resources.
Presidents
•
Lúcio Martins Meira | 1959-1961
•
José Vicente Faria Lima | 1961
•
Leocádio de Almeida Antunes | 1961-1963
Fund Management – Mechanism Created
•
National Investment Fund (FUNAI) – Law Nº. 4,242, of July 17, 1963
Government Program
•
Triennial Economic and Social Development Plan. João Goulart administration | 1961-1963
45
About-turn! About-face!
[The Castelo Branco and Costa e Silva
administrations]
T
he economy team in the Castelo Branco government initially adopted
measures that would counteract inflation, such as the reduction
of credit, salary control and the restricted issue of currency. In
November 1964, the ministers of Finance, Otávio Gouveia de Bulhões,
and Planning, Roberto Campos, launched the Plano de Ação Econômica
do Governo (PAEG – Government Action Plan), aimed at returning to the
economic growth that had stalled in 1962.
PAEG proposed a wide-reaching, government-coordinated operation in
the economy, divided into two paths: contingency measures and structural
reforms. The measures had five objectives: to progressively limit inflation;
to accelerate economic development; to reduce sectorial and regional
imbalances, as well as the tensions created by social inequality by improving
standards of living; to expand the investment policy and, in doing so, create
employment; and to correct the tendency for discrepancy in the balance of
payments. In addition, new political reforms were slated, with alterations in
the tax, currency, financial and foreign sectors.
One of the measures adopted by PAEG, in connection with currency reform,
was to create the National Treasury’s Readjustable Obligation (ORTN), whose
nominal value would be periodically updated in keeping with variations in
the purchasing power of the national currency. Instituted as a provisional
index, the ORTN – widely known as a “currency adjustment” – ended up
being incorporated for more than 20 years as one of the instruments used to
raise funds for the government and the national economy.20
A new loan was obtained from the International Monetary Fund (IMF),
and a reform of the banking system was initiated. It was regulated by Law
Nº. 4,595, of December 31, 1964, and provided for policy and the banking
and credit systems, while also establishing the National Monetary Council.
Furthermore, the SUMOC was transformed into the Central Bank of Brazil. The
National Financial System then comprised the following organs: the National
Monetary Council, the Central Bank of the Republic of Brazil, the Bank of
Brazil, the National Economic Development Bank and a number of other
public and private financial institutions.
20 The ORTN was created by Law Nº. 4,357, of July 16, 1964, and was terminated in 1986, when the new
national currency, the cruzeiro, was implemented.
46
The Central Bank was charged with the task of coordinating the activities
and attributes of the public, private and commercial banks, the investment and
development banks, credit and financial institutions, brokerage companies as
well as security dealerships.
Similar to PAEG, there was a drop in inflation and a certain improvement
in public finances. However, the measures proved to be recessionary. Between
1964 and 1967, the real value of salaries fell between 40% and 60%. The
prolonged economic crisis affected the entire national production system. In
1966, the number of bankruptcies and insolvencies tripled in relation to 1964.
Clothing, foodstuffs and the construction industry were the most affected
sectors. The rate of unemployment rose drastically, and multinationals had to
reorganize, seeking resources from their head offices.
It should also be stressed that several proposals implemented by PAEG had
been deemed necessary under the Triennial Plan, since they were structural
reforms imposed by the complexity of Brazil’s society and economy – the result
of accelerated growth and industrial development in the country.21
In October 1965, the 2nd Institutional Act was introduced and, among
other measures, established indirect elections for the Presidency of the
Republic, decreed the dissolution of the existing political parties, and further
strengthened the powers of the president. The mandate of Field Marshal
Castelo Branco was extended through to 1967. The partisan legislation allowed
the organization of just two parties, which were represented by the National
Alliance for Renovation (ARENA) and the Brazilian Democratic Movement
(MDB). In March 1967, a new Constitution came into effect, endorsing the
actions of the Military Regime, and a new president, Arthur da Costa e Silva,
took office through an indirect election. Antonio Delfim Netto was invited to
take control at the Ministry of Finance, and Hélio Beltrão was installed at the
Ministry of Planning. Costa e Silva asked Beltrão to organize a hard-hitting
economic plan, with urgent measures and national repercussions.
Delfim Netto continued with the policy to fight inflation, but incorporated
changes in the economic policy. The problem lay in balancing the control
of inflation and the growth of GDP in short-term actions. The team at the
Ministry of Finance understood it would be possible to reduce inflation without
negatively affecting the performance of GDP. Economic growth itself would help
stimulate a drop in inflation.
In 1968, the Ministry of Planning launched the Programa Estratégico de
Desenvolvimento (PED – Strategic Development Program), redefining economic
policy for the three-year period between 1968 and 1970. The program aimed
to combat inflation, to expand employment opportunities and to accelerate
economic growth by boosting production capacity. The goal was to increase the
GDP growth rate by 6% per year.
21 Cf. TAVARES, Maria da Conceição et al. O BNDE no Governo Castelo Branco: o desenvolvimento liberal. In:
CENTRO CELSO FURTADO. Memórias do Desenvolvimento, ano 4, v. 4, Rio de Janeiro, set. 2010. Available
at: <http://www.centrocelsofurtado.org.br/arquivos/image/201109010959210.MD4_0_111. pdf>. Accessed on:
September 19, 2012.
47
Above all, the PED’s industrial policy focused on
expanding those sectors deemed dynamic, including
capital and intermediary goods, capable of accelerating
economic growth. There was also a need to raise
resources to finance these sectors. With this, there was
a planned expansion of the BNDES’ areas of activity to
finance the sectors of petrochemicals, steel, aluminum,
pulp and paper, the mechanical and electrical
industries, agriculture, and communication, among
others. The measures adopted by the PED produced
results. The country started to come through the crisis
and growth began picking up. In 1968, the economy
grew 9.3%, thanks to the performance of industry which
expanded 15.5%.
It should be noted that the return to growth was
corroborated by important external factors, such as
the availability of credit on the international financial
market, the reduction of the foreign interest rate and
the expansion of foreign trade. The context of foreign
liquidity was another factor that boosted accelerated
growth without affecting the balance of payments. The
foreign context guaranteed financing for the deficit on
current transactions and helped push the expansion of
the country’s exports.
Nevertheless, the positive results obtained through
the economic policy in 1968 were not reflected in the
political field. Several protests against the government
made the political arena even more tense. This year
was especially turbulent throughout the world. Youth
uprisings exploded across the globe, affecting Brazil,
as well: student revolts that began in Paris in May 1968,
and were reproduced in many other countries, declared
that it was “forbidden to forbid” – a slogan that singer/
songwriter Caetano Veloso appropriated for one of his
songs at the time.
In addition to this, the period was also notable for
other protests, including the fight for equal rights for
black people, women (in a second wave of feminism)
and homosexuals. “Idealism,” “protest” and the
“fighting spirit” were the key words of the time. These
were electrifying times, when culture and politics often
blended in a melting pot of different ideologies.
In March 1968, protests against the government
reached a peak with the death of the student Édson
Luis in a confrontation with the Military Police in Rio
de Janeiro. Confrontations between students and police
became more intense. In June, with the permission of
the state government, the student movement organized
an enormous protest – known as the “Parade of One
Hundred Thousand”– against the dictatorship. The
protest brought together politicians, intellectuals, artists
and musicians in the center of the city. This time, there
were no violent confrontations.
The National Security Council met to discuss the
situation surrounding the waves of protest, which
by now were spreading throughout the main cities
of the country and had led to the arrest of several
students. In opposition to the hard-line wing of the
military government, President Costa e Silva met with
student leaders in a bid to calm their anger. During the
conversation, the president listened to requests to have
imprisoned students freed, to bring an end to censorship
and to restore democratic liberties.
The Parade of One Hundred
Thousand against the
dictatorship started at
Cinelândia and took over
Rio de Janeiro downtown
on June 26, 1968
However, it was too late to appease the rise in extreme reactions that
had been unleashed on both sides. On the same day as the Parade of One
Hundred Thousand, a van belonging to the Popular Revolutionary Front
(VPR) was driven into the barracks of the II Army Unit in São Paulo, killing
the soldier Mario Kozel Filho. This opened the floodgate for armed battle,
which only got worse the following year.
The announcement of Deputy Marcio Moreira Alves on the floor of the
House of Representatives, accusing the government of violence against
students, led to protests from the military ministers. The government’s
response was not long in coming. In February 1968, Field Marshal Costa e
Silva signed the 5th Institutional Act (AI-5) which, among other measures,
closed the National Congress. This signalled the start of the most difficult
period in the military-led government.
Brazil’s macroeconomic variables
during the 1960s
YEAR
GDP
%
RATE OF
INVESTMENT
%
INFLATION
%
PUBLIc
DEFICIT
CR$
1961
8.6
13.1
52.32
_
1962
6.6
15.5
73.81
_
1963
0.59
17.0
90.65
_
1964
3.4
15.0
57.09
332.21
1965
2.4
14.4
38.45
2,560.88
1966
6.7
15.9
28.58
6,089.07
1967
4.2
16.2
24.23
8,677.50
Source: Institute for Applied Economic Research (IPEA), 2002.
The cruzeiro novo [1967-1970]
The depreciation of the national currency in use at
the time, the cruzeiro, also led the Castelo Branco
government to foster a monetary reform. In 1965, the
“cruzeiro novo” was created, with one unit equivalent
to 1,000 cruzeiros. A stamp representing cruzeiro novo
was used, providing people with a speedy adaptation and
understanding of the link between the two currencies. The
cruzeiro novo, represented as NCr$, moved into effect in
February 1967 and remained in circulation until 1970. No
new notes with the new standard were released, however.
49
New paths and a new role
[BNDES | 1964-1969]
D
uring the 1960s, the BNDES began to expand its activities into other
sectors of the economy, seeking to accompany Brazil’s new momentum.
Support tools were created, designed especially for projects backed by
the private sector, thus opening up other perspectives for economic development in the country. The focus was concentrated on the industrial sector,
capital goods and basic inputs.
The State had created specific organs for the infrastructure areas, above
all those in transport and energy, incorporating the National Railway
Network (1957) and Eletrobras (1962), which would be responsible for directly
managing related projects. Since then, the BNDES has managed to allocate
investments to other sectors of the economy, such as those connected with the
private sector, which until then had had little chance of receiving funds from
the Bank.
At this time, the most important portion of the financial resources
administrated by the BNDES, since its founding, was that of the Economic
Renewal Fund, comprising two sources: a compulsory loan, levied on those
paying income tax, and compulsory deposits.22 These compulsory charges,
which in 1956 were extended for another ten years, would only last until the
end of the fiscal year of 1966.
However, Law Nº. 4,506, of November 30, 1964, which entered into effect
the following year, abolished the additional income tax that had been the
Bank’s main source of income. The government, however, started earmarking
20% of the revenue collected through income tax to the BNDES, so as to
continue providing funds for the Economic Renewal Fund. This substitution
was positive since the results of the tax reform substantially increased the
total amount collected through income tax and, consequently, the resources
that were passed on to the BNDES.
22 As well as the compulsory loans charged on both individuals’ and companies’ income tax, the fund was
further strengthened by the inclusion of compulsory deposits collected from institutions such as the
Federal Savings Bank, social security institutions, as well as insurance and capitalization companies.
50
New paths
For a long time, the BNDES’ basic source of income had been
the additional income tax. This existed until 1966, when
the additional income tax ended and, therefore, so did our
solid, and practically only, source of resources. The additional
income tax provided 99% of our resources as there had been
no room to seek foreign resources, and there had been no
return on previous investments since the portfolio was very
small and long-term. It seemed that the Bank’s resources
were to be defined annually as part of the federal budget.
It would be necessary to discuss, and “win” a budgetary
standing. This was a time of crisis when autonomy was
lost. In one sense, the diversification of the Bank, with the
creation of the Programa de Financiamento à Pequena e
Média Empresa [FIPEME – Financing Program for Small and
Medium-sized Companies], the Fundo de Desenvolvimento
Tecnológico e Científico [FUNTEC – Technological and
Scientific Development Fund] and Fundo de Financiamento
para Aquisição de Máquinas e Equipamentos Industriais
[FINAME – Financing Fund for the Acquisition of Industrial
Machinery and Equipment], was also an attempt to find
paths that would resolve the resource problem.
Creative moment
From the beginning of 1964 through until the end of the
1960s, the Bank went through a very creative period. The
BNDES, which had previously only operated as a fund – the
so-called Fundo de Reaparelhamento Econômico [Economic
Renewal Fund] – changes its focus to one of programs or
sectorial funds. It is interesting and very important to note
that the Bank was always ahead, identifying bottlenecks
and needs early on, and taking the lead.
From 1964, the Bank had other sources of investment
and could intensify the process of diversifying its
activities with a view to providing more support
for private Brazilian companies. The BNDES began
administrating new funds designed to provide
financing: the Fundo Agroindustrial de Reconversão
(FUNAR – Agroindustrial Redevelopment Fund);
FUNTEC; FINAME; the Fundo de Desenvolvimento da
Produtividade (FUNDEPRO – Productivity Development
Fund); and the Fundo Especial para Financiamento de
Capital de Giro (FUNGIRO – Special Fund for Financing
Working Capital).
Initially created as a fund in 1964, FINAME23 was
designed to finance the purchase and sale of machinery
and equipment produced in Brazil, while it was also
able to grant financing to projects that implemented
small-scale companies. It was the most forceful fund, as
well as the most strategic within the context at the time,
to such an extent that, in 1966, a new decree24 created an
independent authority to work together with the Bank,
called the Special Agency for Industrial Financing,
which incorporated the fund. This new agency, which
kept the abbreviation FINAME, sought to develop and
consolidate Brazil’s industrial sector, increasing the
drive of the import substitution policy.
23 Created by Decree Nº. 55,275, of December 22, 1964, with the following
sources: loans or donations from international, Brazilian or foreign
entities and, within these, the resources coming from the “Alliance for
Progress;” resources placed at its disposal by the Bank of Brazil and
other federal or state financial agencies; resources raised by the BNDES
on the domestic and foreign capital markets; revenues arising from its
own operations, such as reimbursement of capital, interest, commissions,
bonuses and others. Cf. BRASIL. Decree Nº. 55,275, of December 22,
1964. Creation of the Financing Fund for the Acquisition of industrial
Machinery and Equipment – FINAME and other arrangements. Site of
the House of Representatives. Available at: <http://www2.camara.gov.
br/legin/fed/decret/1960-1969/decreto-55275-22-dezembro-1964-395513publicacaooriginal-1-pe.html>. Accessed on: December 20, 2012.
24 Decree Nº. 59,170, of September 2, 1966. Similar to the previous decree ,
it carried the signature of the President of the Republic, Castelo Branco,
and ministers Otávio Gouveia de Bulhões (Finance) and Roberto Campos
(Planning).
Federal Railway Network (level crossing).
RFFSA Belford Roxo Train
51
The Furnas power station in the city of
Passos (MG) was inaugurated in 1963. Its
construction in the 1950s was financed by
the BNDES
New lines
Roberto Campos held complete trust in Garrido Torres, and he was therefore
given the Presidency of the BNDES. Garrido Torres opened the two new lines –
small and medium-sized companies, and FINAME – with the support of the
Inter-American Bank. At the time, Cleantho de Paiva Leite opened a line of
credit for the BNDES to invest in small and medium-sized companies.
The day after
FINAME was incredibly important. Individually, it was maybe the BNDES’
most important program, not only for the capital goods industry, but also for
purchasers and other industries. The day after the news came out that the
FINAME was being created, we went to the BNDES. This was in 1965, and we
arranged for the purchase of the first machinery under the brand Gradiente
(which was also one of the first of FINAME’s projects) through a financing agent.
Eugênio Emílio Staub, administrator, interviewed in 1982
52
FUNTEC, created in 1964, is also worthy of mention.
It was founded to provide support for research and
training for specialized labor. In partnership with
the National Council for Scientific and Technological
Development (CNPq), FUNTEC helped develop almost
all the graduate courses that existed in the country.
Since 1958, through Internal Resolution Nº. 46, called
the Technical Education and Training Quota, the BNDES
had already sought to encourage companies to support
professional training. According to this resolution,
companies that wished to invest resources in technical
education and improvement of their employees, would
receive a bonus of up to 3% of the amount of financing
granted by the Bank for their projects.25
A significant investment
The internal organization established when founding
the BNDES lasted until 1956. Later, in 1967, a reform
was conducted with President Jaime Magrassi de Sá.
Between 1956 and 1967, there were no changes in
the internal organization. There may have been tiny
adjustments at a departmental level, but I do not recall
any. Soon after I joined, Magrassi decided to internally
reform the BNDES, and I took part in these discussions
with Roberto Campos, Amaury Abreu etc. This gave
rise to the Special Operations Center, which I headed
when we administrated the Technical and Scientific
Fund, the FUNTEC. FUNTEC was created, proposed
and administrated by the Economic Department until
this change came into effect. And it was a substantial
investment, if you think about it in the long-term and
what it actually achieved, because as you become more
technical and progress with this technology, you become
increasingly dependent on solid scientific knowledge.
José Pelúcio Ferreira, economist, interviewed in 1982
However, in 1963, the Economic Department of
the BNDES carried out a study to analyze the results
obtained from Resolution Nº. 46 and found that they
did not correspond with the Bank’s expectations. It was
clear, however, that the growth of Brazilian industry
demanded increasingly more trained and qualified
labor. Instead of abandoning the proposal to provide
incentives to train personnel and for scientific and
technological development, the BNDES’ Board of
Directors felt that it should improve it in the form of a
new instrument. FUNTEC was implemented using the
BNDES’ own resources, on the initiative of sectors that
had already been developing specifically-designed
projects. As such, FUNTEC offered new perspectives to
develop science and technology in the country.
During this period, the BNDES also began providing
support for projects connected with agriculture, as well
as small and medium-sized companies. In 1956, support
for this latter sector was strengthened by creating the
FIPEME. Micro, small and medium-sized companies
(MSMEs) were gradually gaining important ground in
the national economy, and achieving quite significant
growth within the Bank.
A leap in quality
FUNTEC also came about at this time, and this was
considered essential. The Bank had a line of credit
called the Education and Training Quota, designed so
that projects approved by the BNDES would receive a
portion of credit for companies or institutions to invest
in training the workforce. This program did not work
out and was cut. In the Economic Department, José
Pelúcio Ferreira led the studies that created FUNTEC, a
fund designed to support not only training for high-level
workers, but also universities and institutes that were
similar in terms of basic research, master’s and doctoral
programs. It was FUNTEC the really introduced graduate
courses into Brazil. Numerous higher education and
research institutions benefitted from large amounts
of resources. These included PUC-Rio, the Center for
Physics Research, the Physics Institute of the University
of São Paulo, COPPE. Support from FUNTEC represented
an important qualitative leap forward in graduate
education in Brazil, in terms of Master’s and doctoral
degrees and research undertaken.
25 Cf. FERRARi, Amilcar. O fundo de desenvolvimento técnico-científico
(FUNTEC) do BNDE. Parcerias Estratégicas, Brasília (DF), n. June 26, 2008.
53
Educational work
As of 1964, one of the Bank’s large-scale
industrialization programs allowed not only for
the creation of many small and medium-sized
companies, but also for improved structuring.
Small and medium-sized companies in Brazil
today still lack basic notions of business, but
at that time, it was much worse. Most of these
companies had very little technical information.
FIPEME financed a great number of projects
and was reasonably efficient, with relatively low
costs for the time. The BNDES’ requirements for
presenting a project forced small and mediumsized businessmen to be much more aware
of how their companies were run. This had
a significant educational effect. Afterwards,
things were passed on to agents to attend Brazil
as a whole as the centralized costs within the
BNDES were relatively high. The idea was very
good, making local efficiency much faster and
much more efficient. I took part in the FIPEME
Program during its very early stages, and I have
my own personal experiences with it: we would
go to the companies, and they did not have an
accounting department, they did not have any
information on how much they owed the bank, it
was all very relaxed, like “oh, only so-and-so has
that information.” FIPEME did some exceptional
educational work, requiring companies to
organize, which brought costs down and
improved results.
What’s the average?
When I joined the BNDES in 1966, I worked in the
Department of International Operations. It was
the time of the Wheat Agreement; the United
States sold wheat to Brazil and the money was
reinvested in the country via the BNDES. They
carried out regional studies aimed at integrating
Latin America. So there were various areas with
lots of research. It was also a time when the
Americans provided more resources for Brazil,
mainly via the IDB. It was also the period when,
theoretically, investment in small and mediumsized companies in Brazil started, but at the time,
they were “large-medium” companies.
Luiz Alberto Madeira Coimbra, economist, interviewed
in 2002
The Bank adapted to meet the new needs in the country. New
funds helped alter the BNDES’ profile, meaning that it therefore
began to prioritize the industrial sector. It should be noted, however,
that there were still several infrastructure projects underway, and
the Bank did not simply withdraw from these activities. During this
period, the BNDES worked closely with the National Department of
Roads and Highways and other state companies, which, together
with the Bank’s backing, imported equipment to build and maintain
highways throughout almost the entire country.
A natural thinker
I joined the Bank in 1966, and was lucky that the Economics
Department was full, meaning that I went to work in the office
of Professor Ignácio de Mourão Rangel. Even though his name is
also Mourão, we are not related. He was a well-known economist,
with several books published, and a natural thinker who really
enjoyed a good conversation. There I took a sort of second degree
in Economics. I learned a lot from him. We were in the Regional
Studies Division. Professor Rangel had been, let’s say, put on ice
because he had been seen as part of the left-wing. With the coup
in 1964, he lost his influence both inside and outside the Bank.
He was a member of advisory boards at planning and economic
studies institutions. I think that he suffered a heart attack at this
time, actually. He took a lot of time off at this point, but afterwards
the doctor authorized him to work in the afternoons. So he would
go to the BNDES in the afternoon and stay in this regional studies
department dedicated to regional development.
Júlio Olimpio Fusaro Mourão, economist, interviewed in 2002
A major shift
As of 1967 and 1968, development started up again. The Bank
assumed a fundamental role in consolidating the industrial sector.
This sector developed during the latter half of the 1950s, overcame
the crisis and consolidated itself. At this time, the BNDES turned
towards the industrial sector. The Bank helped establish the steel
manufacturing industry by assisting with two large-scale projects –
Usiminas and COSIPA; provided important support for some basic
sectors within the chemicals industry, the National Industry of
Alkalis and Petrobras, with a rubber factory; supported the cement
sector; began to contemplate the pulp sector – not through largescale projects in the 1970s, but some sort of support for pulp.
It opened up to the non-ferrous steel industry and supported
aluminum and zinc, too. The Bank was a pioneer in financing
mineral research in 1967; it was a very-high risk activity, but also
very important. One of the features of the Bank, in a certain way,
was that it anticipated the needs of the economy, and this is what
happened in the 1960s, whether it was through the shift towards
industry, or the diversification of its efforts, while always pursuing
an innovative path.
54
Another change which affected the profile of the BNDES was the transfer of
responsibility, in 1964, from the Ministry of Finance to the Ministry of Planning.
The idea was to strengthen its position as a strategic government instrument and
take advantage of the experience acquired in planning so as to accelerate the
development of the country.
To accompany the expansion of its activities, the BNDES continued establishing
regional offices, which it had begun to do in 1963 with the São Paulo branch. In
1964, regional offices were also established in Porto Alegre and Recife. Besides this,
the BNDES set up a foreign representative office, based at the Brazilian Embassy in
Washington D.C., to facilitate its contact with international credit organizations.
Rare credibility
The inauguration of the BNDES’ offices in São
Paulo (SP) on August 20, 1963, was attended
by President João Goulart.
I played a part, which I think was important, in a program to finance secondary roads
that was conceived by the engineer Sérgio Assis who was also a director of the Bank.
This program had received financing from the IDB [Inter-American Development Bank]
and was very heavily supervised. The IDB kept tight control on the investment of its
resources. The program was very successful. At this time, I was head of the Department
of Infrastructure. Afterwards, I was named director of FINAME, a position which I held
for several years until I ended my career with the Bank. The BNDES is one of the world’s
largest development banks. It is an exemplary organization, with rare credibility in this
country, providing enormous assistance for the nation’s progress.
Attílio Geraldo Vivácqua, engineer, interviewed in 2002
Presidents
•
José Garrido Torres | 1964-1967
•
Jaime Magrassi de Sá | 1967-1970
•
Resources arising from the Wheat Agreement and the IDB in 1964
•
Technological and Scientific Development Fund (FUNTEC) – BNDES Resolution Nº. 146, of May 29, 1964
•
Industrial Financing Fund (FINAME) – Decree Nº. 55,275, of December 22, 1964
•
Agroindustrial Redevelopment Fund (FUNAR) – Decree Nº. 56,798, of August 27, 1965
•
Productivity Development Fund (FUNDEPRO) – BNDES Resolution Nº. 224, of May 17, 1966
•
Special Fund for Financing Working Capital (FUNGIRO) – BNDES Resolution Nº. 9, of October 25, 1968
Government Programs
•
Government’s Economic Action Plan (PAEG). Castelo Branco administration | 1964-1966
•
Strategic Development Program (PED). Costa e Silva administration | 1968-1969
55
FUNTEC
FUNTEC was created in 1964. Its first contract allowed for
the creation of COPPE – the Alberto Luiz Coimbra Institute
for Graduation and Engineering Research – which was
already set to be a space to renew the Brazilian University
system and to contribute to the country’s development.
Founded in 1963 by engineer Alberto Luiz Coimbra, it helped
create graduate courses in Brazil and, over a period of four
decades, it established itself as the most important center for
engineering teaching and research in Latin America.
We had started, in March 1963, with American
professor Donald Caty, from the University of Michigan, a
very well-known chemical engineer. He gave two subjects,
I gave one and a mathematician, another. With that we
started a Master’s course in Chemical Engineering that
had eight students. That was the start of COPPE. The BNDE
appeared at the end of 1963. It was something so simple: I
had a friend, Artur Nunes Lago, who had a friend who was
an army official. This was during the military regime, and
this official was with the BNDES, and the Bank had some
money to invest in education, but they still did not know
how. We intended to provide a Master’s and a doctoral
degree at COPPE. I put in a request and was lucky enough
to receive the first FUNTEC contract.
Afterwards I found out that the origin of FUNTEC was
a sum of money that came from loans from the BNDE for
industrial investments. There was a portion earmarked for
FUNTEC that was accumulating and the idea was to put
this money into training and education.
Alberto Luiz Coimbra, founder of COPPE/UFRJ
Based on the three pillars that guided it – academic
excellence, full-time dedication of professors and students,
and the desire to work closely with society – COPPE singled
itself out as an inspirational center of knowledge, with
qualified professionals and teaching methods, serving as a
model for universities and research institutes throughout
the country.
56
The pilot plant for polymers at COPPE/UFRJ receives financing from the
BNDES and Finep. It is the first in the country capable of scaling technologies
for the production of micro- and nano- polymeric particles with applications
in the areas of medicine, biotechnology and pharmaceuticals.
More than 12,000 Master’s and doctoral students have
graduated from COPPE’s 12 graduate (master’s and
doctoral) courses (stricto sensu). It has 325 professors with
PhDs working exclusively for the institute, some 2,800
students and 350 employees. It also has 116 laboratories
that together form the country’s largest engineering
laboratory complex.
Added to its technological development, I would say that
one of COPPE’s strongest traits is the critical awareness of
our professors. This double vocation involving the production
of technology in partnership with companies, to provide
research and innovation solutions for Brazil, and critical
thought, both in relation to companies and the government.
The most significant symbol in terms of a university in this
sense is MIT [Massachusetts Institute of Technology], which
is an important university connected with technology,
but is also where Noam Chomsky, currently society’s most
esteemed economics critic, works. Although he is a linguist,
he is one of the most important social critics. I think that
this is the dual role that COPPE seeks to provide: technical
understanding and a critical vision in a plurality of visions.
The BNDES has been present at several stages of COPPE’s
history, providing essential contributions. There was a
membrane laboratory that was a cooperative project
between COPPE, the BNDES and Petrobras, which gave
rise to a company that is still operating in the area. More
recently, we believe that renewing FunTec is extremely
important to innovating technology in the country,
because one bottleneck we encounter is the difficulty in
getting out of the laboratory to study the prototype on
a life-size scale. This leap is being made possible by the
BNDES. This FUNTEC support is very important and sizeable
enough to allow prototypes to be tested. We currently
have an emblematic project in the health area that was
inaugurated last week and is being financed by the BNDES,
connected to polymeric micro-particles, in which medicine
is encased so that chemicals are only released to sick
people at the final destination. Another important project
within the scope of FUNTEC is the magnetic levitation
train. And there are others under way that are benchmarks
in advancing Brazilian technology.
Luiz Pinguelli Rosa, director of COPPE/UFRJ
Segen Stefen, director of Technology and Innovation at COPPE/UFRJ
Brazil, the wonder child
[The Médici and Geisel administrations]
T
he military dictatorship controlled Brazilian political and economic
life. Censorship on communication limited public debate and
clarification of the country’s real situation for the majority of the
population. In addition to this, it interfered directly in the production of
literature and music, banning the publication of books and the broadcasting
of songs deemed in opposition to the regime.
In all areas – music, fashion, behavior – there was an explosion of
creativity. In music, the era was defined by rock and roll, by the disco boom
and by experimentalism in classical music. The movements that started in
the mid-1960s, or even before this, and that preached a counter or alternative
culture, would influence not only cultural output, but also the behavior of an
entire generation. Slogans such as “peace and love” and “make love, not war”
took over throughout the world, making these values immensely popular.
When General Emílio Garrastazu Médici assumed the presidency in 1969,26
there was a repression of individual rights and guarantees, while censorship
of means of communication was intensified. The Médici administration
was infamously accused of torturing political prisoners. Another
important feature of his government was the Primeiro Plano Nacional de
Desenvolvimento (I PND – First National Development Plan), launched in 1971
in parallel with the Programa Metas e Bases para a Ação de Governo (19701974) [Goals and Framework Program for Government Action (1970-1974)].
The I PND, drafted by ministers João Paulo dos Reis Velloso and Mário
Henrique Simonsen, had very lofty goals: to raise Brazil into the category
of developed countries “within a generation.” The plan was supposed to
provide the country with the infrastructure necessary for it to achieve full
development over the following decades. The emphasis was on sectors such
as energy, transport and telecommunications. Investments were also planned
in education, science, technology and, above all, the expansion of industry,
with a focus on steel manufacturing and the petrochemical sector. Another
strategic point was national integration by creating new regional centers that
would expand economic boundaries.
26 In 1969, the mandate of Field-Marshal Arthur Costa e Silva was interrupted due to health problems and
he was succeeded by a military junta which elected the new President Médici for a mandate between 1969
and 1974.
57
The Rio-Niterói Bridge, inaugurated during the government of General
Emílio Garrastazu Médici (1969-1974)
ASI
A Security and Information Agency (ASI) was placed in all public institutions. This
body was designed to investigate whoever was a communist, whoever was left
wing. Basically, it was an organ for political control in the institutions to either
expel or not let anyone in. But at the BNDES, Doctor Abade [Alberto dos Santos was
Head of the President’s Office under President Jayme Magrassi between 1967 and
1970, and director under the Marcos Vianna administration between 1972 and
1979] did not allow this organ to be implemented, saying that he himself would
take care of it. As he was well respected (he had created the Higher College of War
and was linked to the military authorities), he had support, and this was accepted.
Therefore, until Doctor Abade left the Bank much later, the ASI did not exist there.
It was only created many years afterwards. Doctor Abade was a very serious and
very honest person. In fact, he protected the institution to prevent persecution of
competent people and workers who were not doing anything that could be seen
as harmful. He maintained, contained and prevented all problems. The Bank was
preserved due to the upright and correct attitude of Doctor Abade.
58
The results of the I PND were translated into an admirable expansion of
the national economy, taking material form in the expressive growth in GDP,
stabilization of inflation rates and expansion of industry, employment and
the domestic market. The surprising economic results during the period, soon
referred to as the “Brazilian Miracle,” were turned into a propaganda tool by
the military government.
By reorganizing the economy, the federal government also started to utilize
its resources to create new State-owned companies.27 Projects for national
integration transformed the face of the country and turned Brazil into a
reckoning force. Some of these projects, such as the Transamazon Highway,
the Rio-Niterói Bridge and the Itaipu Hydroelectric Power Plant, became
emblematic, all impressive large-scale projects, which were soon referred to
as being worthy of the Pharaohs.
Since the previous decade, Brazil had been an urban country. Cities
had benefitted from breakneck industrialization. Progress of accelerated
urbanization and industrialization created new employment opportunities.
According to data collected in the 1970 Census, some 56% of its almost
93 million inhabitants lived in cities. The industrial expansion had been
concentrated in the Center-South region of the country. In countless villages in
the Northeast, little had changed – the most that happened was that electricity
arrived. Migration to cities was gaining pace. Over the 1970s, some 17 million
people migrated from the countryside to the country’s main capitals.
Reasons for the so-called miracle were essentially global.28 Brazil’s positive
economic results were in keeping with the international scenario. The period
between 1947 and 1973 was notable for the stability and expansion of the
world’s leading economies. However, this situation changed with the first
“oil crisis,”29 at the end of 1973, when OPEC (Organization of the Petroleum
Exporting Countries) decided to increase the price of a barrel of oil from 2.90
to 11.65 dollars. The entire world was affected and the majority of European
countries and the United States went into recession. Brazil also felt the impact
of the high oil price; the cost to import fuel quadrupled, leading to instability
in the trade balance.
27 Between 1964 and 1969, some 46 State-owned companies were created. During the Médici government,
some 74 more State-controlled companies were created.
28 GOMES, Angela de Castro. Economia e trabalho no Brasil republicano. In: GOMES, Angela de Castro;
PANDOLFI, Dulce Chaves; ALBERTI, Verena (Orgs.). A República no Brasil. Rio de Janeiro: Nova
Fronteira, 2002, p. 253-254.
29 The huge hikes in oil price on the world stage were called entitled the “oil crises.” The first crisis started
after the United States declared its support for Israel in the occupation of the Palestinian territories during
the Battle of Yom Kippur. In retaliation, the Arab countries organized under OPEC decided to increase oil
prices by 400%.
The Transamazon Highway (BR-230) was
planned during the Médici government
and was intended to link the Northern
Region with the rest of the country
In 1974, opposition to the government, centered around
the MDB, launched Ulysses Guimarães’ “anti-candidacy”
for the office of President of the Republic, as a form of
protest. General Ernesto Geisel won the indirect election
by an enormous margin. The fourth military official to
take the post during the dictatorship promised to begin
the political opening of the country, which he called
“slow and gradual.” And that is exactly what it was. The
5th Institutional Act was not repealed until 1978, and the
Amnesty Law was not enacted until 1979.
In the economic field, Geisel continued with the
economic policy from the previous government,
launching the Segundo Plano Nacional de
Desenvolvimento (II PND – Second National Development
Plan). Even under the effects of the crisis, he opted for a
strategy of structural transformation, seeking to maintain
the same economic growth from preceding years. The aim
of the II PND was to effectively complement the Médici
government’s import substitution policy.
New investments were planned to diversify and
consolidate the national industry, focusing on
petrochemicals, steel manufacturing, copper mining
and heavy industry. The idea of Brazil as a large-scale
potential player was strengthened by new projects, such
as the Nuclear Power Plant at Angra dos Reis in Rio de
Janeiro, and the Itaipu Hydroelectric Plant, in Paraná.
Brazil produced just 15% of the oil it consumed, that is, it
imported 85%, and the price of oil in 1973 rose from three
dollars a barrel to 12 in just 20 days. This had a terrible
impact on our trade balance, which had virtually no
deficit, with no trade surplus – it was balanced, basically.
But this was not the worst thing. There was a sort of trap,
in which a diagnosis of industry established through
the studies we had carried out at Instituto de Pesquisa
Econômica Aplicada [IPEA – Institute of Applied Economic
Research] in the 1960s showed that Brazil is a large-scale
importer of the so-called basic industrial inputs, including
steel, petrochemicals, non-ferrous metals; all of industry’s
large-scale raw materials. We were potentially very
competitive in these areas, but we were largely importers.
When Geisel consulted me after he had been elected, but
had still not been sworn in, I said: “Look, President, we
have to be careful of these two things, because if we are
not, Brazil will not start growing again and the miracle
will be over – over for ever.”
The basic rule of the Geisel government was to
competitively substitute imports in international terms.
But if it was not about substituting at high costs; it
was to substitute what? Pulp and paper. Brazil is a land
mass of continental conditions and proportions; it has
excellent climate and heat. Heat and humidity together
is what makes trees grow. It is not like in Scandinavia or
Canada where they grow in the summer and rest in the
winter. Here they grow all year round. In seven years, a
eucalyptus tree is an adult, with a trunk circumference
of 35 centimeters. In the above mentioned areas, a tree
reaches the point where it can be cut down at about
eighty years of age, but here it takes just seven. If the
industrial aspect were to use first-rate technology, the
productivity of the land could be ten times greater.
This was the substitution. Brazil imported paper and
fertilizers, especially phosphate fertilizers. Industry was
not an industry. It imported phosphate rock; it imported
phosphoric acid for use in [the industrial center of]
Cubatão, where it was mixed and packaged for use in
agriculture. From there, the fertilizer crossed the Serra do
Mar [Coastal Plateau] by truck or by train, and went to the
states of Minas Gerais or Goiás, thousands of kilometers
away. Why was industry located on the coast? Because
that was where products from foreign industry were
packaged, but that was all. Meanwhile, we had abundant
phosphate rock in Araxá in the state of Minas Gerais, and
in that plateau region of São Paulo. We therefore built
fertilizer plants in Araxá – Arafértil and Fosfértil. The local
raw material was already close to the consumer center. It
was cheaper and more efficient. This was the substitution
of imports that was encouraged.
João Paulo dos Reis Velloso, economist, interviewed in 2012
Marcos Pereira Vianna, engineer, interviewed in 2002
The miracle is over!
60
Cheaper and more efficient
To circumvent the effects of the oil crisis, in addition to intensifying
domestic exploratory activities, including permitting the participation of the
private sector through the so-called risk agreements, the federal government
started developing programs for alternative sources, such as Proálcool,
launched in 1975. Petrobras’ oil discoveries in the Campos Basin, in Rio de
Janeiro, from 1974 on, were enthusiastically celebrated, but did not provide an
immediate solution to the fall in imports.
Another measure adopted with a view to reducing expenses with imports
was to prohibit more than 1,000 items considered unnecessary. The measures
did not prove to be enough to overcome the problem of the trade imbalance.
Risk agreements failed, and commercialization of ethanol hydrated into
fuel for automobiles only started in 1979. Initially, trading ethanol did not
represent a significant reduction in gas consumption since, in 1978, Brazil
was still importing 80% of the oil it consumed, which represented around one
third of all its imports.
Decentralizing
When I joined, in 1974, the Second National Development Plan was underway.
The main, important emphasis was on substituting imports, especially in
the capital goods and basic inputs sectors. Mostly basic inputs. I took on
a lot of projects in the areas of cement and petrochemicals. The country’s
petrochemical industry had begun in the previous decade in the form of the
São Paulo Petrochemical Pole in Mauá. A large portion of these companies was
controlled by the foreign companies from the private sector. At that time, a
second pole was under development in the form of Petroquímico de Camaçari.
It was an important step for the state of Bahia and decentralization of the
country’s industries, emphasising national control. The tripartite model was
developed, consisting of the State partner, which was Petroquisa from the
Petrobras Group; the foreign partner, in theory supplying technology; and the
national partner. This was the embryo for developing several national groups
and the entrance into petrochemicals. A number of these groups experienced
impressive growth, and they enjoyed support from the BNDES over these years.
Jorge Kalache Filho, engineer, interviewed in 2002
Good while it lasted
Import substitution programs, as well as investments in basic inputs and
capital goods, all worked out well. Brazil imported paper pulp and today it is
the largest exporter in the world. Aracruz became the world’s largest exporter.
All fertilizers were imported, but today there is no longer any need to import as
the country is self-sufficient. And there were lots more. But, at the end of the
1970s, I said: “This model has run its course; it is over. We have to rethink the
growth model for Brazil, and now the dynamic factor is the domestic market.”
61
During the second oil crisis, which took place between 1979 and 1980,30
production was seriously affected and exploration contracts with foreign
companies in Iran were renegotiated. In 1980, the price of a barrel reached
record levels, jumping from 12 to 30 dollars. The new crisis, which put an end
to the era of cheap oil, led to a global recession, undermining the economies
of European countries, the United States and Japan.
In the mid-1970s, Brazil had a population of approximately 110 million and
was already being recognized as one of the most densely inhabited countries
in the world. In thirty years, the Brazilian population had more than doubled.
The country’s profile was changing and the main change was the shift of
the economic focus from the interior to the city. Most of the population was
concentrated in large urban centers, such as the cities of São Paulo, Rio de
Janeiro and Belo Horizonte.
The state of São Paulo was a stable economic hub, strengthened by the
development of an industrial pole including the cities of Santo André, São
Bernardo, São Caetano, Diadema, Guarulhos and Osasco. This region known
as ABC Paulista attracted a considerable number of immigrants from all over
the country.
The national market was, however, better integrated as a result of the
strong push provided by the economic policy adopted by the military
government. One aspect of this policy were the tax incentives provided for
other regions, such as the North and Northeast, which encouraged migration
of production capitals from industrialized regions, such as the Southeast,
resulting in a certain “deconcentration”of urban centers, such as Rio and
São Paulo. The petrochemical industry, steel manufacturing and pulp poles,
established in other states, helped create employment in other regions and
consolidated the country’s industry.
The Second National Development Plan implemented important structural
reforms, but the “macroeconomic costs of this success were momentous,”31
especially when the foreign debt was concerned. In Brazil, expenditure on
oil imports rose from 4.1 billion dollars in 1978, to 9.5 billion in 1982. The
staggering growth cycle of the Brazilian economy had reached its limit, and
the international crisis showed sure signs of even harsher difficulties in the
immediate future.
30 The second crisis resulted from the oil production stoppage in Iran when the Ayatollah Khomeini
established an Islamic Republic following the toppling of the Shah Reza Pahlavi in 1979. The following
year, the Iran-Iraq War made the situation even worse.
31 Cf. HERMANN, Jennifer. Auge e declínio do crescimento com endividamento: o II PND e a crise da dívida
externa. In: GIAMBIAGI et al. (Orgs). Economia brasileira contemporânea: 1945-2010. Rio de Janeiro:
Campus, 2011.
62
Almost everything
Special mission
We analyzed the largest project underway at the time. It
involved a mining project, a railway in Carajá and a port
in the Amazon. An analysis was carried out together with
the World Bank, the KfW [KreditanstaltfürWiederaufbau]
and the Japanese Development Bank. There was a lot
of criticism, even from environmentalists: how was a
railway going to be built in the Amazon region? They said
that this and that was going to happen, that it would
not work, the termites were going to eat the wooden
sleepers, that there would not be a market etc. None
of this happened. It was a huge job and it was very
important that the Bank should approve it, because the
other banks – the World Bank, KfW and the Japanese
Bank –, also decided to finance it. Up until that time,
it was the largest financing project undertaken by the
Bank. Today, Brazil is the world leader in iron ore and
has the world’s largest mining company, partly because
of this investment. The Bank has provided practical
support for all of Brazil’s large-scale projects, all the large
companies and all the infrastructure projects, whether
they are government or private projects. The BNDES has a
serious responsibility and has played an enormous part in
establishing the country’s gross fixed capital. Every sector
has been supported by the Bank.
FINAME, the BNDES’ subsidiary, finances equipment
manufactured in Brazil in the form of indirect financing
through financial agents. They finance the companies
purchasing the equipment. Despite having a small team,
FINAME manages to work throughout Brazil, where
any one of the Bank’s agencies is located and there is
someone interested in getting financing for equipment.
The FINAME guarantor was the financial agent and
the guarantor of this agent was, normally, a lien on
the equipment. Brazil’s imports essentially comprised
equipment (40%), oil (40%) and others (20%). As oil had
been through two crises (the price of a barrel rising from
three dollars to 12 dollars in the first, and from 12 dollars
to 30 dollars in the second), the Geisel government
decided that the majority of the equipment for the
expansion of COSIPA, the CSN [National Steel Company]
and Usiminas should be manufactured in Brazil. As I had
had experience with Usiminas, I joined FINAME in 1976
with the objective of making sure that the equipment
was manufactured in Brazil.
Wagner Bittencourt de Oliveira, engineer, interviewed in 2012
Irimá da Silveira, engineer, interviewed in 2012
An ostrich
The country chose to ignore the crisis. “The crisis rolls
on, but I am an island of prosperity, and I will continue
consuming, building highways, doing everything as
if nothing was happening.” We acted like an ostrich.
Perhaps this was not the wisest thing to do! If the
recession had hit in 1974, many projects that were
being launched would have been aborted and today
Brazil’s industry would have been much smaller. Our
most significant asset today is our industry, and, thanks
to its existence, last year we exported more than 10
billion dollars in industrial products, allowing us to
turn our list of exports around, shifting from the export
of predominantly primary products to predominantly
industrial products. All this is explained by the fact that
we have capacity for industrial production that is much
higher than the national market in recession can absorb.
If we had been through this recession in 1974, most large
industrial projects would have been cut and it would not
be experiencing the turnaround that is happening now.
At the time of the oil crisis, I thought that we should
have acted accordingly, rationing gasoline, fuels and
everything else, thus allowing the crisis into the country.
I was in favor of this sort of measure. Today, in hindsight,
I ask myself whether Velloso and Mário Henrique
Simonsen did not do the right thing.
63
The cruzeiro [1970-1986]
Before the cruzeiro novo entered into circulation in 1967, a decree
established that the Brazilian monetary unit should go back to being
called the cruzeiro. This decision was put into practice in 1970, and
the cruzeiro went back to being represented by the acronym “Cr$” and
the value was maintained equivalent to the extinct cruzeiro novo.
Brazil still did not have autonomy to produce paper money. For it to
be provided, it was necessary to turn to foreign manufacturers. At
this time, the government decided to nationalize its production. The
Mint was reequipped with all the necessary technical facilities to
manufacture all the country’s money.
A competition was launched to choose the new series of notes. The
winner was Aloísio Magalhães, who presented work that was truly
innovative in the area. The 1, 5, 10, 50 and 100 cruzeiro notes were
allocated different colors and sizes, increasing as the nominal value
rose. The theme used in the imagery on the notes was the leading
governors of the country since independence, in chronological order,
except for the one cruzeiro note, which displayed the bust of the
female “Liberty.”
The publication of the 1,000 cruzeiro note in 1978 prepared the way
for a new set of notes also drawn up by Aloísio Magalhães. Visually
innovative, their design, in the style of playing cards, allowed them to
be read from all angles. They were commonly known as “Barons” since
they displayed the image of the Baron of Rio Branco.
In 1979, smaller and more lightweight 1, 5 and 10 cruzeiro coins
made of stainless steel were launched, and this became the only
material to be adopted in the manufacture of Brazilian coins.
64
Growing with Brazil
[BNDES | 1970-1979]
T
he BNDES played an important role in the performance of the First
National Development Plan (I PND), even though it was working with
limited resources. The two new funds – that for Modernization and
the other for Industrial Reorganization, created in 1970, and substituting the
FUNDEPRO, and the Fundo de Desenvolvimento do Mercado de Capitais
(FUMCAP – Capitals Market Development Fund), in 1971 – did not mean
substantial changes in their allocations.
In October 1970, the engineer and then Executive Secretary of the Ministry
of Planning, Marcos Pereira Vianna, took over as president of the BNDES at
the invitation of minister João Paulo dos Reis Velloso. Vianna headed the
Bank for nine years, during the administrations of generals Médici, Geisel
and Figueiredo. During this time, he implemented alterations in the structure
of the BNDES and managed to obtain new resources, which allowed for
a significant increase in the number of disbursements and considerably
expanded the size of the BNDES. Marcos Vianna spent more time as head of
the Bank than anybody else.
Changing Brazil
I joined in 1974. The BNDES had just undergone the Booz Allen [Hamilton]
restructuring, which adapted the Bank into a company, since it was still a
government agency. But it still carried that hint of an agency called a “Division”.
I started in the Planning Division, before working in the Presidency’s Technical
Consultancy Department. From there I went on to my first operational area, the
Infrastructure Department where I stayed for quite a while. This was one of the
most fulfilling periods of my life. You are very idealistic when you are young,
and I came in here in the 1970s thinking that the Bank was going to change the
country. And I think that our work really did change the country a lot.
Mario Guedes de Mello Neto, economist, interviewed in 2002
Team spirit
Marcos Vianna was my General Secretary as it was called at the time, while
today the post is called an Executive Secretary. I brought him in from the Vale
do Rio Doce Company where he was the industrial director. The president of the
BNDES needed to change. I announced the exit of the president and the entry
of his replacement, Marcos Vianna, so there was already a friendship, a team
spirit that had been formed between the Ministry of Planning and the BNDES,
so the Bank started taking part in a lot of studies.
65
In 1971, the BNDES’ status went from that of a government agency to a Stateowned company – an important moment in the organizational history of the
Bank. At the same time, the BNDES System was created, comprising the FINAME
subsidiary and the recently created Small and Medium-sized Companies’
Management Assistance Center of Brazil (CEBRAE). Later on, CEBRAE became an
autonomous and private, non-profit public utility. Its name was altered to SEBRAE
(Brazilian Micro and Small Business Support Service).
Esprit de corps
A company that the BNDES held in high regard was Booz Allen Hamilton. This was
due to the notable work it had performed on the Usiminas Project, having carried
out all the organizational work. I called the old guard in – this included Juvenal
Osório, Lira, José Clemente de Oliveira and Ignácio Rangel – to talk and I suggested
contracting Booz Allen Hamilton to make an analysis and draft an administrative
reform plan. Everyone agreed. Booz Allen Hamilton’s counterpart within the BNDES
was Roberto Saturnino Braga and another person whom he chose called Armando
de Oliveira. One of the aims was to modernize the structure of the Bank and restore
the esprit de corps which was basically dead. In addition, I explained to [minister
João Paulo dos Reis] Velloso that Brazil needed to take a leap forward and that the
BNDES was the organ that could make it happen, as long as it had the resources.
Renewal
The legal status of the BNDES changed, as well. Within the same framework, this
renewal and modernization of the institutional Bank, I changed the legal status of
the Bank, which had been a government agency and was transformed into a Stateowned company – under Brazilian law, these are completely different. There is
much more flexibility etc. Afterwards, I brought the PIS [Social Integration Program]
and PASEP [Public Service Employee Savings Program] resources here. Previously,
the PIS went to the Federal Savings Bank, and the PASEP [Public Service Employee
Savings Program] to the Bank of Brazil. The BNDES survived on the crumbs from the
so-called monetary budget. Delfim Netto was the almighty, the superpower within
the Monetary Council, and he gave what he wanted. The BNDES was stagnating
in terms of the volume of operations, and was almost paralyzed in terms of its
internal structure.
CEBRAE with a C
I joined the BNDES in 1971 as head of the Special Operations Department. I
was also the CEO of FINAME and managing director of IBRASA [Investimentos
Brasileiros S.A.] and later EMBRAMEC [Mecânica Brasileira S.A.]. Between 1974
and 1979, I was responsible for the Planning and Priorities Division at the BNDES.
Between 1971 and 1972, one of my ideas that the Bank implemented was the
Small and Medium-sized Companies’ Management Assistance Center of Brazil,
“CEBRAE with a C,” and I was its first president. At that time, we had very few
resources, but what was important was that the idea had been implemented
to provide support for the microcompanies, a sector that provided a lot of
employment and which, in developing countries, is always in need of capital.
Roberto Procópio de Lima Netto, engineer, interviewed in 1982
66
The BNDES continued supporting infrastructure
and transport. Since 1968, however, support for the
private sector surpassed investments made in the public
sector, accounting for more than 50% of the total. In
the industrial area, financing prioritized base and
basic input industries, such as steel manufacturing,
petrochemicals, pulp and paper, as well as cement,
among others.
The year of 1974 was especially rich in terms of
renewal for the BNDES. The Bank started receiving
resources from the Programa de Integração Social (PIS
– Social Integration Program) and the Programa de
Formação do Patrimônio do Servidor Público (PASEP
– Public Service Employee Savings Program), which
were created four years earlier and had been under the
management of the Federal Savings Bank and the Bank
of Brazil, respectively.
The entry of these resources pushed the Bank’s
activities ahead. In this same year, subsidiaries
directly linked to the Bank were created, with a view to
encouraging the growth of industry: MecânicaBrasileira
S.A. (EMBRAMEC), Insumos Básicos S.A. (FIBASE) and
Investimentos Brasileiros S.A (IBRASA). The BNDES also
sought to provide incentives for the capitals market,
supporting the capitalization of national companies.
At that time, the BNDES once again assumed the
position of the government’s leading development
tool. The II PND was put into operation, and the Bank
collaborated in its implementation. Once again, the
Bank had to adapt to the government’s requirements
and to the country’s needs. To do so, it sought to
improve and streamline its on-lending structures by
creating new programs.
An eye on the Northeast
In January or February 1973, I went to reinaugurate
the office in the Northeast, in Recife. A more effective
and intense approach to activities was needed for
the Northern and Northeastern regions, where the
population was larger and the differences in income,
more drastic. The Camaçari Petrochemical Pole in Bahia,
and the Pole in Natal, in Rio Grande do Norte were
developed. In Pernambuco, in Petrolina and Juazeiro, in
the Baixo São Francisco region, tropical fruit plantations
had been established using irrigation systems. There was
a great deal of activity from the BNDES at that time, as it
worked to reduce this regional inequality.
Luiz Alberto Madeira Coimbra, economist, interviewed in 2002
Everything was enormous
There is the Gerdau Group that, since I joined the Bank,
has grown immensely, with new projects, each one more
successful than the last. Today, it is a gigantic group.
I would say that the BNDES’ experiences were very
interesting. It was the Geisel period, when steel industry
projects of I-don’t-know how many millions of tons were
started... Everything was enormous.
José Mauro Mettrau Carneiro da Cunha, engineer, interviewed
in 2002
67
From 1977 on, the Bank began making annual
selections, aimed at presenting awards for
technical-scientific work in the economy sector,
and encourage research related to national,
regional and sectorial economic issues, in the fields
of Pure and Applied Economic Science. Since then,
more than 100 projects have been considered for
the BNDES’ Economics Award.
The 1st BNDES Economics Award, June 20,
1977. President Geisel presents the award to
the winner, Carlos Roberto Azzonia. Beside
the president is the minister of Planning, João
Paulo dos Reis Velloso
Covers of the 32nd BNDES Economics Award,
launched in June 2012
In 1974, the Joint Operations Program (POC) was formed. This aimed
to help structure a network of financial agents to grant financing to small
and medium-sized companies. In 1976, the Programa de Financiamento a
Acionistas (FINAC – Shareholder’s Financing Program) and the Programa de
Apoio à Capitalização da Empresa Privada Nacional (PROCAP – Capitalization
of National Private Companies) were designed, respectively, to inject
resources directly into the shareholder to provide support for projects and
encourage the primary share market.
The II PND was implemented in a scenario of high inflation and increased
foreign debt, quite different to the context in which the I PND had been
launched. The two oil crises had exposed the fragilities of the model of growth
adopted. On this occasion, the rise in the American interest rate led to an
increase in the Brazilian public debt, directly affecting the national economy.
Changes to the structure of the federal government once again altered the
position of the BNDES which, as a result of Decree Nº. 83,425, of May 8, 1979,
was connected to the Ministry of Industry and Trade.
Throughout this decade, the BNDES was the main agent implementing
the import substitution policy, which had been boosted by the federal
government’s two National Development Plans (I PND and II PND), playing a
decisive role in diversifying and consolidating Brazilian industry to support
the capital goods and basic inputs sectors.
68
No recession
What a leap!
The Ministry of Planning was able to draft the II PND with
the support of the IPEA, which had two institutes, one for
applied research and another for planning. The Ministry
of Planning received suggestions from the BNDES and
from IPEA. Equipped with this, we were therefore able to
develop the II PND, which defined two things: first, we
were not going to let a recession take Brazil; second, we
were going to implement an investment program in three
areas: oil and energy in general; basic industrial inputs;
and certain areas of capital goods – equipment that
would allow Brazil to become competitive. As Brazil had
been pursuing a large-scale investment program, it had
the scale to produce equipment efficiently, so producing
this equipment in the country was justified; some of the
equipment was imported and some was produced in
Brazil. And that was the II PND.
When I joined, in 1974, the BNDES was taking a giant
leap forward. It is interesting to look back at this now.
The PIS-PASEP resources started to be administrated
by the Bank, and there was a significant jump in terms
of size, budget and investments. I went to work in the
area they called the Joint Operations Division, which
were operations through other banks (development
banks, investment banks) designed to help small and
medium-sized companies. They were creating the Joint
Operations Program. This was already one of the BNDES’
objectives, but, as of 1974, the amount of resources grew.
The bank has a direct and very positive relationship with
the growth of the country. In the 1970s, when you spoke
of the National Development Program, you thought of
the BNDES, because minister Reis Velloso, the President
Marcos Pereira Vianna and the Bank’s planning teams
helped nurture the plan and played a fundamental role.
Terezinha Moreira, economist, interviewed in 2002
President
•
Marcos Pereira Vianna | 1970-1979
•
Industrial Modernization and Reorganization Fund (FMRI) – Decree Nº. 67,323, of October 2, 1970. Substituted the
FUNDEPRO
•
Merchant Navy Fund – Decree-Law Nº. 1,142, of December 30, 1970
•
Capitals Market Development Fund (FUMCAP) – Decree Nº. 69,554, of November 18, 1971
•
Resources from the Social Integration Program (PIS) and from the Public Service Employee Savings Program (PASEP) –
Complimentary Law Nº. 19, of June 25, 1974 – unified under the PIS-PASEP Fund – Complimentary Law Nº. 26, of
September 11, 1975
Government Programs
•
First National Development Plan (I PND). Médici administration | 1972-1974
•
Second National Development Plan (II PND). Ernesto Geisel administration | 1975-1979
69
Protest staged by the “Diretas Já” movement on June
27, 1984 in Cinelândia, Rio de Janeiro (RJ). The march
was held following the Congress’ refusal to pass the
Dante de Oliveira Constitutional Amendment which
established general elections for the President and
Vice-President of the country
In search
of lost time
Putting on the brakes
[the Figueiredo administration]
F
rom 1979 onwards, two subjects ended up prevailing in Brazil: the
return to democracy, and rising inflation. The newly-elected president,
General João Batista de Oliveira Figueiredo, went on opening the
system up, despite opposition from the hard line of the military wing.32 The
Amnesty Law was approved that year, and those who had been in exile
started returning to the country; the following year, the multiple party system
was reestablished and general elections for executive roles were scheduled
for 1982 – the first since the military coup.33 Another event which made 1979
notable in the history books was the founding of the Workers’ Party (PT), and
one of its first leaders was Luiz Inácio Lula da Silva. Brazilians started to build
hope once again; the dictatorship seemed to be coming to an end and a new
era was beginning.
In the area of economics, contrary to what had taken place in previous
years, the news was not so bright. The boom of the “miracle” era and the
growth cycle brought about by II PND had come to an end. A period of
economic stagnation took a grip on both Brazil and Latin America as a whole.
Most developing countries started reviewing their economic and social
policies. Dependence and the foreign debt worsened. Inflationary pressures
and imbalances in overseas accounts set the tone for the period.
With the second oil crisis and the inevitable rise in fuel prices, there was
an increase in interest rates in developed countries, and a world economic
recession set in. Attempting to minimize the effects of the international crisis
that affected the country’s balance of payments, the minister of Planning,
Mario Henrique Simonsen, opted for a recessionary change in economic
policy, which was widely criticized. In the midst of the pressure to alter the
direction of the economy, Simonsen resigned.
Antônio Delfim Netto took over and attempted to reinstate an
expansionist economic policy. During his first year, 1980, the results were
very positive and the GDP grew 9.1%. Inflation skyrocketed, however,
reaching an annual rate of 110.2%, and the lack of equilibrium in the
balance of payments increased. Change was needed and once again a policy
of economic restraint was adopted.
32 Bombs exploded at opposition newspapers, at the Municipal Chamber of Rio de Janeiro, at the headquarters
of the Brazilian Bar Association, killing a secretary, and at a music festival being held at Riocentro.
33 In 1980, an amendment was approved reestablishing general elections for state governors and city
councils as of 1982. In this year, the opposition parties were victorious in legislative elections in the states
of São Paulo, Rio de Janeiro, Minas Gerais and Paraná, while PT was granted the right to register.
72
A set of measures was implemented to reduce the level of economic activity,
imposing limits on the expansion of the currency and investment cuts by state
companies. Measures were also sought to encourage exports. These efforts, which
were focused upon reestablishing stability in the balance of trade,34 had other
implications. In 1981, the GDP growth rate fell 3.1% and inflation dipped slightly,35
before rising again in 1982.
Manufacturing, especially at durable consumer goods industries, was deeply
affected. Unemployment in urban centers grew significantly, and the purchasing
power of salaries dropped. This combination of economic stagnation and high
inflation, a relatively rare phenomenon, was called “stagflation.” Deep recession
prevailed from 1981 to 1983, with the country’s debt process being particularly
emphasized.
The request for moratorium from Mexico, in 1982, made the situation in Brazil
much more difficult, restricting the country’s chances of receiving foreign loans.
International banks, fearing new moratoriums, suspended credit to countries in
debt. The following year, with the internal dollar reserves gone, Brazil went to the
International Monetary Fund (IMF) and promised to follow its recommendations
concerning cuts in spending and other restrictive measures. Turning to the IMF
created a series of internal pressures, in addition to the misunderstandings
between the government and the Fund in relation to reducing the public debt and
expanding internal net credit.
Despite the recession, the positive effects of the policy for change that was
adopted over the previous three years were felt in 1984, when economic activity
resumed and the country started to experience growth once again. This was
pushed by an increase in exports and a reduction in imports.36 The trade balance
showed a surplus of 606 million dollars, but inflation continued to rise, hitting a
rate of 223% that year.
34 Cf. IBGE – Brazilian Institute of Geography and Statistics. 20th century statistics. Rio de Janeiro: 2003, p. 389.
35 In 1980, the annual rate reached 110.2%; in 1981, it fell to 95.2%, and, in 1982, it climbed once again to 99.7%.
36 Between 1982 and 1983, exports climbed from 20.1 billion dollars to 21.9 billion, and imports were reduced
from 19.3 billion dollars to 15.4 billion.
Aerial view of Praça da Sé occupied
by thousands of people during the
Pro-Rights Rally in São Paulo (SP) on
January 24, 1984
The economic crisis drove the people to the streets once again to
demonstrate their dissatisfaction with the military government. In January
1984, with the excuse of celebrating the anniversary of the city of São
Paulo, a large rally was arranged, signaling the start of the campaign for the
public election of the president. The movement – called “Diretas Já” [Direct
(elections) Now!] – quickly spread to cities throughout the country, uniting
millions of people. In April, a rally held in the center of the city of Rio de
Janeiro broke all previous records: more than one million people, according to
the Military Police’s calculations and those of the SNI itself,37 came together to
declare their desire for change.
The Candelária rally was considered the biggest political gathering in the
country’s history. In front of that mass of people, a rather elderly man took
the microphone and said, “I would like silence so that I can speak! I want to
speak to the Brazilian nation!” Probably very few knew who was speaking
but, even so, it was impressive how the enormous crowd grew quiet and
Doctor Heráclito Sobral Pinto,38 at 91 years of age, continued: “This movement
is not against anyone. This movement is for the people.” He quoted the first
article of the Brazilian Constitution: “All power emanates from the people and
it will be exercised on their behalf.” It is not difficult to imagine the reaction
of those who heard that speech after such a long time of political repression.
In just a few words, Sobral Pinto summarized what all those people there
wanted to say by turning up.
The João Figueiredo administration had been worn down, and the
dictatorship was in its final stages. Even so, despite so many protests, the
Dante de Oliveira Amendment, which proposed a return to public elections,
was not approved by Congress. Following this expectation was stymied,
people found some consolation in the candidacy of Tancredo Neves for
President of the Republic in indirect elections.
His victory – which represented the return to democracy – was celebrated
throughout Brazil. A new era began that was soon baptized the “New
Republic.” However, once again, expectations were thwarted: on the eve of
his inauguration, Tancredo went into hospital and was never nominated. The
Vice-President, José Sarney, took power and moved forward with the structure
of government that had been put together by the president elect. Tancredo
Neves died the following week on April 21, 1985.
37 The National Information Service (SNI), created soon after the coup in 1964, was one of the most
controversial organizations of the dictatorship. Directly linked to the Presidency of the Republic, the
purpose of the SNI was to coordinate information activities at all levels of government to maintain the
interests of the military plan and the security of the Brazilian state. The data are from the Veja current
affairs magazine, dated April 18, 1984.
38 An attorney and legal expert from Minas Gerais state, Sobral Pinto defended political activists that had
been imprisoned and persecuted during the dictatorship of the New State and, also, during the military
dictatorship which was installed in 1964. He was one of the founders of the Pontifícia Universidade
Católica (Pontifical Catholic University) in Rio de Janeiro.
74
Adjusting the framework
[BNDES | 1979-1984]
T
he year 1982 brought changes that altered the workings and the structure
of what was then the BNDE. The first was the official addition of “social”
to its activities, with the addition of the “S” to its name – in Portuguese
the name was equivalent to the National Economic and Social Development
Bank – and the new responsibility of creating the Fundo de Investimento
Social (FINSOCIAL – Social Investment Fund).
Also, in 1982, celebrating 30 years of activities, the BNDES managed to
bring together all of its Rio de Janeiro-based employees for the first time,
since previously they had been scattered around the city’s downtown area
at different addresses. The new headquarters, which was designed39 and
built during the years of the Brazilian miracle, together with the Petrobras
buildings and the BNH offices,40 became a set of federal public buildings that
mirrored the prosperity of those times.
39 The plan was drawn up by a group of Curitiba-based architects – Alfred Willer, Ariel Stelle, José
Ramalho Jr., José Sanchotene, Leonardo Oba, Oscar Mueller and Rubens Sanchotene – who won a
public contest in 1974.
40 The building of the former Banco Nacional de Habitação (BNH – National Housing Bank) is currently
occupied by the Cultural Group within the Caixa Econômica Federal (Federal Savings Bank).
Construction of the BNDES’ current
headquarters in Rio de Janeiro, the Services
Building in Rio de Janeiro – Edserj,
at República do Chile Avenue, 100,
downtown Rio de Janeiro August, 1976
The headquarters, soon after named the Rio de
Janeiro Services Building (EDSERJ),41 is located at
Nº. 100, República do Chile Avenue, a place left by
the Morro de Santo Antônio shantytown after it was
demolished In the 1960s. Based on an international
design, with a glass façade and a type of prism that
seems to float, its architecture also reflects the trend at
that time. The building juts out from a sloping garden
– designed by Burle Marx – constructed on part of the
hill where the shantytown sat, providing a view over the
Santo Antônio Convent.
Another important change that took place in 1982 was
the restructuring of the BNDES System, with the creation
of BNDES Participações (BNDESPAR), which resulted
from the merger of the subsidiaries FIBASE, IBRASA and
EMBRAMEC. Bringing together these three companies
meant greater agility in processes and a cut in costs for
the Bank. BNDESPAR took on the mission of providing
capital to private Brazilian companies and strengthening
the country’s capitals market. FINAME maintained
its structure, as well as its activities, financing the
commercialization of machinery and equipment
manufactured in Brazil.
The Bank’s performance over this period was limited
by the context of the crisis that affected the country’s
economy. Inflation and the fall in economic activity
directly affected the lives of a large number of Brazilian
companies. The institution therefore started to support
those companies that were going through difficulties,
by taking a stake as a shareholder. From the beginning
of the 1980s, the BNDES System started accumulating
shares in companies indebted to the Bank. From 1982
onwards, BNDESPAR began taking an administrative
role in these companies, and even took control of many
of them, including COSINOR, SIBRA and Caraíba Metais.
41 On the Bank’s 50th anniversary, the building was given the name Juvenal
Osório, after one of the Bank’s pioneering figures.
76
Winning project
The building design was chosen by means of a public
contest and was one of 49 designs presented. The Bank
made an agreement with the Brazilian Institute of
Architects and well-known architects were invited to
judge the work at two stages: at the Brazilian Academy
of Letters and at the Museum of Modern Art. Luiz
Carlos [Batista], also an architect, and I, advised this
group which made the decision. When they finished
the stage at the Brazilian Academy of Letters, those
selected went to the Museum of Modern Art. It was
an interesting period of learning. There were different
trends throughout the country. The Cotran Group had
drawn up a program and the design had to have certain
characteristics. They chose this group of architects from
Curitiba since they had met the requirements of the
program and because of the artistic aspects. It was a
group of seven architects that won the competition.
The first floor up to the top was finished in 45 days. It
looked like a cake with baking powder that had risen up.
Every day, people were more and more shocked! Then
they began laying the slabs: instead of building floors
one at a time, everything on one floor was done – the
slab, the beams, then they jumped two floors, that is to
say, they would build the fourth floor. At the same time,
they would be working on the second, and on the fifth, in
order to speed up work on the project. There are photos
of everything, showing the technique that was chosen.
The entire structure of the slabs was x-rayed to check that
the welding was completely solid. They were very careful.
Angela Lima Martins Lussac, architect, interviewed in 2012
Hanging on to the victory
BNDESPAR was formed by joining together three
companies: IBRASA, EMBRAMEC and FIBASE. FIBASE
dealt with basic materials, and EMBRAMEC with the
engineering industry, while IBRASA was focused on
consumer goods. In the 1970s, priority was given to
substituting imports and, soon afterwards, we moved
into a “reserve market” phase. It was a complicated
period, and it was a crucial mistake to have created a
reserve market in that way: it was the “lost decade”,
with various economic plans that did not work out. I
experienced this and also a little of what was criticized in
the media, such as the “Emergency Bank for Companies.”
I did not experience the 1970s, but it was a period with
large incentives for investments and the development
of the industrial base. In the 1980s, all these companies
were in a great deal of trouble, and the Bank gave a lot of
support to keep the industrial base that had already been
assembled. We could not let these victories slide away.
Henrique Amarante da Costa Pinto, engineer,
interviewed in 2012
It made much more sense
The subsidiaries IBRASA, EMBRAMEC and FIBASE were
merged as BANESPAR in 1982, under minister Delfim
Netto in the Planning Department, when FINSOCIAL was
also created and the “S” was added to the name of the
Bank. The three subsidiaries were merged as BANESPAR,
and FINAME, which had existed since the 1960s, was
maintained as the financing branch for general machinery
and equipment. The BNDES System was thus consolidated.
In fact, it did not make much sense to maintain three
companies, with three boards, doing the same thing.
Although they dealt with different sectors, they did
virtually the same thing. I think that the merger was
extremely beneficial in terms of operational downsizing.
Ruy Coutinho do Nascimento, attorney, interviewed in 2002
To circumvent the severe fluctuations in the Brazilian
economy, the BNDES redirected its activities throughout
the 1980s in such a way as to preserve the industrial
base which had been established during the previous
years, reinforcing its multi-sectorial activities. In 1983,
upon being renamed manager of the Merchant Navy
Fund,42 the BNDES created the Naval Construction
Department. In accordance with the decree relating to
the fund, the Bank had to finance the purchase of ships
and the export of vessels from Brazilian shipyards. In
1984, the Bank also launched the Programa de Apoio ao
Incremento às Exportações (PROEX – Export Increase
Support program),43 staying in step with the federal
government’s efforts to stabilize the trade balance.
Measures taken to stimulate exports and provide
financial support to indebted companies showed a trend
towards short-term efforts. The BNDES felt the effects
of the crisis arising from the development model that
the state was pursuing, which had prevailed over the
previous decades and seemed to have run its course with
the surge of the overseas debt crisis. It became obvious
that alternatives were needed, as well as the ways in
which they were implemented.
From 1983 onwards, a movement born within the
BNDES’ Planning Department began to take shape with
the establishment of a study group to discuss and plan
the direction of the Bank. The country moved into its
third consecutive year of recession. Since 1980, the GDP
growth rate had shown an average drop rate of 2.5% per
year, meaning an accumulated fall of 7.3%.44
Initially, the group dedicated itself to developing a
diagnosis of the internal situation, seeking to identify
the problems and analyze the Bank’s position. The
group from the mentioned department invited other
areas to take part in the rethink of the issues, and they
started to join in discussions concerning possible paths
to resume economic development.
42 Instituted by Decree-Law Nº. 2,033, of June 21, 1983.
43 In 1991, the Bank of Brazil created the Export Finance Program, also known
as PROEX, which operated with funds provided by the National Treasury
allocated to the special program for official credit operations, besides
financing Brazilian exports of national goods and services, with conditions
equivalent to those in the international market.
44 MOURÃO, Julio Olimpio Fusaro. A integração competitiva e o planejamento
estratégico no Sistema BNDES. Revista do BNDES. Rio de Janeiro, v.1, n.2,
Dec. 1994, p. 3-26.
77
All the BNDES’ technical and executive staff started identifying the
strengths and weaknesses within the System and, at the same time, assessing
possible outside threats and opportunities. A planning committee was
established to analyze the work and organize a final document. From that
point on, four possible scenarios were drawn up in relation to the Brazilian
economy, seeking to take into account the variables, trends and strategies in
order to help create a more informed planning strategy.
The work was streamlined in mid-1984 into two more probable scenarios:
the Adjustment Scenario, and its counterpart, the Recovery Scenario45 –
the latter presented alternative proposals for the country’s economy to get
through the crisis, moving away from the line of reasoning that prevailed
at that time. It was noted that the reducing of the number of imports was
not connected solely to recession, but to the level reached by the country
following the policy to substitute imports that was implemented over the
preceding decades. Brazil no longer needed so many imports; on the contrary,
it had the installed capacity to export domestic products.
Still in keeping with the Recovery Scenario, the increase in exports would
provide a possibility for the country to grow once again. Stimulating the
economy would help improve the level of unemployment which, together
with reopening the political process and union activity, would result in
the recovery of the real wage. Furthermore, inasmuch as confidence in the
economy would be renewed, there would be a consequent increase in private
investment.46
The experience that started in the Planning Department and which was
embraced by the rest of the Bank, turned the BNDES into the pioneering
national institution in applying the methodology for constructing scenarios
in the strategic planning process. Until then, only multinational companies
had worked with scenarios, brought in from their head offices.47 A number of
Brazilian groups started to take this practice on board, albeit, however, based
on scenarios drawn up by consulting companies.
Predictions made within the Recovery Scenario proved to be right. During
the second half of 1984, the economy started to grow as expected, and Brazil
started paying the foreign debt again, and not only the interest.48 Over the
next two years, GDP grew at an average of 6% per year. Drafting the scenarios
helped the BNDES alter its bearings. The Bank once again assumed its role as
an agent of change, collaborating to redirect economic policy in the sense of
reintegrating it into the international context.
45 Idem, ibid.
46 Idem, ibid.
47 Cf. MARQUES, Eduardo. Prospec: Modelo de geração de cenários em planejamento estratégico. In:
BNDES − Banco de Desenvolvimento Social e Econômico. BNDES − um Banco de ideias. Rio de Janeiro,
Oct. 2002. Available at: <http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/
Arquivos/conhecimento/livro_ideias/livro-11.pdf>. Accessed in: Sept. 2012.
48 In 1983, the government informed its international creditors that it would start paying only the interest
and not the principal sum of its foreign debt.
78
In 1984, the BNDES played the pioneering role once
again as it established the Programa de Conservação
do Meio Ambiente (CONSERVE – Environmental
Conservation Program), with credit lines for pollution
control, which started to be used at the Cubatão Industrial
Complex, in São Paulo, and in the sewage treatment in
the South’s pig farming operations. In fact, since the
previous decade, the Bank had already incorporated the
environmental issue into its project analyses. Protecting
the environment was still not widely discussed and the
issue started to attract supporters. By the end of the
1980s, the BNDES intensified its activities, and attention
to the environment grew more and more at the Bank.
Heated discussions
The BNDES went through notable periods; it started
playing its part in extensive industrialization, developing
the capitals markets, then there was privatization,
and afterwards a series of changes and standards,
transforming the economy. The Bank always had decipher
what that particular moment in Brazil required, and
it had to be at the forefront (which I identify as part
of the DNA of the Bank, of the people), which led to
discussions, sometimes rather heated, and different
opinions. For example, when the BNDESPAR was active
and was small in terms of disbursements (400 million
dollars), there was a disagreement between one group
that thought that the BNDESPAR should only focus on
small companies, and another that believed it should
work with large-scale firms. I placed myself in the latter
which ended up prevailing. What came along next
was this: the BNDESPAR’s disbursements skyrocketed
to five billion, and the 400 million that people wanted
exclusively for those small operations would have been
more than covered. If the company had focused solely on
that smaller universe, it would not have carried out a few
of the iconic operations that opened up doors. And it was
a heated discussion I can tell you.
Sergio Eduardo Weguelin Vieira, economist, interviewed in 2012
A cycle
We were obviously facing the end of a cycle of economic
development. If I were to look at it under a microscope, I
would see the following: growth in the 1950s, the plateau
in the 1960s and the growth in the 1970s. If I stand
back a little, I cannot see any difference between these
three periods. It is a single cycle that had perhaps even
started before this, with the crisis in 1930. Undoubtedly,
in the 1970s, we were at the end of this development
cycle, the driving force of which was the industrialization
of consumer goods; industrialization overtook the
automobile industry.
Forerunners
The organizational history of the BNDES needs to be
recovered; this is a bank that is part of the international
financial system, a pioneer in creating a specific
environmental office. In 1989, a management office was
created that, after just over a year, became a department.
This department went through a number of the Bank’s
different areas, but always as the unit responsible for
environmental awareness, raising issues and collaborating
with other areas in the socio-environmental analysis of
projects sponsored by the BNDES. This environmental
unit was transformed a number of times, remaining in
line with the changes in environmental policy both in the
country and at the BNDES. This included incorporating
the requirement for environmental licensing in financing
operations and support for the de-pollution of the city
of Cubatão in which the BNDES took an active role. Lines
of credit were created for environmental projects. Over
time, the environmental issue was even treated with a
certain mistrust within the Bank; it certainly did not have
the importance it does today. This is why I feel that our
predecessors in the environmental unit can almost be
seen as heroes for keeping the environmental issue alive
at a time when it was not fashionable.
Márcio Macedo da Costa, engineer, interviewed in 2012
79
Against the flow
In approximately May 1984, a project was launched which came to be known as
Scenarios for the Brazilian Economy until 1990, which went against everything that
was being said at the time, by both the government and the opposition. The most
important and controversial conclusion was that the foreign debt, while a restriction,
was not an insurmountable obstacle for the country. We could create a trade surplus
that was compatible with the debt payment. As such, exports themselves began to
boost growth.
Luiz Paulo Vellozo Lucas, engineer, interviewed in 2002
Building scenarios
The Brazilian economy was going through an enormous crisis; it was a period of
recession. Companies were in difficulty, not managing to pay the Bank. The strategy
was also recessionary, forcing companies to reorganize. They thought that the only way
out was to increase State investment to see whether this would revive the economy
so it would return to growth. In the Planning Department, we started to diagnose the
BNDES and, later, some scenarios for the Brazilian economy, in which we discussed the
Bank’s situation. We started listening to specialists and people from the Bank, and what
came out of these consultations was a negative scenario, a scenario for adjustment.
We knew that Brazil had to make adjustments to pay the debt. The economy was not
growing, and the crisis had been haunting the country for years. It was a catastrophic
scenario. We decided to create an alternative scenario for contrast and discussion. We
started to see that it would be possible for the country to start growing again and pay
the debt without needing to implement a moratorium, with another type of policy,
without depending upon the public sector. It was private investment, it was exports. We
called it the Recovery Scenario. We brought this up for discussion at the Bank, and it was
implemented. We had a board comprising fifty members. We had some very interesting
meetings, with a great deal of debate. For the Bank, the proposal was completely
different: there was a possibility to recover. It was an enormous change in outlook,
based on the idea that there had been a structural change in the Brazilian economy.
Brazil did not have to be in deficit because it had large-scale investment projects that
generated products that could be exported. It would be possible to create a surplus, pay
the debt and return to growth. The proposal was approved, and we started to create a
new policy: development of export companies and more support for the private sector.
In fact, between 1984 and 1985, Brazil did start growing again.
The origin
There were some funny situations. We asked one company owner: “Have
you ever received financing?” “Never. Everything has been done with
my own resources.” So then you would see a machine and ask: “And this
machine, did you buy this with your own money?” And he would reply:
“Look, this machine, a guy from the bank came along, offered me the
money and we bought it. I think it was Bradesco.” So then we would go
and look at the contract and it was FINAME, it was the BNDES. So outside
the major urban centers, people just did not know where the resources
came from. And it was coming from the BNDES.
Maria das Graças Amaral Passos, economist, interviewed in 2002
80
The capitals market
TOTVS was founded in 1983, aimed at developing
management software for the microcomputers used by
small and medium-sized companies. At the time, PCs were
a novelty and there were four large software companies
in the country: Logocenter, CRM, DATASUL and Laércio
Cosentino’s Microsiga. With the support of the BNDES,
we acquired each one of these companies, founding the
gigantic TOTVS.
At this time, we spoke with the BNDES and the Bank
came in firstly with a loan, with the possibility of convertible
shares. Afterwards, we started to consolidate the market: we
bought the fourth largest company, then the third largest;
we went public at this point and carried out a number of
other commercial transactions. Afterwards, again with
the BNDES, we conducted a DBMS (Distributed Database
Management System) operation to buy the second largest
company – DATASUL. Based on this, we created this largescale company called TOTVS in this fourth stage, with
important, relevant and very well-prepared support from
the BNDES. In the fifth stage, which began this year, we are
aiming to turn TOTVS into a global benchmark company.
We believe that we are already a benchmark in Brazil; we
are leaders in Latin America, with 26,000 clients and 12,000
participants, when considering the direct jobs created by
our franchises. We are currently in 23 countries and have to
strengthen our presence in other countries. To be this global
reference point, we have defined a number of aspects we are
working on.
Laércio Cosentino, president and founder of TOTVS
As Cosentino explains, the BNDES has been helping
develop TOTVS and other businesses in Brazil:
I think that the timing for TOTVS was just right and it
had just the right project. During the first phase of the Lula
government, strategic sectors for the growth of the economy
were defined and one of these pillars was the IT sector. The
BNDES had decided to choose one company in each of these
sectors to guarantee that Brazil had big brand names, largescale companies. We already had a good relationship with
the BNDES and, in conversation, they said that they were
looking for a company in the IT division in which to invest. So
I showed them that they already had this company, which
at the time was called Microsiga, before being called TOTVS,
and we really did have everything in terms of expansion and
,
business plans. So it joined together the BNDES vision, which
is to contribute to a Brazilian brand and company, and all
that we have been developing as well.
The offices of TOTVS, Latin America’s leading company in the
software, services and technology sector
81
Noting the difference:
the entry of the “S” [1982-1990]
T
The Bank’s first logo following
the incorporation of the “S”,
for “Social”, into the name
he most significant milestone in the history of the BNDES took place in
1982, when the institution included another area as a focus in its activities
and became the National Economic and Social Development Bank
(BNDES). The gains made in the economy had not resolved the country’s social
problems; on the contrary, they appeared to have gotten worse. It was necessary
for economic and social development to come together.
Incorporating social activities was to be supported by a new source of funding
that the Bank would be managing: the Social Investment Fund (FINSOCIAL).
Created under the same ruling that added the “S” to “BNDE”, Decree-Law
Nº. 1,940, of May 25, 1982, FINSOCIAL established a contribution aimed at
“financing social welfare-related investments in the areas of foodstuff, low-cost
housing, health, education, justice and support for small farmers.”49
The contribution was planned to take a monthly collection from all
companies, whether public or private, in the total of 0.5% of their incomes. The
BNDES was to invest the available resources in programs and projects developed
in keeping with the directives established by the President of the Republic.
Decree-Law Nº. 1,940 further determined that the Bank should return to the
jurisdiction of the Department of Planning (SEPLAN).50
To manage investments of resources in the new fund, the BNDES created
the Projects VI Division, called FINSOCIAL.51 Created during the Figueiredo
administration, the Bank’s activities in the social division became more
dynamic during the Sarney government, following the regulation of the fund’s
contribution by means of Decree Nº. 92,698, in 1986. In 1989, its name was
changed to the Social Operations Division.
Internal debate
At the end of the 1970s and the beginning of the 1980s, the economic model was
showing signs of wear and tear, mainly in the trade balance. At the bank, attempts
were made to try to push the Social Division as an autonomous program, with
independent resources. There was an enormous internal discussion, since there was
the counter-argument that traditional projects still represented a social effort when
they generated jobs. When the “S” was introduced into the name, time and energy
were lost discussing what to do with it, and this debate went on for quite some
time. Today, everything is much better structured. All the agents better understand
that, in the Social Division, the BNDES plays a role that complements its activities
focused on economic development.
Nildemar Secches, engineer, interviewed in 2002
49 Article 1 of Decree-Law Nº. 1,940, of May 25, 1982.
50 Since 1979, the Bank had been tied to the Ministry of Industry and Trade.
51 This division went by various different names over the years. To make things easier to understand, it was
simply called the Social Division.
82
Rather complicated
In 1982, I was invited to be one of the managers of FINSOCIAL. The objective,
at least in theory, was to modernize the way that investments were made in
the social division, importing modernization in from the investment tracking
systems in the economic division. Implementing this type of methodology
in social areas was very complicated. It was a time of very high inflation and,
through the FINSOCIAL, the government took advantage of this to create a
mechanism to sterilize the currency. A sum was collected from companies’
incomes, and this generated a mountain of money for FINSOCIAL. It took
a long time for this money to be invested – schools, hospitals etc. The IPEA
decided what should be prioritized: health, education etc. And this required
studies. Afterwards, the money went through the Federal Savings Bank
and the Bank of Brazil before arriving at the BNDES. The BNDES received an
explanatory memorandum, based on which it started to receive projects
connected to that location. The states and municipalities had to present
projects, but there was strong resistance. And, when they did submit them,
the projects did not meet the standards, which delayed the process even
more. Money collected only arrived at its destination between 18 and 24
months later. With inflation at 200%, 300% per year, the value dropped. The
program was accused of being far from efficient. Implementing techniques
from the economic division, which were considered modern, to manage
resources did not work well in the social division. Today, it is another story;
to support a company, social investments are also required. A culture was
created that became institutional. The idea that economic activity cannot
be disconnected from social aspects has formed the basis for the modern
concept of sustainability. Sustainability is everything, finding its way into the
environment, health, education, housing and transport. So the Bank’s activity
became more integrated.
Gabriel Stoliar, engineer, interviewed in 2012
The FINSOCIAL boys
In 1982, we started to put together a project in the Social Division of the
BNDES. The FINSOCIAL boys – they really were boys – were inventing the way
to work with the social aspect during the “political opening” of the country.
The work was seen as being almost subversive, but there was nothing
subversive about it. I am very proud to have carried out the first project which
concerned women’s health in the public health system. It was financing for
a project in the state of Goiás, which guaranteed that women in the public
health system would be treated the same as any middle class woman is
treated at a private clinic. Access to contraceptive methods and discussion
on sexuality were issues that were rather normal for us, but for the socially
excluded areas of society, as they are called today, they were issues that were
almost completely inaccessible at that time.
Marcelo Nardin, economist, interviewed in 2002
83
Better experience
I started as a technician in the chemical industry;
I became a manager in the Planning Division where
I stayed until 1982, when the Social Division was created.
I had been in the Industrial Division for seven years, and
I was made a department head there. Creating the Social
Division was quite foreign to the Bank. The creation
of this division faced much opposition. Even so, I went
to this department which was concerned with health,
education and foodstuff. It was completely different to
what I had been trained in and to everything I had done
before. Certainly, working in this business was the best
experience, as well as the most fascinating. I was used
to visiting companies and banks, and suddenly I started
visiting communities in the middle of Brazil. In the 1970s,
the impression that you had was that the country was
growing in time with things the Bank was doing, but,
actually, only a part accompanied such growth, while the
other part was almost forgotten and left behind. In the
Social Division, we had a lot of contact with this. It was a
surprise. As the Bank traditionally attracted progressive
individuals, several people became interested in this area,
but we went and worked in this business of the Social
Division without knowing what it was.
Luiz Orenstein, engineer, interviewed in 2002
Privilege
Arriving there [BNDES, FINSOCIAL] on the wave of
democracy reconstruction in Brazil, I was privileged
to be working alongside sixty-seven technicians all of
whom were excited about the idea of taking the BNDES’
knowledge and applying it to the Social Division, using
the competence exercised in developing industry and
infrastructure. We experienced a very stimulating time
in terms of creativity and the chance to try out a set of
pioneering ideas. One example: AIDS was still unknown
and our hospital network was jeopardized by a high
percentage of contaminated blood. We therefore decided
to develop a national system for blood quality control.
We supported the Hemope Foundation [Pernambuco
Hematology and Hemotherapy Foundation], which is still
considered the best blood service in Brazil, to build a model
to deal with this problem.
Carlos Francisco Theodoro Machado Ribeiro de Lessa, economist,
interviewed in 2002
84
Project by project
Initially, FINSOCIAL’s income accounted for 13%
of the Bank’s total resources.52 Sectors established by
the decree law were given priority, such as: health,
education and support for small farmers. The region
that benefitted the most from the work of the new
department was the Northeast. Due to the droughts
at that time,53 emergency efforts were implemented
in a number of municipalities in the region, and this
included “working fronts” in partnership with SUDENE.
Among the projects carried out, highlights include
support for the special programs54 implemented by
the federal government for production and recovery of
small rural properties in the Northeast; the Nutrition
and Health Program that, together with the Instituto
Nacional de Alimentação e Nutrição (National Institute
for Nourishment and Nutrition), distributed food to
children under seven, pregnant women and nursing
mothers on low incomes; the joint operation with
the Instituto Nacional de Assistência ao Estudante
(National Student Support Institute) designed to
provide school lunches to schoolchildren from 10,000
families in the Altamira and Itaituba regions, in the
state of Amazonas; and the joint operation with the
National Housing Bank, connected to the federal
government’s PROMORAR Project.
During the Sarney government, other important
projects involved support to develop garbage recycling
plants and the creation of lines of credit specifically
to preserve the environment, implemented in 1985.
In parallel with these efforts, the BNDES started to
produce studies on the projects it supported to put
together a theoretical database of the experience and
knowledge acquired.
At that time, Carlos Lessa was our managing director.
He had the idea of building a model project, developing
projects that could be reproduced elsewhere. And what
could be reproduced was the project-by-project work.
And what was exemplary was the technology of working
with these projects, not simply spending and waiting to
see what would happen afterwards. We had projects on
health, hygiene and sanitation. We would go into the
interior of the states to look at the projects that the town
councils wanted to show us. It was difficult to get them
to understand that they needed to structure themselves
to be awarded the resources. There was no great
commitment to the people; at this time, town councils
were not elected by a direct vote. However, there were
town councils with which we worked that took the work
seriously, took on the job and really got engaged.
Sol Garson Braule Pinto, economist, interviewed in 2002
Nothing was easy
The “S” was an enormous new concept which, in my
opinion, the Bank was not ready for. This meant that
there was a certain period of perplexity that dragged
on for quite a while. Getting rid of the “S” was actually
considered at one point. I remember that, at the time
of the transition from Sarney to Collor, there were ideas
floating around to move the “S” to the Federal Savings
Bank. This was all discussed, but things remained as they
were. Today, the Bank has incorporated the social division
more and has been doing an excellent job, but it was not
easy. It was not easy at all.
52 Cf. TAVARES, Maria da Conceição et al. O governo de Figueiredo: o fim do
desenvolvimentismo à brasileira. In: CENTRO CELSO FURTADO. Memórias
do Desenvolvimento, ano 4, v. 4, Rio de Janeiro, Sept. 2010, p. 184.
53 Between 1979 and 1983, the Northeast suffered a period of severe drought
that devastated the region.
54 Similar to the Support Program for Poor Communities in the Canavieira
Region of the Northeast (PROCANOR) in 1984, and the Support Program for
Small Rural Farmers in 1985.
85
In 1986, the Cadernos FINSOCIAL was published, organized by the
managing director at the time, Carlos Lessa,55 to spread the word about the
studies and the main projects supported at that time. The article “Garbage
Recycling Plants: social aspects and economic viability”, published in 1987,56
is an example of this effort to reflect upon the area. At that time, the study
highlighted the problems caused by poor quality garbage collection and the
inadequacies of the areas designated for dumping in most Brazilian cities.
The first outline of the Bank’s social division was greatly impaired by the
crisis during which the fund was created. Very often, the federal government
applied FINSOCIAL resources to programs which should have been run using
their own income – like school lunches and financing for private housing
for low-income families. The bureaucracy involved in collecting resources
reduced room to maneuver within the fund even more.
Before arriving in the Bank’s coffers, FINSOCIAL resources travelled a
long path which took between four to six months, starting from its collection
by the Bank of Brazil and the Federal Savings Bank. Once at the BNDES,
resources were deposited in the Federal Government Account at the Ministry
of Finance. The Planning Division, responsible for the account’s transactions,
finally sent the resources to the BNDES to be invested in social projects.
Despite being a considerable amount, the delay in moving the resources to
the next phase undermined the final amount the Bank received, arriving in
amounts severely diminished due to inflation.
First edition of the Cadernos FINSOCIAL,
October, 1986. The publication presented
analyses of projects developed by the BNDES’
Social Division
Integrated efforts
When the BNDES created the Social Division, I went to work there and I stayed
seven years. It was also a very interesting experience. We traveled all over the
interior of the country and saw a lot of things that we were not used to dealing
with in our daily lives. We financed integrated projects in sanitation, water,
education and health. We sought efforts that would lift that community up to
another level, as an example, because we did not have the resources to do this
with them all, but we felt that making an integrated effort was more productive
than isolated efforts in certain areas, such as education or health. This was also
something that the BNDES’ Social Division sought to stimulate and encourage,
and this project idea came up, this interaction of people from the Social Division,
as well as state, municipal and federal governments. FINSOCIAL resources were
being appropriated for other uses that were not social, but rather budget-related.
At the start, everything that circulated through the Bank was distributed, little
by little, to the government’s social areas. The Social Division was extinct when
Collor took over. The thinking was different.
Paulo Libergott, engineer, interviewed in 2012
55 Before becoming president, Carlos Lessa was managing director of the BNDES’ Social Division between
1985 and 1989.
56 Marcelo Nardin, Marta Prochnik and Mônica Esteves were the authors of the mentioned article, published
in the Cadernos FINSOCIAL, n. 4: “Três Estudos sobre Coleta e Tratamento”, March, 1987.
86
Lots of creativity
FINSOCIAL’s fiscal resources were transferred to the Bank.
There was a presentation of the President of the Republic’s
reasons, and everything was prepared by the ministry, which
listed so many million cruzeiros – or the currency at the time –
for such and such project. It was a lost fund. The amount
put into the presentation of reasons was frozen. So, if there
were 10 million for project “x”, it was this sum from the day
it was listed until the resources were transferred and the
agreement was signed. Except it did not end up being 10
million because of inflation. So, you had to take a lot of care
to be able to finish the project. And that is where the BNDES’
fiscal creativity came in.
To start an operation, we called in a bank to take part. Once
the agreement had been signed, they took the 10 million
and freed up all the money all at once in a connected
account specifically designed for that social project. That
bank’s only obligation was to apply the resources in a
monetary correction indicator which would remunerate
inflation; they could be the Re-adjustable National Treasury
Bonds (ORTNs). It all belonged to the Treasury. The bank
had to provide a minimum return, let’s say, at the ORTN
rate. If a return higher than that was managed, half of the
exceeding amount could stay at the Bank, as remuneration
for its services, and the other half went to the project. And
this is what allowed us to finalize projects. When the Social
Division was shut down, we began closing the agreements.
There was so much money that we managed to carry out
other projects. The “S” continued in the Bank’s name, but
the Social Division was merged into the Infrastructure
Division, where the Department of Urban Services was
created, which is where I went, as did Cristina Fontainha and
Paulinho Libergott who also came from the Social Division.
Terezinha Moreira, economist, interviewed in 2002
In the heart
I think that the “S” was already in the Bank’s heart. The
BNDES analysts knew that there was a serious social issue
in Brazil. The whole time the Social Fund was with the
BNDES, we had the chance to finance about 500 projects,
covering a very wide range and accumulating a culture
on this issue that was so important. At the moment that
the staff really started getting into this issue, it found its
way into the Bank’s heart to such an extent that, after the
Collor government, the “S” returned to really and truly take
its place in the Bank.
Carlos Francisco Theodoro Machado Ribeiro de Lessa, economist,
interviewed in 2012
Both inside and outside the BNDES, the new attitude
led to debates between those who understood that
activities in the social area were not totally in accordance
with the purpose of a development bank, and those who
believed that development included a much wider range
of areas than merely the economy.
FINSOCIAL was terminated in the 1990s, during the
Collor de Mello government, as was the Bank’s Social
Operations Division. The BNDES kept the “Social” in its
name and the “S” in its acronym. However, more than a
name, the “social” remained as a proposal so that greater
attention be dedicated to this aspect in the projects
supported. A few years later, the division’s activities were
resumed in a more consistent manner.
87
Social
The Health and Happiness Project has had a long partnership
with the BNDES. It started in 1983 following the practical
experience that Doctor Eugenio Scannavino and art-educator
Márcia Gama had, providing health assistance in rural
communities in the municipality of Santarém in the state of
Pará. Founding the Center for Advanced Studies in Fostering
Social and Environmental Projects (CEAPS) institutionalized the
organization, which continued to be known as the Health and
Happiness Project. In 1987, with the founding of the CEAPS,
it was possible to establish the first cooperation agreement
using resources from the BNDES’ FINSOCIAL. From then on,
the project brought together many other social entrepreneurs,
mostly from that region, and offered much more than medical
services. It consolidated a proposal for sustained and integrated
community development in a participative manner, initially
involving 16 communities which grew after the year 2000
to new areas with the support of the people themselves. The
project currently operates directly with four municipalities in the
western region of Pará – Belterra, Aveiro, Juruti and Santarém,
where it is headquartered – working with around 30,000
people, most of who are traditional extractivists organized into
rural communities, many of which are difficult to reach and
continue at social risk and facing exclusion.
88
Abaré 2 hospital boat - Health and Happiness Project
The BNDES went through two stages. Its role at the
beginning was very important. It provided enormous support,
indeed, it was our main investor. At that time, we believed
that, as we were developing social technologies, we should
have been receiving financing from the Brazilian State. The
State should have been investing in the development of social
technologies so that it could adopt them as part of a public
policy at a later date. It was very interesting because we
were financing an experience in the development of social
technology, and the BNDES was a partner; there were lots of
demands, and many things were challenged. The FINSOCIAL
team was very experienced in the field. They were not fooled
by anything; taking a very critical and questioning stance,
they forced us to develop a great deal. At this time, we were
still working with the communities, and the Amazon region
was very much in vogue. It was the time of “Rio 92”, Chico
Mendes had died, and part of the international community
wanted to support the Amazon. But we worked with health,
with the social area and we started to articulate the GTA
[Amazon Working Group] exactly because of this, because
the rubber tappers, everyone, the communities, anyone who
works here knows that any forest strategy, for their protection,
first of all has to go through the local communities – they are
the guardians, they are there every day. It does not matter if you
develop a conservation project, or one to preserve the forest if
you do not include the people who live there. And at that time,
forests were thought of without including the communities,
those who live in the forest, the traditional communities.
The BNDES’ second support was also important for the
second stage of “Health and Happiness”. From 1987 to 1990,
we started working with 16 communities; it was the time
when we developed the know-how in relation to community
work, and created low-cost, high impact solutions for the most
pressing needs. After 2000, we started expanding into other
communities, and the Bank offered its second financing package
in 2003 as part of an agreement that was very important
for this expansion. We jumped to about 150 communities. It
was an enormous leap, with a large-scale program including
infrastructure, basic sanitation, a health campaign and
practical health service infrastructure, as well. We started with
16 communities and today we work in a rural area covering
2.5 million hectares and four municipalities. We have become
a well-known institution in the area of sustainable, integrated,
community development for rural areas. Today, those solutions
developed between 1987 and 1990 are social technologies
that are being reproduced as part of the expansion process.
The second agreement with the BNDES was already underway:
while the first had provided a start to the work, the second
provided a start to its expansion and the reproduction of
experiences. This agreement ran from 2003 to 2012, ending this
year. It is an agreement in which they hoped for an “x” and we
delivered an “x” squared. We managed to get results that went
beyond what was expected in the original agreement. Through
it, we were able to provide basic sanitation infrastructure to
more than 5,000 marginalized families throughout this region.
Toilets, plumbing systems for running water, kits to create
chlorine so that water can be treated for drinking and pumping
wells. In the healthcare units, the agreement also involved
setting up rural clinics and, most importantly, it involved the
launch of a hospital-boat as part of a public policy based upon
the Health and Happiness experience. So where does BNDES
fit into all this? The Abaré boat was launched in 2006, and the
resources we had for healthcare infrastructure from the first
agreement from 2003 were allocated to purchasing a second
boat called Abaré 2 which has already been put to work; Abaré
1 provides services on the Tapajós River and Abaré 2 on the
Arapiuns River. Now included in the Waterways Family Health
Program; and Abaré 2, financed by the BNDES, is in the final
phase of also being included in this government policy.
Eugenio Scannavino Netto, founder and general-coordinator of
Health and Happiness
Caetano Scannavino Filho, general-coordinator of Health
and Happiness
The citizens’ constitution
[The Sarney administration]
T
he José Sarney government was worthy of praise for respecting public
rights, even though it maintained a number of ties with the past, such as
continuing with the National Information Service (SNI). Its policy focused
on revoking the laws that had been implemented during the military period and
convening a Constitutional Assembly for 1986. The new legislation reestablished
direct elections for the Presidency of the Republic. Political parties that had
been operating underground, such as the Brazilian Communist Party (PCB) and
the Communist Party of Brazil (PCdoB), were legalized.
The economic crisis had fallen into a lull since the second half of 1984 due
to the increase in exports and the drop in imports, which resulted in a trade
balance of 13.1 billion dollars. As a result, the federal government was managing
to pay the foreign debt. Inflation,57 however, persisted, as did the heavy burden
of foreign and domestic debt, which had to be paid in the long-term.
The new minister of Finance, Francisco Dornelles, adopted an austerity
policy that included a 10% cut in public spending and freezing agreements and
loans. The adopted measures were not well received. Inter-party disagreements
increased and interfered in economic policy. In August 1985, Dornelles resigned.
The president of the BNDES at the time, Dilson Funaro, took over at the Treasury.
The possibility of reducing State participation in the economy had been
under discussion since the Figueiredo government, and a Special Commission
for Privatization had even been created. In 1985, the Sarney government
created the Interministerial Privatization Council, replaced by the Federal
Privatization Council in 1988. The federal government sought to adapt to the
new international scenario, although creating the aforementioned departments
was not central to its agenda.
Even so, at the end of the Sarney administration, some 17 privatizations
had been carried out, meaning collected revenues equivalent to 549 million
dollars and a transfer of debt to the private sector in the order of 620 million
dollars (debts appeared in the companies’ final balance sheets prior to sales).58
However, most privatizations were connected to the BNDES. They concerned
companies that were in default to the Bank and that had been incorporated into
the institution due to the debt process.
57 In 1985, inflation reached 235.5% per year. Cf. FAUSTO, Boris. p. 520.
58 VELASCO JR., Licínio. Documento histórico – a privatização no Sistema BNDES. Revista do BNDES, Rio de
Janeiro n.33, June, 2010.
89
Experience needed
Substituting imports had come to an end. Brazilian
companies needed international presence and needed to
be launched overseas – both in terms of exporting and
establishing bases abroad. It was noted that the BNDES
dedicated a lot of time and energy to financial and human
resources in the companies in which it had a controlling share
interest. One of the most important aspects highlighted by
the document was the urgent need for us to return all these
companies to the private sector through a privatization
program, which effectively happened during the second half
of the 1980s. The success of these sales provided the BNDES
with the experience needed for its role as an administrator of
the National Privatization Program, which was created by the
government at the start of the 1990s.
Nildemar Secches, engineer, interviewed in 2002
A solution
Under the Sarney government, the president of the BNDES,
Márcio Fortes, managed to appoint Nildemar Sanches, who
had been the Bank’s deputy managing director of Planning,
as Financial managing director. The team put together by
the managing director – Sérgio Zendron – consisting of
me and others, developed a directive that would be very
important: privatize those companies that the BNDES had
assumed control of. At that time, there was no culture
of letting a company go bankrupt. The culture was to
continue supporting companies, and as the BNDESPAR was
the shareholder company, the shares were transferred to
BNDESPAR. It therefore fell to BNDESPAR to find a solution.
These companies consumed an enormous amount of time.
Money was poured in but it did not help. Bank employees
became directors or presidents of some of these companies,
but this did not work.
Licínio Velasco Júnior, engineer, interviewed in 2012
What now?
I worked in the IT department, but the important facts for
me were all the economic plans: Cruzado Plan, Summer
Plan etc. Each time you knocked a few zeros off, it was crazy.
Everyone went running to the meeting room to discuss it.
“So what now? What are we going to do? They are going to
knock off the zeros! And the figures, the amounts? What
are they going to look like?” This was also something that
would affect my life a great deal. This was how I learned the
most here.
Margarida Maria Pedrosa Sá Freire de Souza, systems analyst,
interviewed in 2012
90
In February 1986, the government instigated the
Cruzado Plan in an attempt to contain inflation and
stabilize the economy with measures such as adopting
a new currency (the cruzado), price freezing, an
exchange rate and leases lasting one year. With price
freezing, inflation rates plummeted practically to zero.
The plan was well received by the people. Housewives
all over the country became “Sarney’s Inspectors”,
reporting unauthorized price increases. In November,
one week after elections, the government announced
a new set of measures, the Cruzado II, the failure of
which culminated in once again freeing up prices on
products and services.
There was still the problem of the foreign debt to
resolve, which led Brazil to request moratorium at the
beginning of 1987 and suspend interest payments on
this debt. Other attempts to control rampant inflation,
including the Bresser Plan (1987) and the Summer
Plan (1988), also failed. This succession of eternally
unsuccessful stabilization plans increased the lack of
faith in the economy even further. In 1986, inflation
was in the order of 200% per year; three years later it
reached the quite incredible figure of 1,764%. Measures
adopted did not reduce the public deficit, which sat at
around 5% of the GDP.
Average GDP growth between 1985 and 1989 was 4.3%.
However, it behaved rather irregularly, and the worst year
was 1988. At this time, exports drove growth upwards,
except in 1986, during the Cruzado Plan, when there was
an explosion in consumer spending and the subsequent
expansion of the domestic market. Inflation was, without
a doubt, the most significant problem of the era, with very
short respite periods. Hyperinflation was part of life, and it
only fell with the launch of the successive plans (Cruzado,
Bresser, Summer), before it once again started to climb. For
the low-income population, there were months when they
ran out of money. They were times of great instability.59
With the proclamation of the new Brazilian Constitution
in October 1988, Brazil went back to a system of freedom
with social and political rights for its citizens. If we look
at its defects, the new document presented a victory for
society and important advances for the country, especially
for workers. The transition to democracy phase had been
completed.
Difficult times
One very difficult time was the period with all those
economic plans, and the changes of the plans, such as
the Cruzado Plan etc. There were all these questions
and the standardization part was complicated because
we needed to show the agents how they were going
to work with the change in the currency. And this was
all very difficult, everything had to be standardized, so
we were implementing norms practically every day. It
was a really intense job.
José Flávio Gioia, engineer, interviewed in 2012
59 For more information on this period: CASTRO, Lavínia Barros. Esperança,
frustração e aprendizado: a história da Nova República. In: GIAMBIAGI et
al. (Orgs). Economia brasileira contemporânea: 1945-2010. Rio de Janeiro:
Campus, 2011.
The cruzado [1986-1989]
Among the measures adopted by President José Sarney to counter
inflation, adopting the cruzado as the standard currency in 1986
stands apart. The cruzado, which was once again divided into centavos,
corresponded to 1,000 cruzeiros and its symbol was “Cz$”.
Just as the procedure used during other currency changes, the banknotes
were stamped with the new corresponding amounts in cruzados. Later,
notes were brought into circulation that had similar characteristics to
the cruzeiro, with the name of the currency altered and the addition of
the phrase: “Deus seja louvado” (“God be praised”]. In 1986, coins were
launched in the amounts of 1, 5, 10, 20 and 50 centavos, and for 1 and 5
cruzados, then later still, for 10 cruzados.
The innovative theme for the new banknotes paid homage to cultural
personalities rather than traditional historical figures. Those portrayed
were: Villa-Lobos, Machado de Assis, Cândido Portinari and Carlos Chagas.
On the 100th centenary of the date the Lei Áurea (the law that decreed
the end of slavery) was signed in 1988, commemorative coins were minted
with the profiles of a black man, woman and child. All came with the
inscription “Axé”, a word of greeting of African origin. The set of stars
together with the value symbolized the number 100, especially designed
for the visually handicapped to be able to read.
91
New adjustments
[BNDES | 1985-1990]
T
he BNDES had reformulated its long-term planning methodology,
constructing scenarios for the economy and launching its first strategic
plan, designed for the three-year period between 1985 and 1987.
According to the plan’s directives, the BNDES ought to be prioritizing the
private sector, supporting the leading sectors (information technology, microelectronics, fine chemicals and new materials), modernizing and expanding
manufacturing capacity and economic infrastructure, as well as expanding the
agricultural frontier.
In keeping with the rationale of supporting the leading sectors and with
a view to meeting the most urgent needs, the BNDES created the Programa
Especial de Apoio ao Setor de Informática (PROINFO – Special Information
Technology Sector Support Program) and the Programa Nacional de Pequenas
Centrais Hidrelétricas (PNPCN – National Small Hydroelectric Plants Program).
Support for infrastructure projects was continued, with resources to expand
the Rio de Janeiro subway system, the final stage of the Itaipu Hydroelectric
Plant, and for modernization programs related to the Brazilian Urban Trains
Company (CBTU).
Also worthy of mention is Brazil’s first large-scale public share offer, with the
sale of Petrobras’ shares from the BNDES’ portfolio in the order of approximately
300 million dollars. At the time, it was the largest capitals market operation that
had ever been held in Brazil and involved around 100 financial institutions. The
operation was of note due to its size, originality and success.
In 1987, the BNDES took the next step in the cycle of studies that had started
in 1984 which resulted in the 1985-1987 Strategic Planning, as mentioned above,
and launched the new three-year strategic plan for 1988-1990, focusing on a
scenario of “Competitive Integration.” The plan’s objective was to increase
productivity and modernize those Brazilian companies that could compete and
participate in the international market. The basic directive was to “competitively
integrate Brazil in the world economy and integrate markets at the national
level, overcoming the country’s social and regional inequalities, and configuring
a new style of growth for the Brazilian economy.”60 The idea was that a new cycle
of development should start, but one that was not led by the State. The concept
of competitive integration foreshadowed the scenario of a globalized world.
60 MOURÃO, Julio O. Fusaro, op. cit.
92
A landmark
Second cycle
During my first stint at the Bank, I was a managing
director at the BNDES and vice-president at BNDESPAR
from 1985 to 1987. One of the great challenges was to use
the Bank as a promoter for capitals market in the country.
At the time, lots was being done to support share and
debenture issuances, and the most significant was that of
Petrobras’ shares – the largest capitals market operation
that had taken place in the country thus far. It involved the
Brazilian market’s main financial institutions and marked a
historical moment in the sector.
In 1987, we started the second cycle of strategic planning
while also conducting internal planning and discussing
the new scenario. We had concluded that foreign industry
present in Brazil had not had a negative impact as had been
supposed. We also concluded that there had been a series of
changes in international trade. It was intra-firm trading that
prevailed at the time. It was a case of getting connected to
foreign capital. Brazilian industry was already competitive,
so it did not need so much protection. Brazil needed to open
up to the global path, and we created a viable and possible
scenario, under the name of Competitive Integration, which
led to an enormous discussion at the Bank and in the press.
The Bank decided to change its policy: it started to carry
out privatizations, as well as supporting the opening up
of trade and competitive integration. We restructured the
Bank to modernize operations to correspond with not only
the new role companies were playing, but also the Brazilian
economy in the future. With the Collor government, all
this planning collapsed. Until 1990, the Bank was all about
Competitive Integration.
Francisco Roberto André Gros, economist, interviewed in 2002
Selling ideas
I arrived at the BNDES in 1986 in time to participate in
what became known in history as the model and concept
of Competitive Integration. I soon got started on that.
Although we were an investment bank, it was very clear,
at that time, that economic stability was essential. We had
very high inflation which was turning into hyperinflation.
My first job at the Bank was a macro-economic analysis.
It therefore fell to me, at the end of the 1980s, to defend
tax adjustments, the need for fiscal responsibility, the
concept that you should not be spending more than you
were collecting; and I had to “sell” these ideas, supported
by solid and consistent analysis, to the technical staff
that simply were not in the least bit worried about
commitment to the growth of the economy. It was very
challenging work.
Sérgio Besserman Vianna, economist, interviewed in 2002
93
A rich period
I went to Brasília in 1982 and took over at the Department of Governmental
Relations. A board had been created in Brasília with two departments: that of
Governmental Relations and that of the Legal-Legislative side. The Department
of Governmental Relations took care of the BNDES’ interaction with the
Central Bank and the ministries. It was the time of the famous “Competitive
Integration,” one of the Bank’s first attempts to start to prepare both itself
and the Brazilian economy for globalization. This was long before the idea of
globalization. This was about Competitive Integration of the Brazilian economy
at a global level. It was a very interesting process. At the same time, the first
privatizations were starting to take place, which I prefer to call re-privatizations,
because they were private companies that, due to default, for one reason
or another, had ended up falling into the hands of the BNDES. It was a little
difficult because of the transition from the military governments to democratic
administrations, but it was a very rich period, as well.
Aracruz Papel e Celulose’s pulp and paper factory in
Espírito Santo state. It is now called Fibria and is a
world leader in the production of eucalyptus pulp
The so-called
globalization
The BNDES was financially involved
with the State sector of the economy.
The Bank had 23 companies. It was
the owner of 35% of Eletrobras, the
Federal Rail Network, Nuclebrás,
CHESF and Furnas. It had provided
money in the form of a loan to
these companies. The State-owned
companies did not pay the Bank
because everything was under the
same control. In 1987, the Bank did
not have the money to pay its own
payroll, and it was only saved by the
privatization of the Fábrica de
Tecidos Nova América [textile
factory]. The Bank’s planning team
drew up a scenario of the Brazilian
economy in which a series of things
were obvious. In 1987, the Bank’s
Strategic Planning, the result of
the drafted scenario, changed the
Bank’s stance, making it operational
for the new phase of Brazilian
development. Brazil needed a way
into the international economy, and
at that time we called it Competitive
Insertion, but in today’s language, it
is called globalization.
According to the Bank’s strategic planning guidelines, privatization of
those companies under the control of the BNDES System began. Between
1987 and 1989, the subsidiary BNDESPAR coordinated the return of the
companies it had share control of to the private sector. The measure was
strategic to balance the System, bearing in mind financial restructuring. By
the end of the process, some 13 companies had been privatized, generating
significant resources equivalent to 539.4 million dollars.61 Among the
privatized companies, of note were: Aracruz Celulose, Companhia de Tecidos
Nova América, Caraíba Metais, Máquinas Piratininga do Nordeste, Máquinas
Piratininga S.A., SIBRA, CELPAG and Siderúrgica Nossa Senhora Aparecida.
Another important event was the change in the source of the BNDES’
resources. Article 239 of the Constitution, enacted in 1988, established
alterations concerning the destination of the PIS-PASEP resources: 60% of the
amount collected was to finance an unemployment benefit program (which
up until this point had not existed in Brazil) and 40% was to be used for
BNDES’ investments in projects that created jobs and income.
In January 1990, the Workers’ Assistance Fund (FAT)62 was created,
comprising resources drawn from the PIS-PASEP, and tied to the Ministry
of Labor. FAT was thus created to play a dual role: social (unemployment
benefit) and economic development (BNDES). The new fund guaranteed that
there would always be a regular and safe source of resources, and this was
extremely important for the Bank. Since then, these resources have been
employed to stimulate manufacturing activity in the country. During this
period, contributions from the FAT made up 90% of the BNDES’ resources.
Dual role
I worked as a technical advisor in the “Constitutional” assembly on social
welfare contributions, which included the PIS-PASEP, a long-term source of
funds and, therefore, the BNDES’ main fund. At that time, the PIS-PASEP was
transformed into the FAT by means of Article 239 of the Constitution. I was
privileged to help administrate this proposal. Historically, unemployment
benefits exist in the social welfare system throughout the world, but this
country did not have a program like this. There was a lot of discussion in
Congress because anything that affected the rights of workers leads to a big
discussion. Article 239, therefore, says the following: the PIS-PASEP resources,
the contribution, will continue to go to the BNDES as a long-term source
of resources for the economy; that is to say, as a fund, but a part of these
resources is to be used to create an unemployment benefit program. The FAT
has a dual role to play: social and development.
Beatriz Azeredo da Silva, economist, interviewed in 2002
Márcio João de Andrade Fortes, engineer,
interviewed in 2002
61 VELASCO JR., Licínio, op. cit.
62 The fund was regulated by Law Nº. 7,998, of January 11, 1990.
95
Thursday’s the day
In 1985, the BNDES started holding shows in its own building,
demonstrating that it recognized the importance of culture in the education,
development and personality of a nation. From 1993 onwards, this program
of events has been baptized “Quintas no BNDES” (Thursdays at the BNDES).
They helped make the Bank’s program of events a household name and
establish a regular day for presentations.
Every Thursday, the BNDES presents free instrumental, popular and
classical music in its auditorium in Rio de Janeiro, helping to promote
Brazilian artists, performers and music, as well as providing a means for
Brazilian culture to reach a wider audience.
“Thursdays at BNDES” is part of the cultural program in the city of Rio
de Janeiro. Around ninety shows have already been presented to around
300,000 people. This project is one of the BNDES’ most important means of
interacting with the community and effectively contributing to making sure
that everyone has access to their culture.
The BNDES has a wonderful gallery and an auditorium that seats 450
people where a whole program including music, theater and cinema has
been held and it was fantastic! The BNDES was the first public institution
to promote this type of activity. The people who created the Bank of Brazil’s
Cultural Center came to us to find out how we organized things and so did
the Federal Savings Bank: “How have you done this?” They wanted to know
how we put it together, if there was a fee paid to the artists, etc. Basically,
they wanted to know how it worked. So we were the pioneers in public
institutions’ cultural marketing projects. It was a project that has had
influence, even in terms of the difference it has made, inside what was the
BNDES. Creating this cultural niche has proven to be very important.
Nely de Araújo Starling, administrative assistant, interviewed in 2012
In 1989, the BNDES’ Credit division was created to carry out studies on risk
classification. The new division changed the way that the Bank developed
its analyses of a project. From this moment on, studies started to assess the
possibilities of risk inherent in projects that were to be supported and the
chances of recovering the credit. Furthermore, the focus of the analysis was
expanded to also include the client’s history. This new methodology was very
important to the Bank, not only in terms of preserving its investments, but
also maintaining its undertakings and future activities, such as creating jobs,
taxes and local development.
With the new fund and the results of the privatizations, the BNDES started
to recover its economic-financial capacity and was once again able to perform
its role as a development agent.
96
A new culture
The Credit Division was a milestone in the Bank’s culture, because although
there had been an analysis of a project, there had been no vision concerning
risk analysis involved in this project. By creating the Credit Division, the
following started to emerge: “This project has positive aspects and it is
important, but this businessman does not have the financial conditions to
pull it off.” We started to not only assess the project, but also the company and
the business group linked to it. Another important observation drawn from
the Credit Division surrounded the issue of credit recovery. Why did the Bank
not have a recovery culture? Because those who performed analysis were the
same as those who recovered the credit, meaning tasks were not separated.
People began specializing in credit recovery and the focus ceased to be whether
the project was viable or not. The focus became: “Where did it go wrong?”
The Credit division started to take care of this. Seeing whether a project was
feasible was no longer of great concern, but rather the reason it went wrong,
what was missing from the project, how we are going to be able to recover
this credit and, most importantly, how to save the undertaking, thus creating
jobs, taxes and development in the region. Our vision of credit recovery is not
the same as that of a commercial bank. A commercial bank forecloses, wants
its guarantees etc. Our concern is to maintain the undertaking. Very often, this
means having to change the owner of the business; if I could save it with that
owner, then great, but if I have to change him, then I’ll change him. This new
culture was very important.
Fernando Marques dos Santos, engineer, interviewed in 2012
97
The challenge of democracy
[the Collor and Itamar Franco administrations]
I
Stumbling blocks
Based upon these working groups
in the Bank, the idea of competitive
integration had already been
created. This was the idea that the
company had to survive in an open
economy and within the context of
international competition, and also
that this international competition
would be progressive. Obviously,
the Collor government caused us
gargantuan stumbling blocks but,
on the positive side, the process of
opening up the economy had been
started.
José Pio Borges de Castro Filho, engineer
and economist, interviewed in 2002
98
n his inauguration speech in March 1990, the country’s new president
Fernando Collor de Mello, announced that fighting inflation would be a
priority for his government. The strategy would be centered on a program
to modernize the State, covering reforms in the tax, administrative and
financial areas. The program would be put into effect through privatization
and deregulation. In his speech, Collor criticized a “pseudo-nationalism”
among the country’s backward elite and promised to open up the economy.
Brazil needed to update its agenda and make up for lost time in the
previous decade. Reorganizing the State, as well as reducing its size would
make the country more efficient. Industry was technologically outdated and
needed modernizing. At the time, the president used the backward nature of
the base industries in Brazilian cars as an example, these being nothing but
“carts” when compared to the “developed world.”
The “New Brazil Plan”, soon after renamed the “Collor Plan”, had a
national impact, especially due to the fact individuals’ and companies’ bank
accounts were confiscated. In a very short amount of time, the measures lost
their punch and inflation was on its way up again. In January the following
year, Collor Plan II was launched, freezing prices and salaries. Brazil already
knew all about this old story.
The efforts linked to administrative reform were not less effective:
Collor abolished a number of State-owned companies and decided that all
government bodies should cut their staff by 30%. No criterion for the cuts
was provided. The goal was to dismiss 360,000 public servants. Only a third
of this figure was fired but, even so, the effect was devastating. Collor had
made an enemy of the middle class by confiscating savings funds; industry,
with the end to subsidies and protectionism; and now, he had lost the
support of the civil service.
Collor furthered the process of opening up trade and finance (started
during the Sarney government) with the Industrial and Foreign Trade
Policy which, among other measures, reduced import tariffs and started the
privatization program. This opening-up process, which aimed to integrate
the Brazilian economy into the global market, had already been set out in the
BNDES’ Competitive Integration Plan.
Baptism
There were internal and external specialists, but most knowledge came from the
internal specialists. They understood each industrial sector, what was happening,
and what was going to be operational. We were prepared to create a scenario
taking into consideration the changes that had already taken place. We put
together the first plans that were analyzed in several studies for the Department
of Sectorial Studies. Under the Collor government, Luiz Paulo Velloso Lucas and
José Paulo Silveira, who worked with us on the scenarios, took these ideas to
Zélia [Cardoso de Mello]. The president then took the right decision: change the
development strategy, open up the economy and do away with import tariffs.
Brazil did very well in terms of quality and productivity. This [Integration Plan]
was one of the projects for which the BNDES was remembered. It was run by Júlio
Mourão, aided by Antônio Barros de Castro, who had been a director at the Bank
and died recently. It was Castro who baptized the plan. When he described the
plan, Castro said: “Competitive Integration”, and this stuck as a name for Brazil’s
new development strategy.
Yolanda Maria Melo Ramalho, economist, interviewed in 2012
A sad moment
When the Collor government moved into power, it was a very sad moment,
when a cut in the percentage of staff was established. It was just like that; in
one week, 10% of the Bank’s personnel was made redundant – that was how
they made the cut. Firstly, whoever had to go went, and afterwards, it was
necessary to cut another 10%. At that time, I was working for people in the
BNDESPAR, which is a subsidiary, and we had to get rid of ten kitchen staff –
elderly ladies, mothers who had been working with us for many years. But we
had to let them go. There were people who got ill and were even hospitalized
because of the way they were treated psychologically. So it was a very sad time,
because there were redundancies without any grounds, it was just a question of
numbers in the decisions.
Dora Sigaud Vianna Costa, administrator, interviewed in 2002
99
In April 1990, the National Privatization Program was
launched. Initially, some 68 companies were included in
the program, but this number was reviewed and modified.
During the Collor government, only 15 privatizations
took place. The first set of companies to be privatized
was from the steel, petrochemical and fertilizer sectors.
The Usiminas steel mill was chosen to get the process
started. Also from the same sector and due to its symbolic
value, the National Steel Company (CSN) should have
been included in this first stage, but its process was only
completed during Itamar Franco’s administration. During
this first phase, the so-called “privatization currencies”
were used, that is, public debt bonds.
Collor had taken office with no partisan support and
with no support from organized civil society. His inability
to gather political support contributed even more to his
isolation. The Collor administration was notable for all
sorts of upheavals: personal, political and economic
problems each took it in turn to dominate, creating a
climate of insecurity. Recession, unemployment and
allegations of corruption culminated in the impeachment
of Collor de Mello, with the full support from civil society
which took to the streets to demonstrate their rejection
of the incumbent president. Young people all over
the country came together to call for and support the
impeachment, which became known as the “painted
faces” movement.
The Collor government appeared with a proposal for
privatization that I would call “wild,” something akin
to what they did in East Germany, throwing companies
together and selling them off in lots, partly because many
of them were not working. It was the Bank that shaped
the privatization program. While there was an abundance
of critics, implementing the privatization project was
certainly very different to what was initially proposed.
That plan to have one consultant for service A, another
consultant for service B, two consultancies and all the
protection that was positioned around it was created
internally here. And this shows another characteristic
that I think is interesting about the Bank’s employees: the
organization has an opinion and it knows how to create
and implement projects. This makes a great difference
and distinguishes the BNDES among the State-owned
companies as a whole.
Law Nº. 8,031, of April 12, 1990, which created the National
Privatization Program under the Collor administration, was
created in the cabinet of Nildemar Secches and it was due to
him that the BNDES took on the privatization process. This
law established service A, service B and a hired consulting
firm. In service A you had pricing, and in service B, the sales
model. Prior to this, the BNDES did everything: it defined
how to establish pricing, if it was to be sold in parts, what
the flow would be – operational or cash – basically, how it
would be. Nildemar Secches was the chief-superintendent
of BNDESPAR, or vice-president, and we had to take a lot of
care in his cabinet because information could not leak out.
Before this, our shares in certain companies were sold. The
Bank’s shares in Aracruz were sold to Safra, to Votorantim,
and to another company that I’ve forgotten the name of.
Caraíba Metais, Nova América and SIBRA were all sold,
as well. In the case of SIBRA [Eletrossiderúrgica Brasileira
S.A.], which was privatized in 1988, there was a very heated
bidding war between Gerdau and Paulista Ferro Ligas. I
learnt so much during each period I spent in this area of the
Bank, because everyone was new, no one knew anything.
Carlos Tadeu Moreira Ribeiro, engineer, interviewed in 2012
Fátima Regina França Farah, attorney, interviewed in 2012
Making a difference
100
Year zero
What role are we playing?
Gallantly
The National Privatization Plan, as it was called when it
was launched in 1990, was very ambitious. The idea was
to begin with the industrial sectors, because the BNDES
had important shares in these, but it was clearly shown
that the role of the State was to take care of the people,
basic services and typically governmental activities, such
as health, education and security, and not manufacture
steel, petrochemical products and fertilizers. Later,
we saw that some public services could, when wellregulated, move over to the private sector. Precisely
because it was becoming a program with much broader
reach, so much care was taken in setting it up. The first
privatization took way too long, only finally taking place
in October 1991, but it formed the legal basis for this
privatization program.
It was very sad to see how the steel companies were
unfortunately used for political ends and not for
economic ends. It was very confusing – there was a
control of the control of the control of the control; it was
so complicated. There were 10,000 people working for a
company where two or 3,000 would have been enough.
Personally, I was to an extent anxious for privatization
to take place and I ended up working on it, as part of
my department responsibilities. And it was really quite
wonderful work; the Bank had regulations that needed
to be complied with and these regulations were literally
fulfilled; we did what was required under the program,
what had to be done. I could even testify to some of
these privatizations in court, completely at ease that all
that was done was planned. It was a politically turbulent
time for the country, but I think that the BNDES, as a
whole, operated wonderfully. We gallantly came through
this privatization phase with honor.
Eduardo Marco Modiano, engineer, interviewed in 2002
Carlos Gastaldoni, engineer, interviewed in 2012
The cruzeiro [1990-1993]
The steps taken to create the cruzado novo were not
enough to contain and avoid speculation in the financial
market. At the time of the presidential elections in
November 1989, the currency went into rapid depreciation,
taking the country to the brink of hyperinflation. Once
elected, on the day of his inauguration in January 1990,
President Fernando Collor de Mello proclaimed a series
of provisional measures with a view to reorganizing and
strengthening the economy. The national currency was
called once again the cruzeiro, with the centavo being kept
to denominate a one-hundredth. The cruzeiro was equal
to one cruzado novo and the amounts in money used the
symbol “Cr$”. The same procedure of stamping bills was
introduced and, later, these sums were printed up as final
copies of the banknotes, except the 50 cruzeiro bill, which
was replaced with a coin.
101
What could have been a nightmare proved to be more proof that democracy
in the country really had been firmly established. On February 29, 1992, the
House of Representatives, by 411 votes to 31, approved the request to impeach
the President of the Republic. The Collor era had come to an end.
The Vice-President, Itamar Franco, assumed command of the country and,
little by little, started to regain the confidence and respect of the population.
What he inherited from Collor proved to be extremely heavy. In 1992, GDP
throughout Latin America had risen by around 4%, while in Brazil the GDP
growth rate showed a drop of 1%.
The following year, the situation was still no better. Acute recession,
coupled with hyperinflation, was ingredient in the recipe that almost crippled
the Brazilian economy. The public deficit was increasing; production had
stagnated; and unemployment rates continued to rise. It was feared that
inflation would reach the unprecedented figure of 2,000%. That year, the
press announced that Brazil had achieved the highest rate of inflation in the
entire world.
Upon assuming leadership of the government, Itamar Franco suspended
the privatizations that were under way. In April 1993, a Parliamentary Inquiry
Commission was set up to investigate the privatization program. However, still
in 1993, the Privatization Program was reinitiated once again and, by the end of
Franco’s government, some 17 companies had been privatized and the sale of
the companies in the steel sector had been completed. In doing so, the federal
government had collected a total equivalent to 4.7 billion dollars.
Public demonstration calling for the
impeachment of President Fernando Collor
de Mello, held on Copacabana Beach in Rio de
Janeiro (RJ), on August 16, 1992
In March 1994, the Itamar Franco administration
launched a new stabilization plan and a new national
currency: the real. Disillusioned after so many frustrated
experiences with stabilization plans, Brazilians seemed
to have lost all hope with this new attempt (one of the
last efforts from this government0) to do anything. Since
1986, five plans had unsuccessfully tried to stabilize the
country’s economy. People had suffered high rates of
inflation for more than ten years; inflation that had been
eating away at their savings and preventing them from
making any long-term plans.
The Real Plan was carefully constructed, and this
would later win praise from international bodies. The
main idea was to fight the public deficit, which was
labeled one of the principal causes of inflation and held
responsible for the failure of previous plans. In contrast
to its predecessors, the Real Plan proved that it was not
another stopgap measure.
Before launching the new currency, an indexing factor
was introduced in the form of the real unit of currency
(URV), to make the transition from the cruzeiro-real to the
real. There was no bank holiday, no price freezing and
savings were not confiscated. In the first week, the prices
of various products (food, cleaning and hygiene materials
etc.) soared, with readjustments of up to more than 60%,
surprising both the government and the population.
The URV was an inflation indicator calculated daily
by the Central Bank which kept it pegged to the dollar.
Converting prices was done gradually and on a voluntary
basis. Salaries, public tariffs, rents and monthly school
bills were gradually converted to the average for the
previous four months. This measure caused controversy.
Little by little, however, the idea of a strong currency was
being introduced and assimilated by the people.
The Real Plan managed to deconstruct the mechanisms
that, at that level, fed hyperinflation within a framework
of chronic recession: GDP per capita fell 7.1% in 1990 and
only started to recover in 1993. When the real moved into
circulation, in July 1994, inflation during the previous
month had been around 50%, but by October it had
fallen to 2.8%, and by December, the rate reached just
1.5% according to the General Price Index released by the
Getulio Vargas Foundation. The economy started to warm
up again and manufacturing started to expand, as well. A
new era for the country had been inaugurated.
No one believed it
I took part in a few privatization processes and led that
of Embraer, which was very controversial because of
the strategic and military issues. I went to a meeting in
Brasília, as a manager of the Bank, and went into the
National Monetary Council’s room where there were a
number of ministers: Fernando Henrique Cardoso was
the minister of Finance, the minister of Aeronautics
was Lélio Lobo and the Treasury secretary was Murilo
Portugal – who was also from Niterói, but I did not know
him. That day, it was decided that Embraer should be
privatized. A working group, led by Murilo Portugal, was
created to make a few prior adjustments and to make it
as complete as possible, and a lot of meetings were held.
There were even foreign investors involved. People did
not believe that the privatization would take place. There
were 102 consultants, consortium A and consortium B.
If there was a difference in price of more than 20%, a
third would have to be contracted and in this case this
became necessary. When we analyzed the projects, we
saw that there were different premises but, when we
adjusted these premises, the 20% practically disappeared
and the process started moving at a different speed. The
policy decision taken at that meeting paved the way for
the process. It was the first privatization with the new
currency, because previously the famous “privatization
currency” had been used, not to call it “rotten currency”
as it had been called at the time. It was a long process,
but it was successful and Embraer was privatized with
the help of the BNDES. Today, we are proud to see it
conquering the global markets being recognized as a
highly competent company.
Claudio Bernardo Guimarães de Moraes, accountant,
interviewed in 2012
103
The cruzeiro real [1993-1994]
The high inflation rates that scarred 1993 forced the government
to publish Provisional Measure Nº. 336, of July 28, which brought in
the cruzeiro real. Effective as of August 2, this measure ushered in
a new monetary reform in the country and cut three zeros off the
currency, which became known as the cruzeiro real. The entire symbol
CR$ was written in capitals to differentiate it from the Cr$ that had
represented the previous currency. The cruzeiro banknotes were
stamped with the cruzeiro real and their values corresponded with
the new currency. Due to its depreciation, they were never printed.
Coins were minted in stainless steel at the values of 5, 10, 50 and 100
cruzeiros reais, with the images of a macaw, an anteater, a jaguar
and wolf, respectively, replacing the same amounts in paper money.
The real [1994-...]63
The first step of the Real Plan was to try to balance public finances. The second
stage was to create a new indexing system for the economy in the form
of the real unit of currency established by Provisional Measure Nº. 434, of
February 27, 1994. The URV’s daily variation was set by the Central Bank. The
day it came into effect, March 1, 1994, the value of this new indexing system
was CR$647.50. The URV served as a standard of monetary value and not
as currency; the cruzeiro real continued to be used as a form of payment. Its
aim was to maintain a ratio between salaries and prices where the values in
cruzeiro reais were revised daily. Once all the prices had been stabilized in the
URV, this would be the moment for this indexing system to become the new
currency – the real. This took place on July 1, 1994, when the URV, which was
equivalent to CR$ 2,750.00, was converted into the value of one real.
The real, introduced by Law Nº. 8,800, of May 27, 1994, is divided into
100 centavos and uses the symbol R$. Unlike previous changeovers, the
introduction of the new monetary unit did not involve cutting zeros or
stamping the notes issued under the previous standard. To avoid problems
for the population, the Central Bank decided to replace all the existing
banknotes and coins that had been in circulation in a short space of time. The
manufacture of the new currency was started ahead of time. Brazil’s Federal
Mint turned to foreign companies to print up a portion of our banknotes. The
1, 5, 10, 50 and 100 real banknotes were printed both in Brazil and abroad,
with blueprints being supplied by the Brazilian Mint. All the notes carried the
image of Liberty which had been used in 1989 on the 200 cruzado novo note
and the following year on the 200 cruzeiros note. On the reverse are species
of Brazilian animals: a hummingbird, heron, macaw, jaguar and grouper fish.
Coins were minted in stainless steel in sums of 1, 5, 10, 25 and 50 centavos, as
well as 1 real.
63 The currency currently in use at the time of publication.
104
A new role
[BNDES | 1990-1994]
A
t the start of the Collor administration, the BNDES System faced a new challenge
when it took command of the National Privatization Plan (PND) – providing
technical, financial and administrative support – and started administrating the
National Privatization Fund. The Bank’s experiences with privatizations, coordinated by the
BNDESPAR subsidiary during the Sarney government, provided it with the ability to manage
the new process. The job it faced, however, was very different and a lot more complex.
According to Licínio Velasco,64 the PND was a very highly regulated program. Provisional
Measure Nº. 155, of March 15, 1990, which introduced the plan, was developed with the
assistance of the BNDES’ technicians. One month later, the Measure was enacted as Law
Nº. 8,031, which also underwent a number of alterations, being perfected by new
Provisional Measures.
In 1991, the controlling stakes in Usiminas, Usiminas Mecânica, CELMA, MAFERSA and
COSINOR were transferred to the private sector by means of the PND. Between 1992 and 1993,
twenty companies from the steel, petrochemical and fertilizer sectors were privatized, among
which were CSN, COSIPA and Açominas. The sales model adopted in the case of Usiminas
was later reproduced in virtually all the privatizations that were carried out.65 During this
period, of special note was the privatization of the Empresa Brasileira de Aeronáutica
(Embraer), a mixed-capital company under State control, in 1994.
Nip and tuck
When we joined the BNDES, typewriters were Remington. Today, I look back and think that it
really was quite impressive that the bidding round for the sale of Usiminas was done entirely
on a Remington typewriter. Secretaries typed away at the typewriters and, when things
needed to be finalized, we got a big table, a stick of glue, scissors, sticky-tape and I do not
know what else: messed around here, cut something there, lots of people all sorting the text
out. It was what I called “nip and tuck”.
The first
The first person to speak about privatization in the public sector was Ignácio Rangel, one of the
most brilliant economists Brazil has ever seen and who worked for the BNDES. He was the one
who started showing the need to begin privatizing, precisely because the State was not able
to invest sufficiently, and this money would be better spent elsewhere. On top of this, sales
should be made to collect money to fund the services that traditionally fall to the State. What
the Collor Plan did in terms of privatization was to clearly provide some shape to what the
BNDES had started in 1986.
Durval José Soledade Santos, attorney, interviewed in 2002
64 VELASCO JR., Licínio, op. cit.
65 Idem, ibidem.
105
A question of honor
I had learned my trade in the office and the
Privatizations Department at the Bank dealt with
external consultants, law firms and economic firms,
and there were assessments. This was easy because
I understood the way the guys we dealt with thought.
I also understood the way they sometimes treated
things superficially because I had seen this at a number
of law firms, at different places where I had worked,
where the guy would draft a legal opinion but not take
any risks. Here, we risked our positions and this was
really important. What was also very important for us
was the external pressure because it was a very highlycriticized process. From our families and friends came:
“You are there with all this privatization and there are
all sorts of scams and people are going to lose their
jobs!” Lots of different stuff. But it was not just this, it
was a very supervised and scrutinized process, but I can
assure you that, within the Bank, there was never any
sort of irregularity. This could have happened on the
outside, but from the government and the BNDES’ side,
everything was very open. We were held to account
from outside and we defended ourselves; it was a
question of honor.
Luiz Fernando Cardoso Chaves, attorney, interviewed in 2012
Clarity
The BNDES is an agent of change and one of the Bank’s
characteristics is knowing how to define priorities at the
right time for the country from an economic perspective.
I have no idea why this is not defended publicly with
more transparency, it seems like people want to hide this
for some reason, but the information is there for all to
see. In lots of different sectors. In the chemical industry,
for example, these days there is one large Brazilian
company – Braskem. If that tripartite model had been
maintained, the mobility of capital would not have been
available for it to become such a large company capable
of competing internationally.
106
Aerial view of Usiminas in Ipatinga (MG).
Founded in 1956, this was the first state
company to be privatized, in 1991, under the
Collor government
The BNDES focused on updating its agenda, developing new lines of
credit for exports to increase the presence of higher aggregate value goods
in the exports of Brazilian products. In 1991, the Programa de Financiamento
a Exportações de Máquinas e Equipamentos (FINAMEX – Machinery and
Equipment Export Finance Program) was created, after having been instituted
in 1984. During its first year, FINAMEX only provided support for “preshipment” operations,66 which totaled 33 million dollars and served eight
exporters. One year later, the Bank opened up a line for “post-shipment”
operations. The new lines of investment were still responsible for increasing
the BNDES’ disbursements in the following year.
The world had changed and one of the issues that took on great importance
on the international stage was concern for the environment. In 1992, the United
Nations Conference on Environment and Development (UNCED), better known
as “Rio 92”, was held in Rio de Janeiro to sign the Green Protocol. The BNDES
took part in the event with the aim of providing the benefit of its experience in
environmental issues to other federal banks.
66 “The export financing market is divided into two types of credit: financing for manufacturing (preshipment) and commercialization (post-shipment). The two types of financing may be more or less
important depending on the sector, but a well-developed market for both in a country is essential to make
exports feasible.” CATERMOL, Fabrício. BNDES-Exim: 15 Anos de Apoio às Exportações Brasileiras.
Revista do BNDES, Rio de Janeiro, n. 24, v. 12, Dec. 2005, p. 5.
107
Between 1990 and 1993, there was an average fall of 15% in the Bank’s
disbursements and, despite the transfer of resources from the FAT fund, there
was a 10% drop in the amount of resources available. The BNDES started to
prioritize profitability when granting financing and moved away from the
industrial development strategy. The Bank’s disbursements to the agricultural
as well as paper and cardboard sectors grew, however. Furthermore,
the beginning of the 1990s was notable for the fall in the BNDES’ direct
operations and for growth in indirect operations through financial agents
covered by FINAME.
In 1993, while the Itamar Franco government was still in power, the BNDES
drafted the Competitive Northeast Program together with the Ministry of
Planning, aimed at investing the equivalent of one billion dollars in the
region over the following three years, in order to stimulate local development
and create jobs. The resources were supposed to benefit the tourist industry,
the production of fruit for both domestic consumption and export, mining
and preparation of semi-precious stones, which were of great value on the
international market, and other entrepreneurial activities. In his speech,67
given at the launch of the program, President Itamar Franco recalled Brazil’s
debt to the Northeastern Region and declared that investing in the region was
a response to the needs of the country.
A period of uncertainty
When President Itamar took control of the government, he invited Professor
Antonio Barros de Castro to be president of the BNDES. He, in turn, invited me
to be a managing director. At that time, we believed that it was time to go back
to adopting an industrial policy. No one knew what the Itamar government
was going to be like. It was a period of great uncertainty. There was a very
serious problem of economic instability that needed to be addressed. Even
so, we had the idea of doing something along the lines of an industrial policy
through the Bank, one of the few bureaucratic organs which had survived the
dismantling of the State that had taken place during the Collor administration.
We prepared a reform project for the areas I was responsible for: Credit for
Industry, Trade and Services, with the exception of Infrastructure. Together
with the Bank’s operational divisions, “management sectors” were established,
with the initial aim of providing support for operations, studying the sectors in
which these operations were concentrated (such as pulp and paper). This type
of organization is commonplace in large international investment banks. Later,
this was extended to the BNDES’ other operational divisions.
Fabio Stefano Erber, economist, interviewed in 2002
67 Cf. <http://www.biblioteca.presidencia.gov.br/ex-presidentes/itamar-franco/discursos-1/1993/21%20
-%20/at_download/file>. Accessed in: Oct. 2012.
108
Into the field
At the beginning of the 1990s, the main priority was
to maintain investments that had already been made,
because privatizations were starting. A large part of
the specialists in equities, from the BNDESPAR and the
Bank, were posted to the privatization areas. Staff was
thus technically reduced to operating new investments
themselves. Collor had taken that decision in relation to
financial resources and no one had any cash. All projects
were recalled and we had to minimally preserve the
financial health of those which were in the portfolio,
so that the BNDES would not suffer. This meant that
monitoring projects became a priority. The second
priority: let’s get out there into the field where the Bank
can make a difference, where we can get involved and
see projects that were not getting off the drawing board,
because the businessman could not fully see the scenario
ahead of him, not even if he had enough resources. And
we could provide an analysis of the scenarios and speak
about the Bank’s ability to support them. So we went out
there and started doing promotional work which was rare
for the Bank; only a few units did this.
Fabio Sotelino da Rocha, engineer, interviewed in 2012
Surpassing expectations
The Ferronorte railroad was a project that left quite an
impression on me. It was a private concession, awarded
at the beginning of the 1990s. It was actually the cause
of some amusement because it was the “King of Soya”
Olacyr de Moraes’ project. Brazil had not constructed any
railways for a number of years. The idea was to extend
Brazil’s agricultural frontiers in relation to the hinterland in
the Central-West region where agriculture was developing
dramatically; there was a decentralization of development.
It was a project that was really quite daring, expansive
and transformational. In fact, it suffered from a number
of problems since the shareholder had difficulties in other
businesses, but ended up signing the deal. These days, it
is a very important railroad. With the development of the
Central-West, grain production has boomed, and all our
expectations have been enormously surpassed. The Board
of the Bank had some difficulty understanding the project
and had a number of doubts, but I believed in it and made
numerous presentations until it was approved.
Roberto Zurli Machado, engineer, interviewed in 2012
109
Presidents
•
Luís Antônio Sande de Oliveira | 1979-1983
•
Jorge Lins Freire | 1983-1984
•
José Carlos Perdigão Medeiros da Fonseca | 1984-1985
•
Dílson Domingos Funaro | 1985
•
André Franco Montoro Filho | 1985-1987
•
Márcio João de Andrade Fortes | 1987-1989
•
Ney Fontes de Melo Távora | 1989-1990
•
Eduardo Marco Modiano | 1990-1992
•
Antônio Barros de Castro | 1992-1993
•
Luís Carlos Delbein Leite | 1993
•
Pérsio Arida | 1993-1995
Administration of Funds – Instruments of Creation
•
Social Investment Fund (FINSOCIAL) – Decree-Law 1. Nº. 940, of May 25, 1982
•
National Development Fund (FND) – Decree-Law Nº. 2,288, of July 23, 1986
•
Workers’ Assistance Fund (FAT) – Law Nº. 7,998, of January 11, 1990
•
National Privatization Fund – Law Nº. 8,031, of April 12, 1990
Government Programs
110
•
Third National Development Plan (III PND). João Figueiredo administration. Suspended in 1980, due
to the international economic crisis which was, in turn, a result of the “oil crisis” | 1980
•
First National Development Plan of the New Republic. José Sarney administration | 1986-1989
•
National Privatization Program. Collor de Mello administration | 1990
•
New Brazil Plan. Collor de Mello administration | 1990
•
Multi-annual Investment Plan. Collor de Mello administration | 1991-1995, revised by the Itamar
Franco administration in 1993
The BNDES’ support for Embraer contributed to
the company becoming an important global
competitor in the manufacture of commercial
and executive jets
112
The challenge
of stability
A battlefield
[The Fernando Henrique Cardoso administration]
F
The Alberto Pasqualini Oil Refinery
(Refap) in Canoas (RS), one of
Petrobras’ numerous plants, to which
BNDES provided support for its
expansion
114
ollowing the success in implementing the Real Plan as the minister of
Finance under the administration of Itamar Franco, Fernando Henrique
Cardoso was elected President of the Republic in October 1994.
The new government’s most significant challenge was to maintain the stability
of the national currency. Its main efforts, therefore, entailed facing the ongoing
battle against inflation, the consolidation of the Real Plan and the constitutional
reforms needed to attract foreign investment to the country, with a view to
reestablishing sustained economic growth.
The president sought to safeguard the government’s priority areas from
political pressure, appointing people he could trust to plan the reforms
considered strategic to stabilization. The team that had created the Real Plan
was invited to occupy the main positions in the economic area. Pedro Malan was
made responsible for the Ministry of Finance and Pérsio Arida left his position as
president of the BNDES to take control of the Central Bank, which was given more
operational autonomy.
Defending economic stability was not an easy task. The economy was still fragile
and threats – both domestic and foreign – were numerous. Several battles had to
be won before stability was consolidated.68 The international crises, such as that in
Mexico in December 1994, which had repercussions on emerging economies, such as
Brazil’s, became more frequent and heralded difficulties in maintaining stability.
The economic policy adopted to fight inflation, involving high interest rates and
an overvalued exchange rate, had other implications, such as an unsteady trade
balance and an increase in the public debt. These problems highlighted the need
for adjustments, especially in relation to the appreciation of the currency, which
eventually reached a value equal to that of the dollar. The first attempt to adjust the
exchange rate led to capital fleeing the country (the “tequila effect”). With the failure
of this operation, Pérsio Arida resigned from his position at the Central Bank and
Gustavo Loyola was appointed to take his place.
The Real Plan revealed that certain institutions had obtained a large part of their
profits from inflation (inflation floating). With the end of hyperinflation and economic
indexing, many banks folded, causing financial and social losses, besides triggering
a crisis in the sector. In November 1995, after more than 20 banks had gone bankrupt,
the federal government published Provisional Measure Nº. 1,179, increasing the
powers of the Central Bank to intervene in banking institutions lacking equity or
finances. This was aimed at preventing the crisis from spreading and compromising
the financial system and the economy as a whole.
The same Provisional Measure introduced the Programa de Estímulo à
Reestruturação e ao Fortalecimento do Sistema Financeiro Nacional (PROER – Program
to Stimulate the Restructuring and Strengthening of the National Financial System),
designed to encourage the reorganization of the sector through bank mergers and
incorporations, based upon the Central Bank’s regulations. The Fundo Garantidor de
Créditos (FGC – Credit Guarantee Fund) was also created to protect National Finance
System account holders.69
One of the government’s goals was to adapt the Brazilian State to the new global
economic context, which was becoming more complex by the day. A series of measures
concerning the reform of the State’s role, aimed in part at altering the Federal
Constitution that was in effect, was submitted to National Congress for approval. The
measures included breaking State monopoly on oil and telecommunications and
allowing companies of any nationality to research and mine the country’s resources.
The proposals for change were extensively discussed in Congress, undergoing many
alterations, especially those connected with reforms to federal administration and the
Social Welfare system, which were not approved until 1998.
Reducing the State’s participation in the economy, which had been started by José
Sarney and pushed along by Fernando Collor and Itamar Franco, continued during
68 Economists and historians have made reference to the battle or battles for stability. Cf. GIAMBIAGI et al. (Orgs).
Economia brasileira contemporânea: 1945-2010. Rio de Janeiro: Campus, 2011, p. 116-195; and FAUSTO, Boris, op. cit.,
p. 480-522.
69 As well as PROER, in 1995, the Program to Encourage a Reduction in the Participation of State-Owned Banks in the
Financial System (PROES) was also created.
115
Fernando Henrique Cardoso’s mandates. The wave
of privatizations was not restricted to Brazil, as it
spread out across the entire world.
From the mid-1980s on, several European
governments started privatizing State-owned
companies in the areas of infrastructure, energy and
telecommunications. Over the following two decades,
with no funds to invest and cover expenses, these
governments sold or signed concession agreements
for power stations, banks, highways and certain
public services.
The National Privatization Program (PND) was,
therefore, one of the FHC government’s priorities,
considered a strategic instrument in reforming the
State and reducing the public debt. The issue caught
the public’s attention and was discussed daily, leading
to heated debates and much criticism, especially when
the Vale do Rio Doce company was included in the
package of companies to be privatized.
Attention needed
During my presidency, one area that caught my attention
involved BNDESPAR, the capitals market subsidiary – one
of the areas of the Brazilian economy that had not grown.
I found a rather large share portfolio, basically made up
of State-owned companies, valued at approximately 12
to 14 billion dollars. We decided to divest these shares,
because the market was running high. The money would
be used to increase our loan capacity.
Luiz Carlos Mendonça de Barros, economist, interviewed in 2002
116
At this point, there was a plan to transfer public
services provided by the federal government to the
private sector. Part of the electrical energy sector was
privatized and privatization of the telecommunications
sector was starting. Privatizations were accompanied by
the creation of regulatory agencies for public utilities –
such as telecommunications (ANATEL) and electrical
energy (ANEEL) – designed to defend consumer interests,
guarantee contracts were carried out and services were of
high standards, as well as encouraging new investment in
the sectors.
The transport (highways, subways and ports)
and financial sectors were included. Furthermore,
privatizations at a state level also began with assistance
from the federal government.
Another measure that caused controversy was the
enactment of Law Nº. 9,478, of August 6, 1997, which
“flexibilized” Petrobras’ monopoly to explore and refine
oil. The law established a four-year transition period
to end the monopoly. As such, as of 2001, Petrobras
would begin activities as part of an open market, with
competitors. The same law instituted the National
Energy Policy Council, to propose national policies and
specific measures to improve operations in the sector,
and the National Oil Agency, the regulatory agency for
the industry covering oil, natural gas, their derivatives
and biofuels.
The concerns over Petrobras operating in a
competitive field proved to be unfounded. The company
gradually learned how to renew itself, adopting a new
corporate model, and transformed itself into a highly
efficient company with a diverse range of international
operations. Petrobras is now one of the world’s eighth
largest energy companies and appears on the Dow Jones
Sustainability World Index, part of the New York Stock
Exchange, which is considered the most important
sustainability index, assessing social, environmental and
economic management.
Bringing inflation under control had social effects and
economic benefits. Studies carried out by the Getulio
Vargas Foundation showed an 18.47% reduction in the
country’s poverty levels between 1993 and 1995. The
Gross Domestic Product, which had shown growth in
1993 (4.9%), kept growing in 1994 (5.9%), and this trend
continued with positive rates until 1998. Brazil had
started to change. It was now possible to plan for the
future. But other battles still had to be won.
Returning to growth
[BNDES | 1995-1998]
T
he Real Plan signaled a return to economic expansion. With the
economy stabilized, the country rid itself of the problems that had
plagued development in the 1980s. Opening up the economy, one of
the new government’s priorities, set the stage for foreign investment, which
helped modernize Brazilian industry. These investments, together with
increased imports, meant that domestic companies could modernize and gain
a more competitive edge. The new guidelines for economic policy discarded
the previous import substitution policies which had been maintained in the
country since the mid-1930s.
Soy harvesting. The BNDES supported the
development of agribusiness in Brazil,
financing machinery, equipment, as well
as the modernization of facilities and grain
storage systems
At this time, the BNDES also expanded, increasing
its disbursements and activities. There were many
significant changes, such as a return to operations in the
social field and the start of projects in the cultural area,
with the first support for cinema and national historic
heritage. Certain areas were becoming more important
and became priorities, such as exports and small and
medium-sized businesses.
With the drop in inflation, industrial sectors started
to improve. The positive changes attracted foreign
groups that started investing in the country again. The
sectors that most benefitted from these investments were
automotive, electronics and capital goods.
The BNDES supported the expansion of the
automotive sector which had previously been
concentrated in São Paulo, spreading the industry out
to other Central-South states, stretching as far as Bahia.
The entry of new automobile assembly companies
into the country also contributed to this expansion.
The installed manufacturing capacity of this sector
grew by approximately 50%. The auto-parts sector was
modernized and became better organized.
The agricultural sector also benefitted enormously
from the new situation. There was a boom in
agribusiness, which consolidated development in
interior states. Among the support granted to the sector,
worthy of note was that provided to expand irrigated
fruit cultivation in the São Francisco River Valley in
Bahia, and in the Açu River Valley in Rio Grande do
Norte, as well as to cultivate grain in the Southern and
Central-West regions. In 1995, production of grain,
vegetables and seed oils broke all previous records, with
eighty million tons being produced.70
70 The Southern Region accounted for most of the production, with forty
million tons. Other regions contributed with the following: Central-West –
18 million tons, Southeast – 13 million tons; Northeast – seven million tons;
and the North – two million tons.
For our children and grandchildren
I went to work in the Historic Heritage department, where
I still am today, in the area responsible for restoring assets
listed at the IPHAN [National Institute of Historical and
Artistic Heritage]. This really is wonderful work that the
Bank has been involved with since 1995. It started with
Hélio Hermeto Filho, who was deputy managing director
of the Institutional Relations Division that was, at the
time, part of DERIN, using part of the Bank’s profits, via
the Rouanet Law [firms and citizens can help finance
cultural projects, and, in return, they can deduct a certain
percentage of the investment off certain taxes], to restore
protected assets. We had a modest beginning, with fewer
resources than we have today, and with a few churches
in Minas Gerais: Tiradentes, Ouro Preto, then we started
spreading out across Brazil. These days, we are present in
practically all Brazil’s states, restoring and preserving our
heritage for the future, for our children, grandchildren and
for Brazil’s history.
Jany Maria dos Santos, administrative technician, interviewed
in 2012
Development is...
Something important in Rio de Janeiro or Paraná
might not be important in the Northeast; and some
other sector that is essential to the Northeast might
not be considered a determining factor for the nation.
Following these studies to locate opportunities, we,
therefore, realized: “Look, the Northeast has potential
for this and for that.” The BNDES started to become
more aware of this, and these specific niches started
to appear. There were certain sectors that were not
provided support in Brazil as a whole, but in the North
and the Northeast they could be, but this is work that
takes time. This is development, as well: it is about you
going into a sector that no one has ever been into before,
that no one believed in before: it is rather bold. Whenever
the BNDES supports a project, it has a multiplying factor.
The Bank has contributed to developing regions and
reducing regional inequalities. In the Northeast, in
the São Francisco River Valley, there is irrigated fruit
farming in the middle of the desert, with two harvests
per year, exporting grapes. There are a few vineyards
established in the region. All these people have access
to modern technology.
Maria das Graças Amaral Passos, economist, interviewed in 2002
118
The strongest
In 1995, the BNDES started to grow more quickly as
a result of the stabilized economy, the demand for
investment rose, as did financing for investments. This
was a period in which agribusiness received a strong
push forward. There was a certain “reorganization” as
a result of the opening up to trade and the impact of
competition from Mercosur countries. Companies were
restructured and those that could not handle the pace
went under – only the strong survive. Those businessmen
who did survive were more than capable, both in the
field and in agribusiness, which had always been a highly
unprotected sector. They started coming to the Bank in
search of loans. This meant that our lives were dynamic –
we were supporting the growth of Sadia and Perdigão,
two examples of very successful companies that have
since merged. So with the success of the Real Plan, the
essential activity of the Bank, financing investments,
started to grow. It was also a time when agriculture
gained more ground in the BNDES, both agribusiness as
well as small and medium-sized projects (which we had a
more direct relationship with), as well as through indirect
lines, with the federal government’s special programs,
such as the PRONAF [National Program for Strengthening
Family Farming], one of the first to make access to the
BNDES’ credit more democratic.
Paulo de Sá Campello Faveret Filho, economist, interviewed in 2012
República station in the São Paulo subway.
Inaugurated in September, 1974, the São Paulo
subway received financial assistance from the
BNDES to modernize its network in the first
decade of 2000
Since 1993, the BNDES had intensified its support
for other regions through specific programs, such
as the Programa Nordeste Competitivo (Competitive
Northeast Program), the Programa Amazônia Integrada
(Integrated Amazon Program) and others, designating
resources to increase income levels and stimulate local
vocation in agribusiness, bio-industry, aquaculture
and tourism. The commitment to reducing regional
inequalities was maintained and the means of support
were being perfected.
Resources for infrastructure were increased and the
Bank supported projects, such as the Brazil-Bolivia Gas
Pipeline, the Rio Madeira Waterway (shipbuilding),
modernization and expansion work at the Port of
Sepetiba (RJ), and the subway systems in São Paulo
and Rio de Janeiro, some of which were included in
the Brasil em Ação (Brazil in Action) Program. In 1997,
the BNDES signed its first project finance program71 in
the highways sector with the NovaDutra company, to
carry out maintenance work on the Via Dutra Highway
(linking Rio and São Paulo).
71 Project finance or financing related to the project. This is a form of financial
engineering that is contractually supported by the project’s cash flow, in
which the assets and receivables of the project itself are the guarantee.
The National Privatization Program (PND) entered a
new phase with the privatization of public utilities. The
first company to be sold was the Espírito Santo State
Central Electric Company (ESCELSA – Espírito Santo
Centrais Elétricas S.A.). Between 1995 and 2002, some 38
companies were sold. Together, revenue from the auctions
and the debts transferred to the companies totaled 27.8
billion dollars. The amount of operations performed by
the BNDES placed the Brazilian privatization program
among the largest the world had seen.
Privatization of the Vale do Rio Doce Company in
1997 caused the most controversy, stirring up once
again the public debate over whether it was right to be
selling off public assets. The debate over the sale in the
National Congress and the media dragged on for over a
year. During the process, the BNDES answered all the
questions and doubts that were raised.
The number of lawsuits filed against the privatization
of Vale was incredible; there were all sorts of lawsuits
(regular, civil and public), at all levels and coming from
all corners of the country.
Founded in 1942 during the Getúlio
Vargas administration, Vale is now a
private company and the world’s second
largest mining company
There were so many legal battles that the teams of
lawyers at the BNDES were working non-stop. On the date
set for the sale, there was a large-scale demonstration
in front of the Stock Exchange downtown Rio de Janeiro
where the bidding was due to take place, but this was
delayed due to a preliminary injunction, that is, a
provisional legal measure. The following week, on May
6, 1997, the BNDES managed to hold the public sale and
Vale was sold for more than three billion reais.
Privatization of the Brazilian Telecommunications
System (TELEBRAS) in 1998 helped increase public
access to telephone services, which until then had been
restricted to just a small percentage of the population.
According to data from the National Telecommunications
Agency, in ten years, the number of landlines in the
country grew 135%. The increase in the number of cellular
phones was even greater: the number in use jumped from
600,000 to 28 million in just two years. In 2004, mobile
telephony in Brazil overtook landlines, and since then has
only continued to grow. Also according to ANATEL, in July
2012, the cellular phone network in Brazil stood at more
than 256 million active lines.
Cellular phone signal tower in Campina
Grande (PB)
The BNDES has played an active part in expanding
this service by financing investments in the sector. Also
in 1998, two financing programs were created to boost the
manufacture of telecommunications equipment and to
expand telephone services in the country: the Programa
de Apoio à Implantação da Telefonia Celular (Cellular
Telephone Implementation Support Program) and the
Programa de Apoio a Investimentos de Telecomunicações
(Telecommunications Investments Support Program).
That same year, however, the “BNDES ‘wire-tapping’
case” exploded in the media, involving the privatization
of TELEBRAS. At the time, the Federal Prosecutor’s
Office filed legal action for administrative misconduct
against top employees at Minicom, ANATEL and the
BNDES, accusing them of supposedly manipulating
public bidding and irregular financing at the Bank. In
1999, the Federal Court of Accounts (TCU) concluded
that there was no irregularity in the process. In 2009,
the judge of the 17th Federal District Court ruled the
trial court lawsuit was groundless, confirming that the
process had been “in favor of the public treasury and in
the public interest and not against them.” The case was
finalized in 2012, when the judge of the Federal Regional
Court (TRF) in the Federal District dismissed the charges
against the TELEBRAS System privatization process.
In general, the BNDES processes were conducted
without further question. The BNDES’ management
with respect to the entire privatization process can be
assessed by the fact that every operation was scrutinized
and approved by the TCU.72
Between 1994 and 1997, there was large-scale
expansion of the BNDES’ activities. The Bank’s
disbursements showed an accumulated growth rate of
approximately 300% during the period, reaching around
18 billion reais, representing real growth in the order of
71% compared to the previous year.
72 For more information on this process, Cf. VELASCO JR., Licínio. Documento
histórico – a privatização no Sistema BNDES. Revista do BNDES, Rio de
Janeiro, n. 33, June 2010, p. 307-382.
121
Towards the globalized world
[The commercial opening of Brazil | 1995-2002]
I
n the mid-1990s, globalization became a reality and evolved rapidly. As
each day passed, this process showed it was irreversible. Advances in
technology and improvements in transport and communications (especially
the creation of the world wide web – www – and the expansion of the Internet)
transformed the world, reducing distances and broadening horizons.
At the beginning of 1995, the Internet had brought together approximately
forty million users in more than 100 countries, with a staggering rate of daily
growth. According to the International Telecommunication Union, at the
beginning of 2012, there were 2.3 billion Internet users. Old habits, such as
reading the newspaper, sending written messages and even dating, took on
another dimension on computer screens. People all over the world started
communicating differently, sending their ideas and cultures to the four
corners of the planet. Social relations were redefined with the creation of
virtual communities in different Internet networks.
Globalization especially changed economic relations. A quick and efficient
system was created to make capital transfers and trade possible at a global
level. Financial transactions and international trade started to be carried out
much more quickly and easily. China was on its way to becoming one of the
most important players in the world economic system.
Large corporations from the US, Japan, Germany, France and other
countries, formed international supply networks, establishing bases
in countries where labor was cheaper, such as Vietnam, Indonesia and
Guatemala. Large corporations became much more powerful. With turnovers
that surpassed GDP in many developing countries, they started to orchestrate
international trade.
The interdependence between markets and nations that transformed
commercial relations became an important element of interference in every
economy. Ideas such as competitiveness and agility became essential in the
fast-paced process of international trade. To survive in the globalized world,
one had to invest in technology and training to bring down production costs
and aggregate technology with products. The best rates of economic and social
development were to be found in those countries that exported the most.
122
Brazil updated its agenda to keep up with global
change. Brazilian companies needed to modernize to be
competitive in the international markets and compete
domestically as well, when imported products started to
arrive in the country. Before opening up the economy,
there had been practically no competition on the
internal market.
On the other hand, the appreciated exchange rate
and the newly-opened economy brought about a notable
increase in imports, which upset the trade balance.
In 1995, imports had increased 51%, while exports
had increased by just 6.8%. Investing in exports was
crucial at this point. It was also necessary to support the
modernization of Brazilian industry for it to be able to
compete with imported products.
To equalize the trade balance, the federal government
increased export incentives through financial
instruments that minimized any possible losses arising
from high tax burdens and interest rates. This burden
undermined the performance of Brazilian companies
when it came to competing. New lines of credit were
offered by the Bank of Brazil (PROEX) and the Brazilian
Export Credit Insurance Company to assist local
companies’ sales on the international market. Between
1999 and 2001, PROEX disbursed 2.4 billion dollars, and
the BNDES, through FINAMEX, disbursed approximately
10 billion dollars.
Efforts to strengthen exports continued over the
following years. The Export Guarantee Fund (FGE) was
created in 1997 by means of a provisional measure and,
after numerous alterations, was enacted as law.73 The
actions tied to the FGE should be channeled through the
BNDES as designated administrator of the fund.
Japanese inspiration
I took part in a Bank-organized mission to Japan in 1996.
The Bank had an Export Department and wanted to
transform it into a fully-fledged area. At the time, the
Bank’s president who created the Export Department
said: “We need to make this area more effective.” I
think it was the first time in the history of the Bank
that a president had brought together the head of
the president’s office, a managing director, a deputy
managing director for exports, the new head of the
Export Department, a representative from the Financial
Division, which was me, and another from the Credit
Division. We stayed in Tokyo for two weeks, having
meetings every day with the Japan Bank for International
Cooperation (JBIC), the Japanese export bank, to discuss,
learn and see how they did things. Taking part in that
project was very beneficial, because afterwards we
returned and saw a division that had not been very active
become one of the most important divisions, changing
the profile of the Bank. The BNDES started to take part
more and more in Brazilian exports and to stimulate the
export of goods and services.
Gil Bernardo Borges Leal, economist, interviewed in 2012
From Brazil to the world
I performed the first Brazilian operation with export
guarantees from Brazil to Venezuela. It was not the
first for Venezuela, but it was the first from Brazil to
anywhere else with an export guarantee – an SCE
[Export Credit Guarantee], which was created in 1996.
They were also undergoing structuring to perform these
export finance operations in Brazil, in association with
a French insurance company. The first operation we
managed to put together and carry out was to finance
120 buses for Venezuela. It was very important for Brazil
at that time. This operation also appeared on the list of
Brazilian exports.
Maria da Conceição Keller, economist, interviewed in 2012
73 Law Nº. 9,818, of August 23, 1999.
123
Opening frontiers
[BNDES | 1995-2002]
I
n 1997, FINAMEX was transformed into BNDES Exim. At the same time, as well
as capital goods, the Bank started to finance exports of engineering services
and products, such as chemicals, textiles, electronics, shoes, leather and
foodstuffs.74 Support for exports was, therefore, strengthened, making it one of the
BNDES’ priorities.
From practical to pleasurable
I was giving a speech in the US on behalf of the FINAMEX Program, and a guy asked me
if it was Mexican financing because of the term “mex”, and thus linked to Mexico. That
day I thought: “I cannot say ‘FINAMEX’ anymore.” After that, the creation of BNDES Exim
was so natural. It was not that I had had a great idea, even though the name was very
strong. It brought together two things: when I say the BNDES, people know where I am
from, who I am, and when I say Exim, they know the sort of work I am involved in. The
name itself is self-explanatory. BNDES Exim became a brand, a symbol.
Renato José Silveira Lins Sucupira, engineer, interviewed in 2002
Sea water de-salting plant –
Bayovar Project, Peru
74 CATERMOL, Fabrício. BNDES-Exim: 15 anos de apoio às exportações brasileiras. Revista do BNDES, Rio de
Janeiro, n. 24, v. 12, December, 2005, p. 3-30. Available at: <http://www.bndes.gov.br/SiteBNDES/export/sites/
default/bndes_pt/Galerias/Arquivos/Jato da Embraer, modelo ERJ 145 conhecimento/revista/rev2401.pdf>.
Accessed in: Oct, 2012.
The lines of credit for export were increased the following year to encourage
exports of products with a high aggregate value. BNDES Exim started to support
virtually every export sector. In doing so, disbursements made by the BNDES Exim
increased dramatically in 1998, reaching 2.4 billion reais, some 73% more than the
amount registered in 1997. Approvals jumped from an annual average of 100 million
dollars in the first half of the 1990s to four billion at the beginning of this century.75
During this period, two operations were performed which will be remembered
for their magnitude: the first was financing for exports of large-scale equipment to
be used at the Three Gorges hydroelectric plant in China, a gigantic power station
with double the capacity of Itaipu; the second was financing for American Eagle
to purchase Embraer ERJ145 jets, considered to be the largest individual operation
performed by the Bank up until that time.
An exceptional operation
One of BNDES Exim’s largest projects was the sale of turbines to the “Three Gorges”
hydroelectric plant in China in 1997. There was an international bid held which
included developed countries and some developing countries. At that time, we
arranged credit covering a twenty-year period, which was an exceptional operation,
but which made it possible for Brazilian companies to sell turbines and generators.
Brazil held a high position in the bidding process. The Chinese divided the deal into
three parts and among the countries involved were the UK, France, Spain, Italy,
Canada and others, but the Brazilian sale was the most significant. This operation
was very important to the reputation of BNDES Exim, the export credit agency that
was just starting up that year.
Renato José Silveira Lins Sucupira, engineer, interviewed in 2002
A resounding success
After it had been privatized, Embraer was developing that small 145 jet. The company
came to the Bank to ask for resources to develop the jet; it was very expensive to
develop an airplane. The Bank gave a “C rating” to the company: you can only get
credit with a bank guarantee, something like that. As the company had been sold to
the Bank, they asked the Operational Division to resolve the issue. However, there
was a problem: the company needed a higher guarantee rating. How could this be
resolved? The aircraft model which Embraer had previously planned was fantastic
and everything went to plan, but they did not sell enough, and that is why Embraer
almost went under. The market just did not buy that wonderful technology – there
was just no market. We made a royalties arrangement with Embraer: we would make
the sales and, for each aircraft sold, the Bank would earn half a percent of the amount
of the sale. If the project did well, the Bank would make extra profit and this would
compensate for the risk. It was a very high risk project. We took the idea to the Board
of Directors, and it was approved. Sales of the plane were a resounding success, and
Embraer became an extremely lucrative world-class company.
Oscar Felipe Lopes Quental, engineer, interviewed in 2012
75 Cf. BNDES Activities Report, 1998.
125
The spillway of the Itaipu Binacional, located on the River Paraná, in the
municipalities of Foz do Iguaçu (Brazil) and Ciudad del Este (Paraguay)
Everything worked out
The division was being created to finance exports. I joined
as the Bank’s representative in Brazil’s disagreement with
Canada over aircraft exports. That was one of the most
unbelievable clashes; I get the chills just thinking about
it. I started going to the World Trade Organization at that
time and I have never stopped. We were negotiating at
the Canadian Embassy in Washington, and the Canadians
said: “We are partners with the United States, and you…” A
little later on, one Canadian said: “It is obvious that you are
doing something wrong, because Brazil just does not have
what it takes to export aircraft.” The problem was that we
were winning all the bids in aircraft sales. I would say that
he made one of the worst mistakes in his life, because we
could have even reached a deal. We replied very politely:
“No, we are not doing anything wrong.” And over the next
few years, we beat them, so life is full of changes.
Paulo Sérgio Ferracioli da Silva, economist, interviewed in 2012
126
Flying high
I went to work in the management department tied to the aeronautical sector,
which basically supports Embraer and Helibras, a helicopter company. The
conflict between Brazil and Canada had been dragging on for about five years
and the Export Division always took part in the discussions with the World Trade
Organization (WTO) in Geneva, in an attempt to reach an agreement. I had the
opportunity to take part in the meeting in Geneva; I was scheduled to spend three
days there, and I ended up spending 11. The work started to flow and, using an
impressive databank, we managed to effectively show that it was very important to
defend Brazilian interests within the WTO. I do not think the Canadians thought we
had the capacity to be able to respond as we did, because of the short space of time
and the amount of information. There were three Brazilians while the Canadian
delegation was made up of 12 people. The result was published a few months later,
with a victory for Brazil. Still connected to Embraer, there is one very interesting
matter. I had the opportunity to go to Canada on numerous occasions, and the
flights between Montreal and New York, for example, use Embraer aircraft. The
funny thing is that the Bombardier factory is right next to the airport so, just before
landing, the Embraer plane flies right over it… So when you step onto Canadian soil
in a Brazilian aircraft, you feel very proud indeed.
Jorge Cláudio Cavalcante de Oliveira Lima, economist, interviewed in 2002
Other important operations during this period were
financing for bus and truck chassis for countries in South
America, Central America and the Caribbean. Besides this,
the BNDES intensified its support for engineering and
construction services provided overseas, thus supporting
Brazilian exports associated with large-scale infrastructure
projects, especially those being carried out in Latin America.
The BNDES’ activity was not restricted solely to largescale operations. The Bank also provided financing to export
ceramics, jewelry, polished gemstones, ornamental stones
for flooring, furniture and wooden artifacts, and domestic
utensils – products from companies falling into the “small
and medium” category.
The expansion of the Bank’s activities in the export area
was impressive. Between 1996 and 2000, disbursements
made by BNDES Exim rose from 0.8% to 5.6% of the total
sum of Brazilian exports. In 2000, disbursements related
to exports accounted for 25% of the total authorized by the
Bank. Efforts made by the federal government had been
rewarded. In 2001, the trade balance had been stabilized:
exports reached 58.2 billion dollars against the 55.6 billion
dollars spent on imports.
127
Exports
Inspired by Santos Dumont, Embraer is now one of the
world’s largest aerospace companies. With over forty
years of experience, the company is active in all the stages
of a complex process, involving planning, development,
manufacture, sales and post-sales support of aircraft for the
commercial and executive aviation sectors. In addition, it
also offers integrated solutions for defense and security.
The BNDES’ role is essential, in several aspects, to the life
of Embraer. The BNDES holds shares in Embraer through
BNDESPAR which has played an important role in the
company in the past and continues to do so. It is also
important in financing a number of Embraer’s areas, starting
with fixed capital investments and new products; and
export financing, which is of vital importance… One role the
BNDES plays is that of an Export Finance Agency, as there
are overseas and also here in Brazil with European agencies.
The BNDES plays this role in Brazil, to the extent that there
is a division of the Bank specialized in aviation. I think it is
one of the few industries that the Bank has a specialized
division in, considering the complexity of the operations
and the amounts involved. So the BNDES has an aviation
division; within the Export Division, there is a department
specialized in financing aircraft. This is a process that started
in 1995-1996 and has been fine-tuned ever since. So I would
say that the Bank’s involvement in Embraer’s day-to-day is
very important and vital to financing Embraer’s clients by
financing exports. Adding up all the financing over the years,
the BNDES has financed about 20% or 25% of Embraer’s
total sales (…). Despite Embraer being a very successful
company, it was clear that the model had reached its limit
and the State was no longer capable of investing in the
company. However, there was all that investment that the
Brazilian State had made in developing aeronautical capacity
in the country, culminating in the founding of Embraer in
1969, and this investment as a whole was fundamental
so that, when private capital came into Embraer, it would
find technical capacity among the best in the world, while
Embraer’s engineering capacity, the technical procedures, and
the technology developed within the company were highly
advanced. So when private capital arrived with a philosophy
more focused on the market, with a businesslike vision of
marketing the business, and effectively bringing in additional
resources, this combination of entrepreneurship with new
capital and the capacity that already existed, created the new
Embraer in 1994.
Paulo Cesar de Souza Silva, executive vice-president for the
Commercial Aviation Market at Embraer
128
The Embraer ERJ-145 jet. Embraer-manufactured aircraft have
started to dominate the world in terms of flights and sales
Over the years, Embraer has manufactured more than
5,000 aircraft, which operate in 92 countries on five
continents, making the company a world leader in the
market for commercial jets up to 120 seats. The company
also manufactures some of the best executive jets on
the market and has moved up to a new level in the
defense sector. Paulo Cesar de Souza e Silva, executive
vice-president for the Commercial Aviation Market at
Embraer, stresses the importance of the BNDES to Brazil’s
investment in the commercial aeronautical sector:
The challenges in the world aeronautical sector are
truly enormous, and the BNDES will continue to play an
extremely important role in Embraer’s activities. We are
currently developing the executive aviation and defense
sectors, with new products, which will mean additional
exports. This means that the Bank will play a very important
role in providing credit for Embraer’s clients – those which
it already has and will continue to have, and still others, as
well as the idea of support for fixed investments and the
development of new technologies and new products. The
Bank’s role in a company like Embraer is just as important
as developing new markets for us. What I mean to say is
that the Bank effectively has an enormous connection with
medium and long-term financing.
New efforts: Solidarity Community
and Brazil in Action [1995-1998]
A
t the beginning of the Fernando Henrique
Cardoso administration, in 1995, the
Comunidade Solidária (Solidarity Community)
program was created, focused on meeting the needs of
the low-income population, and especially combating
hunger and poverty.76 To widen its reach, the program
created a partnership between the State and civil society.
A board was established, comprising 21 members
from civil society, the ministries of Health, Education,
Labor, Finance, Planning and Sport, as well as the
head of the President’s Office, led by the First Lady
and anthropologist, Ruth Cardoso. The focus was on
the areas of food and nutrition, urban services, rural
development, creation of jobs and income, defense of
rights and social development.
As its initial priority, the Solidarity Community
program selected 156 municipalities in 14 states.
These municipalities were chosen based upon studies
conducted by the Institute of Applied Economic
Research that mapped out the country’s three poorest
regions, and by the United Nations Children’s Fund
(UNICEF), which, with data from the IBGE, had
identified cities where children had fewer chances of
survival. At that time, the two studies together showed
the existence of 1,072 pockets of poverty, with 5.2 million
people living in conditions of extreme poverty. Each
state governor was invited to contribute, choosing at
least ten municipalities from their state.
76 Decree Nº 1,369, of January 12, 1995.
129
The Solidarity Community program expanded, spinning off into other
programs such as the Solidarity Literacy Program, the Solidarity Training
Program, the Solidarity University Program, the Solidarity Sports Program and
the Solidarity Handicrafts Program. The federal government also implemented
programs to transfer income, such as the Cooking Gas Assistance Program,
linked to the Ministry of Mines and Energy, as well as Food Allowance and
School Allowance; this latter was linked to the Ministry of Education. In 2002,
some 12 social programs benefitted five million families.
In August 1996, the FHC government launched the Brazil in Action
Program, aimed at implementing a series of efforts in partnership with states,
municipalities and private companies. This program brought together a set
of 42 undertakings chosen for their capacity to encourage new productive
investments as well as reduce regional and social inequalities. The scope of
the program was wide reaching, encompassing the areas of health, education,
housing, sanitation, water, employment, agriculture, communications and
transport in an attempt to provide a boost for integrated and sustainable
development.
Choosing projects was based on the ability of the undertaking to
“increase the competitive nature of the economy, reduce production and
commercialization costs, eliminate bottlenecks and improve the availability of
skilled labor.”77 Furthermore, projects would have to have a multiplying effect
on economic and social development in the regions they were operating in.
Projects, such as constructing the Brazil-Bolivia Gas Pipeline and modernizing
the ports of Santos in São Paulo, Suape in Pernambuco, and Pecém in Ceará,
were included in this group.
Between 1996 and 1999, investments, both public and private, absorbed
around seven billion reais. For each undertaking, there was a manager
responsible for reaching established targets. A digital network was updated
in real time, concentrating data and connecting all the managers, partners
and public servants involved in the projects. This administrative model of the
program started an entrepreneurial management culture in the public sector
and contributed to targets being reached.
Brazil in Action was concluded in 1999, but served as a base for the multi-year
program called Advance Brazil, which increased its efforts to 58 projects.
77 Brazil in Action Program: <http://www.abrasil.gov.br/anexos/anexos2/bact.htm>. Accessed 1n: Oct, 2012.
130
The return of a social agenda
[BNDES | 1996-2002]
F
rom 1996 on, the BNDES also provided support
for the Brazil in Action Program in its social area,
especially the National Program to Strengthen
Family Farming (PRONAF). This program (considered
strategic for the FHC government) was created to support
small family-run farms and agrarian reform settlements.
The goal was to balance and encourage “small-scale
agricultural production due to its increased capacity to
produce foodstuffs for the domestic and foreign markets,
besides generating production settlements and income in
rural areas.”78
Support for family farming was increasing each year. In
2000, the BNDES supported 56,311 rural producers (which
represented significant growth in relation to the 32,127
producers the previous year) benefitted by the PRONAF,
PROSOLO (correct land-use incentives) and PROLEITE
(modernization of dairy farming).
Still working together with the federal government,
in 1996, support for social projects returned to the daily
operations at the BNDES, and a division was created
exclusively for this purpose, at the time called the Regional
and Social Development Division. The unit started to
create more wide-ranging projects than those developed
during the previous decade, besides working together
with other departments in the Bank. Since then, it has
become obligatory for projects supported by the BNDES to
include a program focused on professional recycling and
encouragement to adopt benefits beyond those obliged in
labor law, aimed at minimizing the effects of job losses.79
A world
The BNDES had had a Social Division in the 1980s, which
basically operated with resources from FINSOCIAL. A
Social Division was recreated in February 1996. What
was our challenge? It was to help the Bank reach clients
it had never managed to before. How were we to design
products for this untraditional clientele? The second
difficulty was this issue called “social.” We talk about
“social” as if it were a very easy matter, but it represents a
whole world. Social inequality has a number of different
faces. If you think of basic social services, then you are
looking at water, waste, sanitation, housing, health,
education… Also, thinking of the social aspect is not just
thinking about health, education and infrastructure; it
also means thinking about income. If those people do not
have an income, this creates a significant challenge for
sector policies.
78 Brazil in Action Program: <http://www.abrasil.gov.br/anexos/anexos2/
bact.htm >. Accessed in: Oct, 2012.
79 Cf. BNDES Activities Report. 1996.
131
The new division was structured into lines of operations so as to address projects
in basic social sectors, such as health and education; support the modernization of
the public sector, involving municipal administration and multi-sectoral investments
in depressed urban regions; and develop programs to support the creation of jobs
and income, including, notably, microcredit, self-managing companies and local
development projects.
With this, health and education were considered priority areas for investments
of both reimbursable and non-reimbursable resources. In the area of health,
investing reimbursable resources was largely earmarked to support private medical
and hospital projects, either directly or through financial agents. One-by-one, new
programs were being created to boost the social area.
During its first year, together with the Solidarity Community Program board and
the Brazil in Action Plan, the Production Credit Program (PCPP) was created, aimed
at forming a micro-finance industry in Brazil, making resources available to onlending and microcredit agents. The idea was to serve small businessmen who had
no access to the banking system. Microcredit was then passed on indirectly through
specialized institutions, meeting the needs of informal entrepreneurs.
The most respectable area
The Social Division is the most respectable area of the Bank. It restarted in
1996. We started to develop modernization programs in the administrative
sectors in Brazil’s city councils which is just fantastic! The program sought to
help all of Brazil’s municipalities, and we had a lot of contact with them. They
were modernized so they would know how to charge taxes and get organized
so they could meet the people’s needs. The division includes the Production
Credit Program, and the BNDES includes trustee NGOs to offer credit to those
who have no access to the Bank. So the BNDES now reaches people like a
seamstress, a popcorn salesperson, someone who makes pizzas at home to sell
through the Social Division.
Deborah Prates Padilha de Barros Peralles, attorney, interviewed in 2002
The microcredit program was implemented in two ways: the BNDES Solidário
(BNDES Solidarity) and the BNDES Trabalhador (BNDES Worker) programs. The Bank
put together a network of institutions capable of attending these small businessmen,
developing and systematizing its own methodology to train the credit agents.
In 1997, the BNDES, using its own resources, created the Social Fund to support social
projects for the low-income community. The Programa de Apoio a Crianças em Situação
de Risco Social (Support Program for Children in Situations of Social Risk) was the first
to receive benefit from the fund. The Social Fund resources, created from a portion of the
Bank’s annual profit, started to be used as non-reimbursable financial support for social
projects working with children and adolescents from poor families. This program helped
expand the number of people aided by public and private institutions in almost every
Brazilian state.
132
In 1998, the BNDES started to support the Mother Kangaroo Premature Baby
Assistance Project, developed by the Maternal-Child Institute of Pernambuco. The
method consists of encouraging direct contact between mothers and premature
babies. Instead of being kept in an incubator, babies stay at their mothers’ breast.
The mothers’ heartbeats help stabilize that of premature babies. Humanizing the
treatment and strengthening the tie with their mothers helps reduce the time babies
spend in hospital from, on average, three months to fifteen days, which also reduces
hospital costs.
In 1999, the minister of Health adopted the Mother Kangaroo Project as a public
policy. The BNDES, in partnership with this ministry and the Orsa Foundation,
contributed to disseminating the method, which included training health workers
throughout the country. Today, it has been adopted in countless maternity wards,
both public and private.
In 1997, in keeping with the federal government’s proposal for tax reform, the
BNDES launched the Programa de Modernização das Administrações Tributárias e
Gestão dos Setores Sociais Básicos (PMAT – Modernization of Tax Administrations
and Management of Basic Social Services Program), created to help strengthen
municipal administrations.
The sheer size of the country
We took a business trip to Fortaleza and I had the opportunity to watch a
show that had received support from the BNDES – the Edisca Ballet. You just
cannot believe how an investment, support, sure it was not only from the
Bank, can take children from the street and turn them into ballet dancers.
They were perfect. They not only showed the technical beauty of what they
had learned (which shows that making an effort, you can get there), but
also all the emotion in taking part in that experience. To have watched that
was really thrilling. From supporting large companies, such as Embraer, to a
small businessman when purchasing a machine, all regional support, in the
Northeast, in the South, in the capital or upstate, all this is something that only
here inside can you have a sense of the sheer size of it.
Denise Nogueira Gregory, economist, interviewed in 2002
With responsibility
The Fiscal Responsibility Law was initially discussed by a work group from the
BNDES and the Ministry of Planning. From these discussions came the bill of
law that was published on the Internet at the end of 1998. The Finance Ministry
departments discussed this bill and met together at the beginning of 1999. Over
the course of that year, the bill was submitted to various public hearings, with
several sectors, under the supervision of the Ministry of Planning and the BNDES’
Department of Fiscal Affairs. In May 2000, the law was sanctioned. We worked very
hard to implement the planning instruments with the municipalities and provide
training. The law obliges municipalities to plan not only the year that is underway,
but have a medium-term plan – multi-annual plans for four years.
133
A new push
The Social Division received a push after it started to work
with wider reaching projects, starting with city councils,
through financing tied to taxes. The idea of refusing to
offer loans to town councils and states was not solely due
to the default risk. The idea was that they should know
how to generate resources. The Modernization of Tax
Administration Program (the PMAT) allowed city councils
and states to better administrate their own resources, not
only to repay the Bank loan, but to provide continuity to
financed projects.
Since it was implemented, the PMAT, together with
city councils, has sought to develop ways of improving
administrative management and to strengthen the
capacity to generate one’s own income. The aim was to
actively participate in the process of reform and increase
the level of tax efficiency of the Brazilian State.
During this time, the city councils in Manaus, Vitória,
Rio de Janeiro, Curitiba, Belém and Fortaleza, among
others, took part in the PMAT. At the end of 1999, the
PMAT’s portfolio of projects covered 52 municipalities.
In 1998, the BNDES developed an operation line
called the Integrated Multi-sectoral Project in Areas of
Extreme Poverty (PMI), linked to urban development,
to coordinate several efforts together with the federal
government, aimed at to low-income communities. The
first city to benefit from the PMI was Teresina (in Piauí
state), where the project implemented approximately
twenty efforts, from paving roads to water and electrical
energy supply connections, as well as housing
improvements, construction of daycare centers, health
centers, schools, public squares, sports centers and
community centers.80
80 In Teresina, the PMI was integrated with the Better Living Program, part of
the federal government’s Brazil in Action plan.
134
Wonderful stories
There are wonderful stories – stories of success. Travelling
salesmen who took out their first, second, third and with
the tenth loan, open their own store. An ex-taxi driver
organized a workshop to make guitars, where he and
his two young sons worked. With the credit, he bought
equipment and the raw materials to make guitars. It is
an unregistered world that includes seamstresses, sweet
makers... An assorted world of productive initiatives:
the youth who makes a surfboard, another who offers
tandem hang-glider flights and got credit to buy his
second hang glider; the famous pizza-maker from
Rocinha who bought a motorbike to make door-to-door
deliveries. And the list goes on...
On the outskirts of Teresina, some 115 slums were
transformed into fifty urban districts, benefitting
a population of 120,000 people. In creating jobs
and income, community vegetable gardens were
implemented as were production centers in back yards
and community launderettes. At this same time, the
city councils in the municipalities of Curitiba (PR)
and Vitória (ES) also benefitted from financing and
interventions from the Integrated Multi-sectoral Project.
In 2000, the BNDES, together with the Northeastern
Bank and the United Nations Program for Development
(PNUD), started the Local Development Project, with the
aim of contributing to the improvement of standards of
living, housing and income in the poorer communities.
PNUD’s technical cooperation was essential in
establishing a new and strategic vision of development
that took shape in the form of the Participative
Management methodology (GESPAR).
Initially, the Local Development Project was
implemented in 57 municipalities, which were selected
due to inhabitants’ low purchasing power and the high
level of social exclusion. The project’s main objective
was to improve the standards of living through human,
social and economic development, as well as generating
jobs and income.
Synergy
Synergy between regional development and the micro,
small and medium-sized companies is enormous. The
least developed areas grow at the same advanced
rate as micro, small and medium-sized companies.
Joining regional development to the sector of micro,
small and medium-sized companies is essential. They
are indivisible. When you talk about local production
arrangements, we are talking specifically about micro,
small and medium-sized companies. One example of
local production arrangements, supported by the BNDES,
is the shrimp fishing sector in the state of Rio Grande do
Norte. There are several small businessmen who develop
shrimp in captivity in these regions. The BNDES did
some work together with Sebrae and local organizations,
looking for alternatives to optimize this sector, because
when isolated, with no guidance, the tendency is to
go under. Small and micro-businesses open and close
at a ridiculous rate. So what has to be done is to try to
consolidate them into groups that I call local production
arrangements. Why? Because it is the local calling. It is
no use trying to produce captive shrimp in Rio de Janeiro.
It is not the vocation there. Where can you find irrigated
fruit farming? In Brazil’s northeast there is an area that is
perfect for this.
Darlan José Dórea dos Santos, economist, interviewed in 2002
135
Valuing diversity: BNDES
and culture
D
uring the Collor administration, practically all the mechanisms for
cultural support were discarded. The so-called “redevelopment
of Brazilian cinema” took place under Itamar Franco, with the
publication of Federal Law Nº. 8,685, of July 20, 1993, called the Audiovisual
Law, that came into effect in 1994.
The Audiovisual Law helped stimulate investment in the production and
co-production of film and audiovisual projects, and the infrastructure of
production and screening. Expected to remain in effect until the fiscal year
of 2003, this law was extended for another twenty years in 2001, by means
of Provisional Measure Nº. 2,228. In addition to this, in 1994, the Ministry of
Culture created the Rescue Brazilian Cinema Award, which provided resources
for film production and contributed to this redevelopment.
With these new means of support, Brazilian cinema moved into a new
phase. In 1995, films like “Carlota Joaquina, Princess of Brazil” and “O
Quatrilho”, partly financed by the Rescue Award, ushered in this new phase.
The number of film productions increased noticeably, and Brazilian cinema
once again found its way onto the world’s screens.
Aware of what was happening, the BNDES started to make consistent
investments in the cultural area with the launch of the Cinema Incentive
Program, accompanying and encouraging the rebirth of Brazilian cinema.
Among the first films supported by the BNDES were: “Four Days in
September”, “The Battle of Canudos”, “Possible Loves”, “Villa-Lobos: A Life
of Passion” and “Mauá: The Emperor and the King.”
In 1997, property restoration projects covered by the National Historic and
Artistic Heritage Institute (IPHAN) started to receive support from the Bank.
The BNDES began sponsoring the restoration of monuments listed at IPHAN,
dating from the Colonial and Imperial times. During this time, work was done
on spaces including the Paço Imperial and the Santa Luzia Church in Rio de
Janeiro, the Casa da Torre de Garcia D’Ávila in Bahia, and the Santo Antônio
de Igarassu Chapel in Pernambuco.
Growing support
After culture had been dismantled
by the Collor government from 1993
onwards, and when the cultural
incentive laws started to appear, the
Bank began using these resources to
invest in culture. This meant that it
used the Audiovisual Law for cinema.
Since 1995, the Bank has increasingly
supported cinema, with one, then
two, then four and, in 2000, some
7.5 million reais, which was a very
substantial sum at the time. In 2001,
it rose to more than 14 million. The
BNDES started to become one of the
most supportive Brazilian companies
in the world of cinema: fiction,
documentaries, shorts, mediumlength and feature films. During
this time, more than 140 films were
provided with funding. I do not think
there is even one important country
that does not have a well-represented
film industry. Besides this, it is an
industry that employs a lot of people,
and creating and maintaining jobs
is one of the BNDES’ missions. So
basically, the BNDES does not support
cinema for cultural marketing, but
rather to help development.
Elizabeth Maria de São Paulo,
administrator, interviewed in 2002
136
Culture
Since 1997, the Bank has developed different projects in
the cultural area, encouraging its preservation, production,
promotion and distribution. These pioneering projects
focusing on restoring Brazil’s national heritage have
received support from the Ministry of Culture and Iphan.
Thanks to its regular and reliable efforts in this area, the
BNDES has incorporated the value of national historic and
artistic heritage into its name and is now widely respected
in this area.
When I took over as Theater director in 2007, part of the
foyer in the boxes section, where the grandest part of the
theater was, had collapsed; this is an area with paintings
by Amoedo and Visconti and gold leaf gilt. Anything
between ten and twelve buckets of water had infiltrated
and filled the ceiling of the theater.
The dome was covered in black plastic. When I took
over, I realized that the situation was serious and I told
the governor and Adriana Rattes [Secretary of Culture],
but I could not believe that it would collapse. When it did
collapse though, I immediately called the Civil Defense
department, took photographs of everything and went
straight to those institutions that I felt would be able to
understand what was happening to one of our country’s
most important artistic buildings. I also went to the
BNDES and to Petrobras and it was fantastic, because the
president and vice-president of the BNDES, who at that
time were Armando Mariante and Luciano Coutinho,
immediately understood and contributed the money. The
BNDES’ support was provided instantly as soon as I showed
them the photos. They realized that there was no option
other than to completely restore the building. I was afraid
that we would lose the Visconti’s Tímpanos paintings,
considering the degree of the damp that had crept in. The
first thing we had to do was thorough pest control of the
entire building. The restoration of the roof started in March
and we were able to continue with the theater’s program
until October when we closed to complete the work which,
thank God, the theater well deserved.
Carla Camurati, president of the Municipal Theatre Foundation
and filmmaker
Facade of the Municipal Theatre in Rio de Janeiro (RJ), following the
restoration started in 2008
The Bank also promotes cultural projects at its
headquarters – such as “Thursdays at the BNDES” and
art exhibitions – and sponsors several publications and
events. The BNDES considers culture a means of boosting
sustainable socio-economic development in Brazil, offering
the sector a wide range of means for financial support.
Carla Camurati has this to say about the Bank’s support
for the cultural area:
The BNDES, through its focus on the economy and
development, has a very clear understanding of what
we need in relation to different investments. The BNDES
therefore recognizes which areas of culture it should be
investing in: the audiovisual field and heritage we need
to conserve in our society, because history is ingrained in
our heritage and our cinema, which is our future! And
education as well, because without education, the country
simply will not develop… So cinema, heritage, education
and culture are fundamental areas and they are the pillars
to largely balance things out in this country.
137
Facing the storms
[FHC’s second administration]
I
n 1997, the National Congress approved a constitutional amendment
allowing the reelection of the president of the Republic, governors and
municipal mayors. Fernando Henrique Cardoso was reelected in 1998.
FHC’s second term in office had to deal with a more adverse international
scenario, comprising a succession of economic crises. The effects of
globalization were resonating throughout the entire world.
Between 1997 and 1998, a group of Asian countries suffered a monetary
crisis, with widespread repercussions on global finances. Unrest in the
globalized world also marked Brazil, leading to the flight of dollars, which,
in turn, threatened the national economy. The government needed to resort
to the International Monetary Fund (IMF) to strengthen Brazilian reserves
and reach a suitable agreement regarding the foreign debt. At this point, the
country received a 41.5 billion dollar loan from the IMF, based on a series of 51
different requirements. The situation, however, became unbearable.
In January 1999, following an unsuccessful attempt to make the system
more flexible, the national currency was depreciated. During the first half of
the same year, the government adopted measures in an attempt to maintain
economic stability. The most important measures were a change in the
exchange system (from fixed to floating), a policy involving inflation measures
created by the Central Bank, and the expansion of the primary surplus
target,81 which meant a serious fiscal adjustment to the country’s accounts.
Despite predictions, at the end of that year, slight growth in GDP of
approximately 1% was noted. Compared to other Latin American economies,
which also adopted and abandoned administered exchange systems, such as that
in Mexico, the Brazilian case was a success. There was no loss in Gross Domestic
Product, the exchange rate dropped back quickly, and inflation rose slightly,
closing the year at 8.9% (National Expanded Consumer Price Index – IPCA).
Between 1999 and 2001, Brazil started to witness growth once again and
managed to improve the trade balance.
81 According to Fabio Giambiagi, the GDP target became 3.1%, 3.25% and 3.35% for 1999 to 2002,
respectively. Cf. op. cit., p. 177.
138
In an attempt to push the expansion of the economy,
the federal government drew up the Multi-annual Plan,
also called “Advance Brazil,” based on the experience
with Brazil in Action and the Studies on National
Integration and Development.82 The BNDES played a
role in drafting the plan, seeking to move back into
long-term planning – something that had been on
hold since the Collor government. The basic idea was
to plan for sustainable growth, while maintaining
economic stability and trying to reduce regional and
social inequalities.
In 2000, within the scope of the reform of the State,
in terms of administration, the Fiscal Responsibility
Law was passed, establishing strict norms for managing
public finances at the three levels – municipal, state and
federal. The intention was to create more responsible
and transparent fiscal administration. With the new law,
the federal government took on the commitment to fiscal
austerity. Reorganizing public finances was one of the
factors that helped consolidate economic stability.
The adjustments (exchange rate, monetary and fiscal)
to economic policy contributed to the return to growth,
which stretched throughout the year 2000, when the
positive variation in GDP was, on average, 4.3%. The
foreign scenario remained unfavorable, however, and
the run of good results was interrupted in 2001, when
the GDP growth rate fell to 1.3%.
Over the course of 2001, the Brazilian economy was
once again undermined by four large-scale crises:
the energy sector’s internal crisis, called the apagão
(blackout), which resulted in rationing electrical energy
due to the lack of investment,83 associated with a long
period of drought in the basins containing important
hydroelectric centers, and increasing consumption over
the previous years; the crisis in Argentina; the crisis
arising from the attacks on the Twin Towers in New
York, and other targets in the United States; and the
general shrinking of the world economy.
Integrated development
There was a large-scale study of national integration
and development, to have an idea of what there was in
a certain space. The emphasis was on infrastructure, but
it was not enough to just have a highway, if what you
had to carry did not have a port or electrical energy so
that you could manufacture in that region, or if you did
not have skilled personnel to work, or if that investment
did not provide anything in return for the people in
terms of social conditions. So, national integration
and development started to take on this concept of
integrated development; starting with production
activities and moving on to discover what could work
in each region of Brazil, thinking about development
moving to the Central-West or to the Northeast. Where
was development going? What did it need? Where
should investments in infrastructure be made? The
basis of everything was a survey on production activity
to establish the investments required in infrastructure:
totally-integrated transport, storage facilities, logistics,
energy and telecommunications. There were also social
issues: is there housing for these people? Is there
education? Are there schools? Is there healthcare?
Essentially, the needs in each region were established,
including the environmental issues. Ultimately, the
study identified the investment needs for Brazil as a
whole, based on infrastructure, education, healthcare
and the environment.
82 These studies, which started in 1998, came from a partnership between the
Ministry of Planning and the BNDES, with the aim of guiding the federal
government’s investments in infrastructure and strategic planning.
83 The government did not extend investments to the electrical energy sector
due to planned privatizations, which included the sale of hydroelectric power
plants. New investments should, therefore, have been made by the private
sector. This did not happen however, and investments were put on hold.
139
The international crises had a significant impact on
Brazil and the Brazilian government requested another
loan from the IMF. Despite the difficulties brought about by
domestic and foreign scenarios, Brazil ended the year with
positive results, including industrial production on the rise,
a stable trade balance, a reduced current account deficit, a
surplus in the public accounts, the real interest rate reduced
to one digit, success in the fiscal efforts in all government
areas and an improvement in social indicators.84
In 2002, difficulties arose once again. The international
financial crisis worsened, leading to stock exchanges
throughout the world recording significant drops. In Brazil,
the situation was just as serious. During this year, the São
Paulo stock exchange registered losses of 30% and the
dollar exchange rate rose by approximately 50%. Fernando
Henrique, with the consent of the president-elect Luiz
Inácio Lula da Silva went to the IMF a third time. The new
loan was only made available during the Lula government.
During FHC’s two terms in office, the economy went
through periods of decline and expansion. The GDP’s
average rate of growth was much lower than expected –
between 1995 and 2002, only 2.3% per year. Even so, during
his second term, Brazil grew by a total of 9%, exceeding the
results of other South American countries.85
There was definite concern about reducing regional
inequalities. The Northern Region registered the highest
growth rate (55%), followed by the Central-West (38%),
South (34%), Northeast (24%) and Southeast (22%)
regions. Despite implementing important structural
reforms, there was still a need for tax reform to
consolidate advances and help create better growth
conditions and reduce social and regional inequalities.
In general, things were positive. There was a real
change in Brazil during this period. The national
economy became more modern and competitive. With
a stable currency and the first programs for transfers
of income, the country’s poverty started to drop. After
more than a decade with no change, the indicators of
the IBGE’s National Household Sample Survey (PNAD)86
recorded a 31.9% drop in poverty levels between 1995
and 2002. However, if battles for stability had been won,
other equally important conflicts needed to be fought.
Brazil still had many difficulties to overcome in the areas
of education, social welfare, healthcare, distribution of
income and employment.
86 Source: CPS/FGV, based upon Pnad/IBGE microdata: Inequality of income
over the decade. Available at: <http://www.cps.fgv.br/cps/bd/DD/DD_
Apresentacao_FIM.pdf>. Accessed in: Oct. 2012.
85 Cf. GIAMBIAGI, Fabio, op. cit., p. 191.
São Paulo Stock Exchange (BOVESPA)
140
Much more effort
[BNDES | 1998-2002]
I
Many studies
In the Planning Division, I had
an interesting experience called
the Study of Matters Associated
with Planning for the Country,
during the Fernando Henrique
government. I had access to other
infrastructure sectors, which is where
I work today. They did analyses of
national integration, and this was a
substantial study, which sought to
develop a portfolio of investments
in transport, energy and, urban and
social structure. This work continued
for more than two years. I also had
the opportunity to work on a project
analyzing economic groups with the
sociologist Luciano Martins. This was
done in conjunction with the Bank,
and we started to work together with
advisors to the president’s office.
We analyzed large groups, such as
Gerdau, Odebrecht, and others that
no longer exist, such as COFAP and
CEVAL. The analysis was performed
from a strategic perspective and
was very interesting. Today, the Bank
performs similar analyses looking at
company strategies.
n 1998, the BNDES once again started to develop its program of studies,
developing the study entitled “National Integration and Development,”
elaborating the federal government’s multi-annual plan. A consortium
of specialized companies was contracted to lead the studies, which were to
cover the entire country, divided into sections that grouped together areas
without taking into consideration their geopolitical boundaries. In addition to
the Bank, twenty universities and research centers took part in the study.
The study group sought to identify the main obstacles to national
development and highlight the opportunities for public and/or
private investment in sectors considered essential in the sustainable
growth of the country: economic infrastructure (transport, energy and
telecommunications), social development (healthcare, education, housing
and sanitation), information and understanding, and the environment.
The opportunities highlighted by the study were to contribute to national
integration and improve the systemic competitive nature of the Brazilian
economy on the international market. Another central issue was the
suggestion of favorable points to reduce disparities in income and
regional inequalities.
In 1999, as part of this effort to reduce inequalities, the BNDES created
the Regional Development Department, aimed at implementing specific
measures through two new credit programs: the Tourism Support Program,
designed to encourage visits to the Northeast, and the Central-West Program,
for which the same conditions were established as in the Integrated Amazon,
Competitive Northeast and “Reconversul” programs.
The father
Luiz Carlos Mendonça de Barros was truly the father responsible for the BNDES
resuming the Social Division. He was the one who believed in it and followed
the first projects through. He had experience in the financial sector, but was
completely fascinated by this venture into reality, which he saw at the BNDES.
José Pio Borges de Castro Filho, engineer and economist, interviewed in 2002
Nelson Fontes Siffert Filho, economist,
interviewed in 2012
141
An important link
More significant
In 1999, the BNDES was being encouraged and, indeed,
told by the federal government and foreign entities that
its activities should be more regionally based. The Bank,
therefore, created a Regional Development Department,
with the status of a Deputy Management Department,
with the objective of conducting this issue of regional
development, not at an operational level, but rather at an
institutional level, serving as a link between the BNDES
and the assorted entities, and not just at a state level,
but also those in the federal government in the form of
ministries: the Ministry of Agriculture, and Ministry of
the Environment. The department was focused more on
the North and Northeastern regions, where the Bank’s
activities were more limited. I was invited to be the deputy
managing director. At the time, we were a small group of
people; there were around six or eight of us at the most,
taking into account the whole structure. The objective
was to provide coordination between the foreign entities
involved in regional development and the several areas in
the Bank; not just operational divisions, like the planning
division and things like that.
At that time, the “S” of the Bank’s acronym still had no
operational meaning, but we started thinking, and then
acting, in a way that other institutions, such as the World Bank
and the Interamerican Bank, would only start incorporating
into their central concerns years later. Since 1970, the Bank
had done pioneering work in the environmental area, but
only in the 1990s did concern for the environment start to
condition each of the credit operations, with the requirement,
which came to be a norm for the committee, that all the
projects, with no exceptions, had to respect environmental
regulations appropriate to the principle of sustainable
development. We also started to incorporate social concerns
focusing on the battle against regional inequalities and
especially on the problem in the Northeast. Generating
employment and the need to reduce social imbalance became
part of our work and, consequently, a number of operational
programs came into being – the Competitive Northeast
Program, and the Integrated Amazon Program, among others.
Shortly after Luiz Carlos Mendonça de Barros took over as
president of the Bank in 1995, these ideas and initiatives
were grouped together and the BNDES’ Social Division was
recreated. It started working with a whole range of projects,
from microcredit to large-scale operations involving social
infrastructure in metropolitan regions. The Social Division
was consolidated by the end of the 1990s, and I was its first
managing director. The “Social” division became one of the
BNDES’ priorities.
Luiz Fernando Linck Dorneles, accountant, interviewed in 2012
Sérgio Besserman Vianna, economist, interviewed in 2002
The BNDES has provided support to
modernize Brazilian agribusiness
142
With the new department in place, the BNDES expanded and significantly
redirected its support to the Northern, Northeastern and Central-West regions, as
well as micro-regions that were in need of economic revitalization. To do so, the
Bank adapted its products to suit the characteristics of the regional economies.
Disbursements to the Northern, Northeastern and Central-West regions, which
represented 19% of the national total in 1999, rose to 25% in 2000, reaching the
sum of 5.8 billion reais.87 Distribution of these investments among the respective
regions can be seen in the table below:
REGION
GROWTH
%
INVESTMENTS
R$
New frontiers
NORTH
102
930 MILLION
NORTHEAST
68
2.8 BILLION
CENTRAL-WEST
73
2.1 BILLION
The Central-West Region had shown
excellent levels of economic growth
since the 1960s. Agro-industry is
the strength of that region. Ipea
performed an historical feat between
1960 and 1996; during these 36 years,
GDP growth in the Central-West
was double that of national GDP,
at an average of 8.4%. On average,
because there are peaks; for example,
in 2000, Mato Grosso state’s GDP
grew by 11.5% . They are the new
agricultural frontiers. The BNDES
created a few mechanisms, such
as MODERFROTA, a modernization
program for agricultural machinery
and equipment that “boosted” many
of the operations in the region and
greatly “boosted” the sale of this
equipment. The region has grown at
an average of 20% per year.
Source: BNDES Activities Report, 2000.
Considering this context, the lines of credit for agro-industry gained
more importance. A large part of disbursements went to micro, small and
medium-sized companies in this sector, to rural producers and autonomous
transporters. Between its creation, in 2000, and 2002, the Modernization of
the Agricultural Tractor Fleet and Associated Parts Program (MODERFROTA),
generated disbursements of 5.57 billion reais. As well as this program, the
sector had Finame Agrícola to finance the manufacture and commercialization
of machinery, agricultural parts as well as computer and automation goods
specifically for agricultural production.
Also to reinforce its agricultural activities, the BNDES launched a number
of programs to encourage the diversification of production: PROVARZEASUL,
PROPASTO, PROCAMOL, PRODEVINHO, PRODECAP, PROCAJU, PRODAMEL
and PROFRUTA. Other programs linked to small-scale agricultural production,
included in the Social Division, such as PROSOLO and PROLEITE, were
changed to expand the reach. Prosolo included green fertilization as a possible
area for financing and a line of credit was opened to cooperatives.
The BNDES also collaborated with another of the federal government’s
programs, ‘Brazil Entrepreneur’, aimed at micro and small companies,
allocating a third of its funds. Support for this sector (a reality since the 1960s
and expanded with the creation of FINAME) was intensified even further with
the adoption of new measures, making this area one of the Bank’s priorities.
In 1998, the Fundo de Garantia para Promoção da Competitividade (FGPC
– Guarantee Fund to Foster Competitiveness) was founded, with the aim of
circumventing the difficulties these companies had in presenting guarantees.
The new fund allowed the BNDES to share the risk of operations between
micro, small and medium-sized companies and financial agents. In 2002, the
Bank reached the landmark of 130,000 operations per year with companies of
these sizes.
Ruy Coutinho do Nascimento, attorney,
interviewed in 2002
Small, but powerful
Over these past few years, the BNDES’
challenge has been to provide support
for small businesses. Approximately
90% of the companies scattered
across the country are micro, small
and medium-sized companies. These
companies probably account for 60%
of GDP. They also account for creating
a significant number of jobs. And as
a result of this, the BNDES has been
trying to “boost” support for these
companies more and more.
Luiz Antônio Araujo Dantas, engineer,
interviewed in 2002
143
More power
The FGPC [Guarantee Fund to Foster
Competitiveness] was an incredibly
important instrument, principally for
financing micro and small companies.
You did not have any guarantee to
offer; the FGPC, with the company’s
revenue, guaranteed 80% of the sum
of the credit and this made a lot of
operations possible for micro and
small companies.
Yolanda Maria Melo Ramalho, economist,
interviewed in 2012
Large scale
The BNDES has always been very
active in the capitals market, with
strong presence not only in the
operations it conducted – in refining
operations – but also as an investor
supporting the capital increases for
Brazilian companies over the years.
It had a rather full portfolio. The
first large-scale operation I worked
on was the sale of Petrobras shares,
which was in the pre-analysis phase
of the initial share offering, in August
2000. It was an iconic operation,
since it was the first time that the
Guarantee Fund had been used and
because it was a large-scale public
offering – the third largest operation
undertaken by an emerging country:
300,000 Brazilians bought Petrobras
shares. The largest two were taken
by Chinese telecommunications
companies. It was a beautiful effort.
Eleazar de Carvalho Filho, economist,
interviewed in 2002
Since the 1990s, through PRODETUR, the
BNDES has supported the development of
tourism in the Northeast, benefitting places
such as the town of Santa Cruz de Cabrália (BA)
on the Discovery Coast
144
Another means of support for micro, small and medium-sized companies
(MSMEs) was the implementation of advanced service centers, together with
the National Confederation of Industries (CNI) and the state federations
of industry. At these centers, businesspersons started to receive advice on
the product most suitable for their investments, the credit conditions, the
possible referral of the claim to authorized financial institutions, as well as the
provision of subsidies and the specific requirements for fine tuning financial
support for this sector of companies.88
Support for MSMEs was growing. In 2002, the Bank launched the BNDES
Card, with the objective of providing this sector better access to credit and
encouraging investment.
In 2000, as part of the National Privatization Program, the BNDES organized
the largest initial public share offering that had ever been performed in
Brazil: 180 million ordinary shares, representing 28.3% of the voting capital of
Petrobras, were sold for 7.2 billion reais. The shares sold were part of the federal
government’s surplus shares in corporations.
The operation included small investors who, for the first time, were able to
use the resources of the Worker’s Severance Pay Fund (FGTS) to purchase shares.
More than 313,000 workers bought shares with their FGTS savings, tripling
Petrobras’ share base. It was the largest initial public offering ever held in Latin
America and the third largest operation in the capitals market in countries
considered “emerging”.
In 2000, the Bank returned to the issue of its own structuring and future. This
resulted in the creation of the BNDES University, designed to improve the training
and development of its technical staff, and the return to strategic planning,
which redefined its performance principles and established seven priorities:
modernization of production sectors; infrastructure; support for exports; social
development; micro, small and medium-sized companies; reducing regional
inequalities; and privatization. In addition, this established development of the
capitals market as a key factor in achieving the goals set forth in the plan.
In planning, the BNDES’ mission statement was updated, incorporating into the
text the priority of social issues, regional development and job creation – directives
that had already been adopted by the Bank in its activities – and reaffirming the
commitment to raising the competitive edge of the Brazilian economy.
A year later, the BNDES started internal reorganization, seeking to adapt
and adjust the technical teams to the new management philosophy and to
the strategies defined by strategic planning. A new division was created –
information technology – with a view to bringing the Bank even closer to its
clients, employees, the government, financial institutions and society in general.
BNDES University
Seven priorities
When I took over in 2000, we made
a series of changes and created the
BNDES University. At that time, this
business of corporate universities
was not very well known. Today,
almost all big companies have
their own university. Twelve years
ago it was still a very new idea. As
I was the managing director of the
Administrative Division, I was chosen
to be the dean, which was, in fact, a
university manager. We were able to
use internal resources to develop the
institution’s talents, taking special
care of staff, talented workers within
the BNDES. There were people who
dedicated themselves practically full
time to the BNDES University. We
started to provide internal courses,
bringing in professionals from
outside who could add knowledge
to the Bank’s technical staff, and we
started to pay attention to the Bank’s
employees, thinking of their careers
in a long-term perspective. There was
constant tracking and assessment.
We created a form of assessment
called “180 Degrees.” It was a very
interesting experience.
We resumed strategic planning, which had not been seen at the Bank for many
years. We created a wide-reaching project and established the BNDES 2000-2005
Plan. The Bank sought to redefine itself to face the challenges of the 21st century:
the Bank’s mission, objectives and priorities. Seven priorities were identified:
first, continued support for industrial sectors, seeking a competitive edge and
modernizing Brazilian industry. Secondly, also one of the Bank’s traditional roles,
was to continue financing investment in infrastructure: the construction of
roads, ports, transmission lines, railroads, navigable waterways etc. The third
area was essential: support for exports. Brazil needs to export more to become
more efficient. The fourth area identified was regional diversification. Brazil’s
industry is still strongly concentrated in the South; it is essential that economic
development regionally diversifies investment. The Bank is expected to encourage
projects in less-developed regions: the Central-West, North and Northeast. The
fifth priority was support for micro, small and medium-sized companies due
to their capacity to create jobs, “boost” resources and increase the efficiency
of Brazilian manufacturing. We also identified the Social Division as a priority.
Any development process in the country has to face our social inequalities. An
organization such as the BNDES has to concern itself with the social aspects of
development, which has to be seen in a much more expansive manner. And the
seventh priority was to reemphasize the Bank’s commitment to privatization.
All the know-how accumulated by the BNDES was important, but it recognized
that, unlike certain times in the 1990s, the Bank should not be focused almost
exclusively on privatization.
Isac Roffé Zagury, economist, interviewed
in 2012
145
To overcome the country’s energy crisis, the
BNDES provided support for projects focused
on generation, transmission, distribution and
alternative sources of energy. Among these
projects is the duplication of the capacity of
the Tucuruí Hydroelectric Plant (PA), which
principally provides energy to the North and
Northeastern regions of Brazil
In 2001, the government invited the BNDES to help resolve the energy crisis
which had hit the country. The Bank adapted its lines of credit to the electric
sector, modifying financial conditions so as to stimulate investments in electricity
generation and transmission. The Bank took part in the search for solutions
together with the Electrical Energy Crisis Management Chamber, created by the
federal government at this time, while internally it created the Energy Division,
designed exclusively to manage the portfolio of projects within this sector.
Among the projects approved for generating and transmitting
electric energy, worthy of mention are: expanding the capacity of the
Tucuruí Hydroelectric Plant in Pará State; implementing the Juiz de Fora
Thermoelectric Plant in Minas Gerais State, which was the first natural gas
power plant characterized as an Independent Power Producer (PIE)89 to start
operations in the country; and constructing the Campos Novos-Blumenau
power transmission line in Santa Catarina.
During Fernando Henrique Cardoso’s two mandates, the BNDES’ budget
was increased more than fivefold: from 7.1 billion reais in 1995, to 38.1 billion in
2002. As a percentage of GDP, it moved from 1.01% to 2.58%. The total amount
of resources obtained through privatizations surpassed 100 billion dollars. New
perspectives for the national economy attracted foreign investments in the order of
150 billion dollars, which were earmarked for infrastructure and industry.
89 According to the National Electric Energy Agency (ANEEL), an independent electric energy producer is a
company or consortium of companies that is granted a concession or authorization from the licensing authority
to produce electric energy to be sold, partially or entirely, at its own expense and risk. Source: Glossário ANEEL.
Available at: <http://www.aneel.gov.br/biblioteca/glossario.cfm?att=P>. Accessed on: Oct. 2012.
146
Presidents
•
Edmar Lisboa Bacha | 1995
•
Luiz Carlos Mendonça de Barros | 1995-1998
•
André Lara Resende | 1998
•
José Pio Borges de Castro Filho | 1998-1999
•
Andrea Calabi | 1999-2000
•
Francisco Roberto André Gros | 2000-2002
•
Eleazar de Carvalho | 2002-2003
•
Social Fund – BNDES Resolution Nº. 902, of June 13, 1997
•
Guarantee Fund to Foster Competitiveness (FGPC) – Law Nº. 9,531, of December 10, 1997
•
Export Guarantee Fund (FGE) – Law Nº. 9,818, of August 23, 1999
•
Fund for the Technological Development of Telecommunications (FUNTTEL) – Law Nº. 10,052,
of November 28, 2000
•
Solidarity Community Program. Fernando Henrique Cardoso’s first administration | 1995-2003
•
Brazil in Action Multi-year Plan. Fernando Henrique Cardoso’s first administration | 1996-1999
•
Program for the Eradication of Child Labor (PETI). Fernando Henrique Cardoso’s first administration | 1996
•
Advance Brazil Multi-year Investment Plan. Fernando Henrique Cardoso’s second administration | 2000-2003
•
School Assistance Program. Fernando Henrique Cardoso’s second administration | 2001-2003
•
Cooking Gas Assistance Program. Fernando Henrique Cardoso’s second administration | 2001-2003
•
Food Assistance Program. Fernando Henrique Cardoso’s second administration | 2001-2003
147
Through non-reimbursable funds from the BNDES Social
Fund, the Bank provides supports for recyclable material
waste picker cooperatives
Competitive
and sustainable
development
An historic change
[Lula’s first administration Begins]
T
he stability gained by the Real Plan brought significant benefits to the
people, but, at the end of the FHC government, problems such as rising
unemployment, federal and state debt, and dogged issues related to the
distribution of income were evident. These matters influenced the result of the
2002 presidential election.
Luiz Inácio Lula da Silva was elected President of Brazil, defeating the
government’s candidate and former minister of Health, José Serra, then senator
for the state of São Paulo. It was the largest turnout to vote in the country’s
history, with 52.4 million votes counted. Lula took 61% of the valid votes. It was
his fourth attempt to become President of the Republic, and his victory thrilled
the country.
For the first time, Brazil had elected a president from the working classes,
a man whose life was a symbolic journey. Born into a poor family in the
town of Garanhuns in the arid countryside of Pernambuco state, Lula was a
metalworker and established himself as a union leader. He led the famous
ABC Paulista strikes during the time of the dictatorship, during which he was
arrested, and was one of the founders of the Worker’s Party (PT – Partido
dos Trabalhadores). His inauguration as president on January 1, 2003, also
represented the growing maturity of Brazilian democracy.
During the election campaign, an uncertainty over the direction in the
country’s economy would be taken led to a confidence crisis in the domestic
and foreign markets: would the economic policy employed since the Itamar
Franco government be continued or would there be a rupture? Doubts were
based on documents and the PT government program, which talked of a
necessary rupture and renegotiation of the foreign debt. At that time, the
external situation, which was far from favorable, made the situation even
more serious.
It was within this context that, in June 2002, Lula read his famous “Letter to
Brazilians”, promising to ensure continuity of the policy of stability (preserving
the inflation targets and the primary surplus to restrain any increase in the
internal debt) and the government’s capacity to honor its obligations. The new
PT program, launched the following month, also adopted a more moderate
tone and reaffirmed the commitment to fiscal austerity and economic stability.
A third document – Notes on the Agreement with the IMF – published by the
party in August, renewed the intention to pay debts and respect agreements.
150
Proven ability
In the first administration, Lula sought to show the
markets and the people that he and his party, and the
people who entered government, were sufficiently
organized to run the country. The economic policy was
especially conservative. President Lula, during his first
term, put the situation in order; the economy did not
grow much, but all the fears that he was not fit for this
area were swept aside.
João Carlos Ferraz, economist, interviewed in 2012
Lula took over the government at a time of crisis. The
challenge was to stimulate growth once again and try
to right social inequalities, without placing the stability
of the currency at risk. The seriousness of the economic
crisis meant that the government concentrated on
stabilizing measures.
The choice of non-traditional names from within PT,
such as Antonio Palocci, former Mayor of Ribeirão Preto,
for the Ministry of Finance, and Henrique Meirelles,
former director of the Bank of Boston, for the Central
Bank, demonstrated that the new government was not
truly prepared to fulfill the intentions it had announced
during the campaign.
The government kept inflation under control, cut
budget spending and surpassed the primary surplus
target of 3.75% of GDP, achieving the unprecedented
feat of reaching 4.25%. Inflation fell from 12.5%, in
2002, to 9.3%, in 2003, and continued to drop over
the subsequent years. The measures adopted by the
new government alleviated market tensions and,
in December 2003, the Brazil Risk90 fell to 463 basepoints, as opposed to the 1,446 base-points recorded
in December 2002. However, despite the changes, the
economy remained stagnant that year. Almost every
sector registered reductions, with the exception of
agriculture, which expanded 5%.
Another important step towards winning credibility
was the continuity of structural reforms started by the
previous government. Tax and welfare reforms were sent
to and approved by the National Congress. The proposal
to reform the Social Welfare System surprised everyone
and faced heavy resistance, especially amongst public
servants, who were negatively affected by the changes.
Amongst the first measures to be taken, the new
president announced a social project designed to
improve the food supply to the poor. The Zero Hunger
Program was launched. It was the government’s first
initiative towards confronting the concentration of
wealth that plagued the country. Problems brought
about by unequal development required intensive efforts
to correct age-old inequalities, the roots of which date
back to colonial times. The program was welcomed
by the people and gained support from several
international organizations.
90 The country risk is an index named the Emerging Markets Bond Index Plus
(EMBI+), which measures the degree of instability that a country represents
for foreign investors. The Brazil Risk is calculated by risk classification
agencies and investment banks. The American bank J.P. Morgan was the
first to make this classification, which is made available by the Portal Brasil
in its financial indexes section.
151
Development with inclusion
[BNDES | 2003-2004]
P
resident Lula invited the economist Carlos Lessa to take command of
the BNDES. In his inauguration speech, Lessa announced the BNDES’
commitment to the government’s main social initiatives. More than a
legitimate proposal for social justice, Zero Hunger was a project to build the
country’s future, which had to meet urgent needs, such as combating hunger,
creating jobs and room for mobility, as well as social ascension. Lessa also
stressed that the program was an important tactic with opportunities for the
business community; it was a “program of the size of Brazil.”
The BNDES embraced the challenge posed to the entire government to
foster “development with social inclusion.” Lessa employed a deep-rooted
transformation in the internal structure. The reform restored the BNDES’
sectorial structure that had been changed in 2000, when it had opted for a
product-client based model. The new changes were carried out in a very short
space of time and prompted alterations for almost all the Bank’s technical staff.
Multiplying effect
The amount disbursed by the Social Division is small when compared to the
large areas, such as infrastructure and industry, but the multiplying effect of
the investment is enormous. It is logical that, in industry and infrastructure,
there are benefits that arise out of investment, such as the creation of jobs
etc. However, in the Social Division, you have all this and also the possibility
to improve some people’s standards of living. This may be the significant
differential and shows the importance of having a Social Division in the Bank.
Gabriel Rangel Visconti, economist, interviewed in 2012
Everything changed
I had a spectacular advantage within the administration, because there were
absolutely no subdivisions or government coalition, nothing like that. As I
thought that the BNDES was extremely distorted by the connection with the
idea of privatization, I removed the entire management group. In less than 30
days, I had changed everything.
Carlos Francisco Theodoro Machado Ribeiro de Lessa, economist, interviewed in 2012
152
Stepping on the gas
When Carlos Lessa took over the Presidency of the BNDES,
he did away with the Social Development Division,
merging it into other departments. The Bank was
changing its organizational structure, which was based
on a product-client approach. I took care of the “product”
part, analyzing projects in the Regional Development
Division; they were smaller projects. This period was very
intense, and the Bank became rather disorganized with
these structural changes. We had to really step on the gas
and started disbursing a great deal; the department grew
enormously. The energy boom came soon after. I took
over all the Petrobras gas pipeline projects; we had a lot
of gas-driven thermoelectric projects. I got the first windpower project supported by the Bank.
Cláudia Pimentel Trindade Prates, economist, interviewed
in 2012
Sectors were divided into the following operational
divisions: social inclusion, industry, basic inputs,
infrastructure and energy, indirect operations and
foreign trade. Four lines of action were prioritized:
fostering social inclusion, recovering and developing
national infrastructure, modernizing and expanding the
production structure, and fostering exports.
The new directives also focused on the operational
practice of project analysis. Since then, the concept of
“priority” has been present and has been combined with
the concept of “risk” when assessing projects submitted
to the Bank. Introducing these new assessment criteria
did not minimize the issue of risk – which is so crucial
for an institution such as the Bank.
When analyzing two or more projects with a
similar level of risk, the preference should be for that
which would most contribute to development with
inclusion. From this viewpoint, selection should
prioritize projects with more possibilities to generate
employment. The change aligned the Bank’s policies
with the government’s new strategy to combat
inequality in the country.
Involving everyone
As of 2003, when Lula took over the Presidency and
stipulated that the BNDES should become active in other
areas, the Bank began working with certain sections
of the public that did not have access to credit. It is
essential that the BNDES continue working with large
and medium-sized companies, but it is also important
to meet the needs of small and micro companies. It is
necessary to attend those on the fringes of the market,
because development is not apt at involving everyone,
(often leaving behind) family farmers and solid waste
pickers. The large-scale projects, such as steelworks and
hydroelectric power, end up affecting the regions around
them. The Bank needs to pay attention to the traditional
communities that exist there. Today, BNDES’ activities are
effective. I am experiencing and learning a great deal as a
professional, and I hope that I can make my own modest
contribution to this story.
Guilherme Narciso de Lacerda, economist, interviewed in 2012
153
The release of BNDES’ resources for projects with a
social purpose increased 36% during the first five months
in 2003, in relation to the same period the previous year,
totaling financing of 551 million reais for infrastructure,
health and social services, as well as education.91 These
investments included undertakings that directly impact
social development and improve the population’s
standard of living.
The BNDES continued working in the basic social
sectors of health, education and comprehensive social
assistance, while developing studies and conceiving
new ways of providing support that were in keeping with
each sector’s operating model as a means to establishing
priorities. One concrete result of this effort was to
improve and expand the Production Credit Program,
created in 1996.
The new Microcredit Program started to include new
financial resource on-lending institutions, including
city halls, unions and federal public banks, besides
offering a new form of financing in which the interest
rate charged to the final borrower would not exceed
2% per month. Shortly afterwards, central rural credit
cooperatives were registered so they, too, could act as
on-lenders for the BNDES’ and FINAME’s resources. In
2006, financing for the social area grew, especially that
linked to microcredit operations. From 2004 to 2006, the
BNDES supported 20 institutions in this area with a total
sum of 75 million reais.
Reinforced support
The main problem in the Social Division is that it deals
with the poorest part of our country. Within this area, the
Bank supports projects from city halls and states, but the
small city halls and NGOs still have difficulty structuring
well-conceived projects to present to the BNDES. The Bank
needs to make its experts available and hold numerous
meetings with these cooperatives to assist them in
preparing and presenting their projects to our institution.
Paulo Mizushima, economist, interviewed in 2012
91Cf. Informe BNDES, n.171. June 2003, p. 4. Available at: <http://www.
bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/
conhecimento/inf_bndes/inf_0603.pdf>. Accessed in: Nov 2012.
154
The BNDES’ soldiers
I think that, during Lessa’s period, it was a serious conceptual
mistake to characterize the BNDES as an ideological
institution, which it is not. In the privatizations, on the
contrary, the Bank did everything in a very practical way,
and ideology did not win out. What I am trying to say is that
all of the BNDES’ involvement in privatization had nothing
to do with ideology; in terms of probability, exceptions are
always going to exist. The same people who worked with the
privatizations would be capable of nationalizing them again
if this was the government’s policy. Obviously, people are
concerned about the Bank’s capital structure and defend the
BNDES as an institution, but there is no way of opposing the
government’s policy. This is the policy now, and the people here
are soldiers, typical civil servants.
Incorporating possibilities
In the past, the BNDES was heavily criticized for only
considering large-scale projects, while it would also have to be
committed to creating jobs. This was the diagnosis. How do
we make a product that is agile and how do we interact with
this public or with micro, small and medium-sized companies?
Milton Dias did a course at MIT and came up with the BNDES
Card project. However, it takes a long time because we have
a crucial issue which is information technology – this is
not limited solely to the BNDES, but extends to all financial
organizations – it is a scarce resource and highly disputed
among the organizations. This project was conceived, and
we managed to operate and adjust the concepts a little,
incorporating more possibilities for financing.
Claudio Bernardo Guimarães de Moraes, accountant,
interviewed in 2012
Track is laid to expand the Rio de Janeiro subway, thus increasing the
urban public transport network
The Bank continued to stimulate regional decentralization, seeking
to reduce the difference in its disbursements. In 2005, the Regional
Stimulation Program (PDR) was created, bringing together all the
programs designed to reduce regional inequalities. The projects located
in municipalities classified as “low” and “medium” income were offered
benefits and easier access to the Bank’s financing.
In relation to infrastructure, another priority line, the BNDES
created projects to expand access to basic facilities such as electricity,
communication, urban transport and sanitation. The Bank also sought to
encourage not only a reduction in costs, but also an increase in efficiency
in the manufacturing structure, while consolidating regional integration.
The BNDES continued operating in synch with the federal government’s
multi-annual program. The BNDES Infrastructure Division aimed to reduce
bottlenecks in the economy and foresee the demand so they would not
interrupt a new cycle of development.
Concerning the modernization and expansion of the manufacturing
structure, small and medium-sized companies were prioritized. The BNDES
Card, launched in 2002, was being revised and improved. Every year, new
procedures were introduced, such as the accreditation of manufacturing
goods suppliers to improve the operational performance of the Card. The
change was felt as early as 2004, when an increase in the number of cards
being issued was noted, with a total of 24,854 cards issued, 554 suppliers
accredited, and 6,548 products made available. The difference in the number
of cards issued between 2003 and 2004 can be seen in the table below.
CARDS ISSUED
CREDIT PROVIDED (R$ THOUSANDS)
SUPPLIERS ACCREDITED
2003
2004
VARIATION %
2,162
24,854
1,049.6
44,843
367,448
719.4
222
554
149.5
PRODUCTS MADE AVAILABLE
4,040
6,548
62.1
NUMBER OF TRANSACTIONS
116
1,215
947.4
1,170
12,142
937.6
TOTAL AMOUNT OF RELEASES (R$ THOUSANDS)
Source: BNDES Activities Report, 2004.
The reason for the Card
In 2002, the Board of Directors
approved the first proposal for the
BNDES Card. In 2003, during the next
government, the department was
created. The new Board of Directors
had recently been inaugurated,
and I made a presentation on the
project to the new president, who
immediately agree to the idea and
created the department: “Make this
happen!” It was just like that. So, why
the card? Due to the importance of
small companies in creating jobs;
they create a lot of jobs. Maybe in
terms of the quality of the jobs,
large companies are better, but in
terms of quantity, it is the small
companies that create most jobs.
This is the genesis of the idea behind
the Card. It came about like this:
“Why doesn’t the BNDES have some
sort of a tool like a Card?” With a
traditional credit card, you can go to
a machine and withdraw money, you
can go to a restaurant, but this was
not the purpose of our card – it was
not created to purchase consumer
goods. It was created for investment.
Our idea was for an investment card.
There was the problem of identifying
the product. How am I going to
identify the product? How am I going
to know that the card carrier is buying
an investment item that will improve
his manufacturing activity? The
Internet resolved this.
Milton Cesar Teixeira Dias, engineer,
interviewed in 2012
155
A fantastic idea
The BNDES Card was a fantastic idea since it brought together the Internet
and a channel of communication, meaning that you could have a branch of
the Bank in every town, on each computer, everywhere. The credit card is an
extremely widespread tool; who does not know how to use a credit card?
We brought in a few financing characteristics – you do not pay off the whole
balance the following month, because you have maxed out the limit. So, with
this design, it is a really fantastic product.
Ricardo Albano Dias Rodrigues, engineer, interviewed in 2012
A success
There were some really first-rate embryos here that were not getting the
recognition they should have. For example: the BNDES Card had a thousand
suppliers and 12,000 cards – it was a sub-department. We put together a media
plan and started advertising in July 2005. Obviously, we prepared so that there
would not be an enormous amount of pressure on the IT division, and we held
a meeting with the Bank of Brazil, the Federal Savings Bank and Bradesco to
explain: “Look, we are going all out with the advertising and it is possible that
the demand will be quite high.” It was a success! From then on, the growth in the
use of the BNDES Card has been exponential.
Elvio Lima Gaspar, engineer, interviewed in 2012
A time of enthusiasm
There was a moment of real enthusiasm with the possibility that we would
restore BNDES’ reputation as a development bank. One very important example
is that in the naval construction sector, which is very much linked to the oil and
gas construction area. Following a long period of decline, with a number of
shipyards closing, concerted efforts were made to mark the start of the recovery
of the production capacity of the shipbuilding industry. The same happened in
several other sectors, in manufacturing and capital goods industries – those with
machine-tools and heavy machinery etc.
Luiz Eduardo Melin de Carvalho e Silva, economist, interviewed in 2012
The emphasis on exports remained one of the Bank’s priorities, which was in
keeping with the federal government’s economic policy to guarantee the stability
of the trade balance. At the end of 2003, the Bank’s efforts saw return in the form
of 14.2% growth in exports of goods and services. The trade surplus hit 25 billion
dollars, outperforming the 13 billion registered in 2002.
156
The BNDES Card
The BNDES Card celebrated its 10th anniversary on September
24, 2012, surpassing all original expectations and filling a
gap by meeting the credit requirements for micro, small and
medium-sized companies to make investments. More than
550,000 cards have been issued to companies operating
in several different areas, located in 96% of Brazilian
municipalities. The Operations website (www.cartaobndes.
gov.br) has 46,000 accredited suppliers making 207,000
items available for sale. Since its launch, in 2002, some
1.7 million operations have been carried out, with a total
of approximately 25 billion reais in disbursements, the vast
majority of which have favored the development of new
business, markets and talents in our country.
The music business market was very concentrated, and
this possibility of creating, through the Card, really helped
decentralize things and develop independent musicians and
recording studios. These independent businesses invest in
new artists and unknown talents who do not stand out in
the large-scale media. So when you provide an incentive for
these businesspeople, the independent market naturally gains
space and also the possibility of developing so much more,
meaning that the use of the Card by the Brazilian Association
of Independent Musicians (ABMI) was extremely important.
By financing through the Card, the Bank managed to
incorporate these small producers, who are responsible for the
country’s cultural diversity. If we manage to extend financing,
via the Card, to the other phases of production, it will be very
important. Producing content, which is so intrinsically linked
to innovation and culture, involves not only production, but
also creation itself, including studio recordings, mixing, hiring
musicians, mastering – a series of stages before production.
Carlos Mills Milman, director of Mills Records. Former director of
the Brazilian Association of Independent Musicians (ABMI), when
the BNDES Card was contracted by the organization.
The image of the BNDES Card is available on the sites of
the accredited supply companies and works as a link to
the Operations Website. Pumar e Cia. Ltda., an umbrella
manufacturing company based in Mesquita, Rio de
Janeiro state, was one of the first companies to contract a
technology service through financing from the Card and is
now an accredited supplier on the website.
In fact, the Card was one of the company’s last
innovations. We really needed it because business had
really diminished over a period of about eight years.
With the opening of the Chinese market, umbrellas
started arriving with much lower prices, and this had an
enormous impact. The factory went from 600 employees
to 60. When we inherited the factory, we had to really roll
up our sleeves, because even though the structure was
all there, the business was in tatters. We had to invent
a few different things and, among these inventions was
the BNDES Card. The Card has been used for seven years
now to acquire equipment and modernize the factory.
Afterwards, we also started to use the BNDES Card to
sell our products on the site. That has been going on for
three or four years now. Since then, we have put together
an electronic trading service, and the volume of business
has grown to such an extent that we have turned our
attention to retail. This was the alternative solution: create
a retail brand, aggregate value to the product, so that we
could keep up with the Chinese. They have reached the
lower-middle and upper-working class (economic classes
B, C and D), while we serve the client who prefers a more
attractive product with quality and a brand.
Emílio Cantini, Sales director at Pumar
Recording Studio used by Mills Records, a client of
the BNDES Card
The Card celebrated its 10th
anniversary in 2012
157
The return to growth
[Lula’s first administration]
I
n 2004, the performance of the Brazilian economy surpassed all
expectations and market projections. Brazil’s Gross Domestic Product
(GDP) grew 4.9% – the highest rate in ten years – and GDP per
capita expanded 3.4%. Employment rates also increased. The foreign
situation improved, with the global economy seeing a return to growth
of approximately 5%. This extremely favorable context contributed to the
Brazil’s outstanding performance.
In relation to foreign accounts, a record surplus of 33.7 billion dollars on
the trade balance was registered – 36% higher than the previous year’s. The
positive results in Brazil’s export sector allowed for continuous adjustments
to the balance of payments, and Brazil managed to reduce the ratio between
the net foreign debt and exports to approximately 1.6 in 2004 (far below the
2.3 in 2003 and 3.9 in 1999). Furthermore, large-scale international liquidity
contributed to improving the economic indicators.
The economic stability helped boost the entry of foreign investment into
the country. Activity was resumed in several sectors of the economy, with
growing production and the creation of new jobs. From 2004 on, there was a
remarkable increase in the creation of registered employment, a recovery of
the population’s income, and more access to credit in Brazil.
In 2004 alone, approximately 1.8 million registered jobs were created. One
highlight was the 6.3% growth rate in labor productivity (production/hours
paid), the best result in the last three years. Contrary to that which was noted
in 2002 and 2003, the increase in labor productivity was accompanied by
growth in industrial production and the level of employment. The average
unemployment rate that year was 11.5%, compared to 12.3% in 2003.92
158
For the little ones
The Social Division started working more and more with the solidarity
economy [2006]. This was when DESOL [the Social Economy Department]
started to think of credit and microcredit for small companies to generate jobs
and income for those who are unable to get financing from a bank, because
they do not have proof of income, have no guarantees, nothing. So we started
working with this, and the Bank started thinking like this: “Let’s create jobs
working with small and medium-sized companies.”
Claudio Cezar Carvalho de Almeida, systems analyst, interviewed in 2012
Positive results in the economy encouraged the federal government to
expand its social efforts. In 2004, the Family Assistance Program (PBF), which
brought together and improved the previous income transfer programs,
such as School Assistance, the Food Assistance, the Food Card, Cooking Gas
Assistance and the Program to Eradicate Child Labor. At the end of 2005,
the program had already reached 8.7 million families. The minimum salary,
another mechanism for the transfer of income, increased 3.7% (annual
average) in 2004, and 7% in 2005.
As well as the immediate benefits for the poorest sectors of the population
and improvements in the distribution of income, the PBF was one of the factors
that contributed to expanding the internal market. The program, allied with
policies designed to increase the minimum wage and expand access to credit,93
helped boost consumption and the economy. A large part of the country’s
economic growth was due to the positive performance of internal demand,
supported by an increase of 4.1% in household consumption.94
Brazilian exports also contributed to the growth of the economy. The volume
of products exported continued to expand and foreign trade reached a new
level. The trade performance was reflected in successive current account
surpluses. Also in 2006, the positive balance was 13.5 billion dollars, equivalent
to 1.41% of GDP. The favorable foreign situation contributed to reducing the
foreign debt indicators, such as the total net debt/exports ratio, which fell from
2.7 in 2002 to 0.5 in 2006.
93 Specific factors, such as the return to stability in the national economic situation related to low inflation,
reduced internal interest rates, and lowering the Brazil Risk, all made it possible to raise funds abroad
with a lower interest rate, making it feasible to expand the access to credit in the country.
94 Cf. BNDES Activities Report, 2004, p. 14.
159
One thing and another
At first sight, what does an oilrig that is going to operate in the Campos Basin
have to do with financing exports? In Brazil, there is a very specific customs
system. When these rigs are sold to a Petrobras subsidiary overseas, this sale is
treated as an export. We, in the Foreign Trade Division, dealt with this. In 2004
and 2005, Petrobras was making investments in the P50 family – today the
production units have been concluded, extracting oil from the Campos Basin
in different fields – and this was a very clear mission that we had: do not let
investment opportunities occur without local suppliers having the capacity to
include their products and services.
Luciene Ferreira Monteiro Machado, engineer, interviewed in 2012
At the end of 2005, the Lula government quit the remainder of the debt
with the IMF, which had been taken out at the end of the FHC government.
Adjusting the foreign accounts, within a context of accelerated global
expansion and high international liquidity, allowed the Central Bank and the
National Treasury to replenish the level of international reserves, diminish
the exposure of the debt to the exchange rate and improve the profile of
domestic debt. Net international reserves grew 60% between 2005 and 2006,
when they reached 86 billion dollars.
The government had been facing allegations of corruption since 2005,
which had enormous nationwide repercussions.95 In addition to this, in
2006, the minister of Finance, Antonio Palocci, was substituted by the then
president of the BNDES, Guido Mantega. The change was also reflected in
economic policy, seen in efforts such as increased public spending and a
certain reduction in the primary surplus, among other aspects.96 The new
minister further reinforced the importance and participation of the BNDES in
the Brazilian economy.
Strengthening macro-economic foundations and the advances achieved
contributed to an expressive reduction in the assessment of the Brazil Risk
and, in turn, to changing the image of the country. Brazil started to occupy a
new position in the global scenario.
95 Allegations involved a scheme to purchase parliamentary votes, called the “mensalão” (equivalent to
“monthly kickback payments”), which gave rise to the largest political crisis in the Lula government and
resulted in Criminal Charge Nº. 470, filed by the Public Prosecutor’s Office.
96 For more information, see GIAMBIAGI, Fabio, op. cit., p. 215.
160
A vineyard irrigated with water from the São
Francisco River in the municipality of Petrolina (PE)
Expanding the agenda
[BNDES | 2003-2006]
T
he BNDES actively participated in the country’s recovery of economic
growth, disbursing 40 billion reais in 2004 – the largest amount of
resources released by the Bank in its 52-year history. Here, it is worth
highlighting the strong performance of the agricultural sector, the champion
in exports. As well as boosting production, agribusiness led the field in trade
balances for the country. It was one of the sectors that received the most
support from the BNDES, surpassed solely by infrastructure, which received
38% of the Bank’s releases this year.
Santa Clara wind park (RN),
of CPFL Energia
The BNDES bolstered its support for infrastructure, creating
the Programa de Apoio Financeiro a Investimentos em Fontes
Alternativas de Energia Elétrica (PROINFA – Program for Financial
Support and Investment in Alternative Electric Energy Sources) to
support projects that generate energy using alternative sources and
small hydroelectric plants (PCHs).
Micro, small and medium-sized companies (MSMEs) remained a
priority for the BNDES, playing an important part in creating jobs
and social inclusion. The following year, aiming to boost the Social
Division and support for MSMEs even more, the Bank created the
Capital Risk Fund Participation program, aimed at capitalizing
these companies.
More energy
Companies that were unable to get any credit because they belonged
to the government were now able to. The Lula government was
removing a number of barriers against financing the public sector
and, along with this, infrastructure grew. Financing the electrical
energy sector in Brazil had never been so intense.
Cláudia Pimentel Trindade Prates, economist, interviewed in 2012
162
In May 2004, the Bank, together with the Ministry of Science and
Technology and FINEP, recreated the Technology Fund (FUNTEC)97 for
Brazilian companies to boost national production, with the aim of making
national products more efficient and competitive through technological
innovation. Since then, projects undertaken by public or private
technological institutions started to receive financing, as did companies or
groups of companies, together in clusters established in Brazil. It was decided
that resources would be granted in the form of non-reimbursable support,
stakes in companies, or financing, in accordance with an analysis of each
product submitted to the Bank.98
Another important development at this time was the introduction of the
Brazil Index Fund – Brasil Tracker (PIBB 50), a fund investing in shares
that reflected the performance of one of the main reference indexes for the
Brazilian market, the I BrX-50, consisting of the fifty main shares traded on
BOVESPA (the São Paulo Stock Exchange) at market value. The fund was
created to expand access to the Brazilian capitals market, mainly for small
investors by allocating 75% of the shares to the public.
The fund’s first operation, carried out in July 2004, was considered a
success. The public offer involved 24,997 small investors, who purchased 304
million reais of the total 600 million offered. The rest of the amount offered
was acquired by institutional investors, the large investors in the capitals
market. These shares belonged to BNDESPAR, the BNDES’ holding company,
and the resources obtained from the public and institutional share offers were
transferred to the Bank. Also in 2004, the BNDES once again included the
Capitals Market Division, covering the Department of Innovation in Small and
Medium-sized Companies and Investment Funds.
Pioneering efforts
The first FUNTEC in the Industrial
Division was carried out by me and
Marquinho [Marcus Vinicius
Macedo Alves], a colleague of mine
who was already a member of the
department. It was a project for
a decoder for Brazilian digital TV,
developed by PUC in Rio Grande do
Sul state in conjunction with CEITEC,
a Brazilian semiconductors factory. It
was a pioneering project. It was the
Bank’s quickest project – two months
from start to finish.
Claudio Cezar Carvalho de Almeida, systems
analyst, interviewed in 2012
97 As of 1973, FUNTEC’s duties to offer direct support to graduate studies in science and technology were
attributed to the Brazilian Innovation Agency (FINEP), which took responsibility for allocating the
resources from the National Science and Technology Development Fund. FINEP inherited not only the
role, but a great deal of FUNTEC’s management culture. José Pelúcio Ferreira took over as director of
FINEP and continued the work that he had been doing at the BNDES.
98 At that time, the diagnosis developed for the re-creation of FUNTEC established a comparison between
Brazil and South Korea. The two countries occupied tenth and ninth positions in the world, respectively, in
terms of educating students at Master’s and doctorate levels. This proximity disappeared if one included
the number of international patents registered in 2000, when Brazil had 100 registrations and South
Korea, 3,500.
163
A priority
It is a fact that, in Brazil, those who generate jobs are the
small and medium-sized companies. It is no use favoring
a large corporation, because it will create a certain
number of jobs and, at the first economic crisis, it will
restructure and dismiss everyone. In a small company
with three employees, dismissing one is more difficult.
The owner knows the person by name and that person
knows the boss by his name. So he is going to try to fight
for that person’s job as much as he can. In a company
with 30,000 employees, if he dismisses a thousand, he
does not know who they are. Through PROGEREN, the
Bank started to encourage this line of thought, working
with small and medium-sized companies. The BNDES
Card exploded at this time, because the Bank was
thinking like this: “I have to favor small and mediumsized companies, because they will create jobs, guarantee
jobs for all these people.” So this was the priority.
Claudio Cezar Carvalho de Almeida, systems analyst,
interviewed in 2012
Mission accomplished
One of the things that really called my attention at
that time was the sale of a product developed by the
BNDES – the “PIBB” [Brazil-BOVESPA Securities Index].
In fact, it was a portfolio of shares that replicated the
BOVESPA Index. We insisted that the sale of this share
would generate enormous profit for the BNDES. We
fulfilled our role, creating funds for the Bank to make new
investments. We also insisted on separating a group of
shares to be sold to individuals, with a view to increasing
the number of investors on the Stock Exchange and
allowing regular people, those who do not take part
in the stock exchange on a day-to-day basis, to make
investments, without having to follow the performance
of this company: if it goes up or down; if they may lose or
gain; if they sell that one and buy another.
Fabio Sotelino da Rocha, engineer, interviewed in 2012
164
Support for MSMEs was reinforced by creating the
Programa de Apoio ao Fortalecimento da Capacidade
de Geração de Emprego e Renda (PROGEREN – Support
Program to Strengthen Capacity to Create Employment
and Income), with a view to increasing production, work
and the payroll through financial support, in the form of
working capital, for these companies. The program also
benefited large companies capable of developing other
sectors which would certainly increase the demand for
labor. At the end of 2004, the Bank had already approved
490 million reais in operations connected to PROGEREN,
involving around 100 projects.
The Programa de Modernização do Parque Industrial
Nacional (MODERMAQ – National Industrial Park
Modernization Program) was also created in 2004.
Investments made in the area involving MODERMAQ
allowed the capital goods industry, which plays a
fundamental role in the economic development of the
country, to increase the competitive edge of industrial
manufacturing, thus helping expand production capacity,
improve the quality of products, reduce production costs,
expand infrastructure, increase exports and create jobs.99
In November 2004, there were changes at the helm of
the BNDES. The Bank’s president at the time, Carlos Lessa,
was replaced by the then minister of Planning, Guido
Mantega. The new management sought to review the
procedures and processes and adapt the Bank’s structure
to this new phase in the institution’s expansion process,
making it more active and quick.
99 BNDES Report 185. September, 2004.
Doing the right thing
When you work with a management
model that follows a process, this is
run so that activities are performed
on a horizontal line or, in other
words, they are considered from the
beginning through to the end. These
processes are designed to involve
everyone who performs the same
activity in the institution, and the
systems are constructed to provide
speed, agility, confidence and control
of these processes. Activities were not
highly integrated; we had very little
automation; and the reliability of
information was not always as good
as it could be. It is not that you use
unreliable information, but to trust
it, you have to check the sources. You
quickly arrive at the conclusion that
you need systems. And when you go
into it a little deeper, you reach the
conclusion that, if your process model
is not suitable, you run the risk of
providing the wrong information
on something.
Luiz Fernando Linck Dorneles, accountant,
interviewed in 2012
In 2005, the BNDES initiated the AGIR Project; the name is an abbreviation
of the Portuguese title: ‘Action Integrated Resource Management’. It was
created with the intention of improving the Bank’s management and
governance processes, and concerned a long and complicated process,
which is still underway and being carried out in stages. AGIR was structured
into nine programs: the Operational Risk Program; the Management and
Accompaniment Program; the Acquisitions Program; the Breakdown of
Processes Program; the Architecture of Information Technology Program;
the Infrastructure Program; the Market Applications Program; the Developed
Applications Program; and the Data Migration Program.
As well as centralizing all the processes and information, AGIR will
facilitate access to the growing volume of data stored in the various
divisions of the BNDES. At the end of the project there will be better
integration between all the areas and the Bank’s operations will operate
more smoothly. As such, the BNDES will be better prepared to accompany
its own fast rate of growth.
We are active
The idea of the project was to computerize the BNDES as a whole. We have
a number of very good systems that have been developed by the Bank’s
employees. Within the staff, there are analysts, and they developed several
systems. However, these systems do not communicate with each other; there
is no link between them and this is important for our work, because it makes
access to information much easier and minimizes certain errors that could occur.
This project gained momentum, and a bidding process was held. The object of
the bidding was to contract an integrated process management system. People
from many different divisions of the Bank are working on the AGIR Project. Many
of them I already knew through contact I had made connected to the bidding
process; each one is focused on their own scope of work. When the tool is up and
running, we will be able to interact in a much more practical way. Today, this very
often involves knowing people personally: “Oh, you want to know about such
and such a piece of information? Call so-and-so, because he works with that.”
“Oh, you’ve got a registration problem? Call this person or that person.” “You’ve
got a problem with the code on some job or other? Call Celinha [Célia Regina
Côrte-Real Carelli].” The idea is to be able to access the system and get that
information, even concerning accountancy, and even though you might not be
on the premises. This system will be very good for the Bank in terms of agility and
quality of work.
Mônica Gallardo Rey, attorney, interviewed in 2012
165
In March 2006, the BNDES gained a new president,
Demian Fiocca, with Guido Mantega leaving to go to the
Ministry of Finance. Fiocca, who had held the position
of vice-president at the Bank since 2005, continued
with the processes that were already underway. During
his administration, methodological changes were also
introduced in the operational policy, which was reinforced
by new programs in priority sectors: Financing for the
Electrical Energy Generation Program; Financial Support
for Investments in Railroads in the North and Northeast
Program; and the Railroad Logistics Bottlenecks Program.
In movement
The BNDES sought to finance projects with a multiplying
effect on economic and social development in regions,
such as the modernization of the Suape Industrial Port
Complex in Pernambuco state
Demian Fiocca, economist, interviewed in 2012
I stayed at the Bank for a year and a half, first as vicepresident, and then as president for a year. During the
first phase, we worked on encouraging the BNDES
Card, the restructuring of the Capitals Market division
and promotion of BNDESPAR. Large-scale projects
were boosted and we sought to establish more unity
within the staff at the BNDES. We revised our priorities.
This meant that we financed large-scale hydroelectric
plants, adopted larger amounts and longer loan terms;
we financed railroads with lower interest rates and
supported the capitals market and the area of capital
goods, where investments would radiate out to the
rest of the economy with a very low spread. We made
a change during this period of a year and a half when
Guido [Mantega] was in charge of the Bank, in the sense
of positioning the BNDES as a more forceful instrument
of support: lower interest rates, larger investments and
the like.
Much faster
Strategic
When I took over as president of the BNDES, I focused
more on management. The perception was still that
the Bank was very slow and bureaucratic; in terms of
performance, the Bank could be better. So I formed
a management committee with the Bank’s deputy
managing directors, coordinated by one who was directly
linked to me, to see how we could improve performance
and other things. Firstly, we measured the time the Bank
required to analyze an application. Another line of action,
let’s say, was to reduce bureaucracy. We needed to review
processes, to see where there were overlaps, and which
documents we did not need to request anymore. We
aimed to differentiate the types of projects. We managed
to do this: besides a new credit limit, previously, a normal
project would take ten months, but when I left, this had
dropped to seven months – including the most complex
of all. In the Export Division, we also simplified certain
procedures and reduced the time required for processing.
In 2006, the pharmaceutical area became a very
clear priority for the Bank, and it became a separate
department. The Bank had, and still has, a specific
program called PROFARMA, which is concerned with
increasing the industrial base in the manufacturing
of pharmaceuticals; it is strongly linked to the area of
technology and development on the frontier of applied
science. It is a strategic sector for the country, where the
volume of imports is enormous and where there is a
great effort being made to develop things domestically,
aggregate more production value, make those groups
that are producing here stronger, but keeping everything
connected with the Ministry of Health and a strategic
government effort.
Encouraging innovation and technology started
to gain ground at this time, with studies fostered to
create new incentive programs. Through until 2005,
the lines for research and development were restricted
to specific programs, such as the Development of the
Programa de Apoio ao Desenvolvimento da Cadeia
Produtiva Farmacêutica (PROFARMA – Pharmaceutical
Production Sector Support Fund) and the Programa para
o Desenvolvimento da Indústria Nacional de Software e
Serviços Correlatos (PROSOFT – National Software and
Related Services Development Program).
The BNDES increased its support for investments
with more capacity for technological innovation,
recognizing that this represented a new growth frontier.
Based upon this realization, the Bank expanded its
concept of innovation. In 2006, FUNTEC was refined
to support projects that would stimulate technological
development and innovation in areas of strategic
interest, such as renewable energies, the environment
and health, in accordance with the programs and public
policies of the federal government.
167
Accelerating growth
[Lula’s second administration]
D
uring the 2006 election campaign, opinion polls continually showed the
public’s approval of Lula and, during the second round in the election, he
defeated the Social Democrat Party (PSDB)’s candidate Geraldo Alckmin.
The emphasis given to social programs, especially the Family Assistance program,
and an intensive policy for social inclusion helped guarantee Lula’s reelection.
Henrique Meirelles remained at the Central Bank and Guido Mantega at the
Ministry of Finance.
Contrary to the start of the first term, the foreign scenario was extremely
favorable. Since 2004, optimism created by a new cycle of global growth ended up
propelling trade throughout almost the entire world. In Brazil, there were no longer
any doubts concerning the stabilization of the domestic economy. The increase in
demand and commodity prices on the international market, largely due to growth
in China, stimulated the Brazilian economy even more.
Brazil was more stable, globalized and competitive. With all accounts up to
date, Lula decided to take advantage of the moment and reinforce the role of the
State in search of development, launching the Growth Acceleration Program (PAC),
which planned investments of around 504 billion reais between 2007 and 2010, in
the areas of transport and logistics, energy and social infrastructure. With projects
scattered throughout the country, the PAC also fostered job creation and boosted
employment in general across the country.
For Brazil to be able to enjoy accelerated and, above all, sustainable growth,
the federal government sought to involve the private sector. Public-private
partnerships would guarantee more investments and the success of the program.
This concentration of investments should, therefore, result in improved standards
of living for Brazilians.
In addition to the positive signs that the economy was sending out, other good
news helped transform the image of the country at this time. In 2007, Petrobras
announced that new oilfields had been found in the pre-salt layer off the coast of
São Paulo. The following year, new discoveries increased expectations concerning
future national reserves, with this news having global repercussions. Furthermore,
at the end of 2007, Brazil was chosen to host the 2014 World Cup soccer
championship.
168
Off-loading operation with the P-34
offshore platform, in the Jubarte oilfield,
in the Espírito Santo bay
New production
Starting to understand
The BNDES is a financier and its most important role is to try to help develop
the supply industry, involving all equipment and services, to also develop
exploration in the pre-salt area. Petrobras, obviously, has the greatest
challenge – an enormous technological job with very special conditions.
The BNDES started to assist Petrobras develop local suppliers and help other
concessionaires such as OGX etc. However, in the pre-salt area, the sole
operator within the chosen model is Petrobras. The BNDES took part, during
the early days, in discussions concerning the form the pre-salt exploration
model should take. The BNDES commissioned a study, which was published,
looking into the several exploration models. We discussed the Norwegian
model and that of country X, Y and the numerous options that existed. The
government chose the sharing model that is now in the development phase.
Whatever happens, the role of the Bank is to help develop industry. At the
time that I was in the Basic Inputs Division, we started to structure things
that had never been produced in Brazil before, such as drill ships. The naval
industry recovered, and we financed the implementation of shipyards to
build Brazilian platforms besides helping attract foreign investments with
possible technologies. This is the BNDES’ role: to help make things possible
through financing.
We were called in to finance the
stadiums for the World Cup, but
no one understood stadiums; we
had never financed a stadium. We
took the average costs and arrived
at the conclusion that, with all the
clearances, with all the security,
an arena that holds 45,000 people
could cost up to 550 million reais,
and we said: “Look, the Bank will
finance up to 400 million, which is
75% of the cost of the project.” When
someone goes and builds a stadium
that costs more than this, then it is
because this stadium is capable of
generating enough revenue to cover
construction costs.
Luiz Antônio do Souto Gonçalves;
engineer, interviewed in 2012
Roberto Zurli Machado, engineer, interviewed in 2012
169
Renewal to support development
[BNDES | 2007-2010]
W
hile still at the beginning of his second mandate, in 2007, Lula
invited Luciano Coutinho to be president of the BNDES. At this
time, the Bank also contributed to moving the federal government’s
development initiatives forward. During the implementation of the Growth
Acceleration Program (PAC), the Bank mainly participated in supporting the
energy and logistics sectors and helping draft and propose the Production
Development Policy.
To face the challenges associated with the growing demand for resources and
ensure that its operations ran efficiently, the BNDES moved ahead with its internal
changes. In 2007, the new management adopted a new operational model, aimed
at modifying procedures and speeding up project analyses.
170
Magnetic Levitation Train Project from
COPPE/UFRJ, under development at the
Superconductor Application Laboratory
(LASUP/COPPE/UFRJ)
Also in the area of internal processes, the BNDES continued with the
Integrated Resources Management Project (AGIR) and, as planned, finalized
its first phase (situation analysis and planning), allowing the second phase to
start, which established procurement and the acquisition of services, software
and equipment with a view to modernizing processes.
In 2007, the BNDES started developing new strategic planning, based on
the construction of reference scenarios for the world and for Brazil and their
possible impacts on the Bank. The studies also resulted in reformulating
the wording of the BNDES’ mission and its vision for the future. The Bank’s
mission is “to foster sustainable and competitive development in the Brazilian
economy, generating employment while reducing social and regional
inequalities.”
It is said that the best way to predict the future is to create it. At that time,
the BNDES looked ahead and decided that it should “to perform its duties as
the development bank of Brazil, an institution of excellence that is innovative
and proactive in light of the challenges in our society.”100 To do so, planning
defined 12 guidelines to help draft future strategic plans for the Bank’s
strategic divisions.
100 Cf. BNDES Activities Report 2007, p. 14.
Strategic Planning | 2009-2014 | Guidelines:
1. Expand total assets and strengthen the BNDES’ asset structure.
2. Operate in a wide-ranging manner, focused on each one of the Bank’s divisions.
3. Emphasize the expansion of production capacity and innovation; regional development and socio-environmental
development, based on an integrated approach to these issues; job creation; strengthening the management and
governance of Brazilian companies; and strengthening the international presence of Brazilian companies.
4. Prioritize investments in infrastructure and the socio-environmental development of areas surrounding projects.
5. Provide support for initiatives and investments to modernize institutions, companies and public agencies.
6. Provide support to formulate and implement government policies, including regulatory policies.
7. Strengthen relations with the National Congress, the providers of public institutional funds, and the banking
regulatory control and supervisory organs.
8. Develop, expand and diversify the sources of resources both in Brazil and abroad, in partnership with industry and
the capitals market.
9. Use financial instruments in an integrated manner, placing emphasis on variable income.
10. Improve the methodologies for management, assessment and pricing for the risk of projects and companies, using
banking prudence and the return/risk ration as a parameter to provide support to projects in sectors considered
strategic.
11. Implement integrated management for the Bank’s funds, processes and assets to meet the needs of each one of its
areas of activity, with the intensive use of new technologies.
12. Value people, fostering knowledge as well as the staff’s analytical and operational capacity.
171
Visions of the future
We moved into the planning process, constructing visions of the future, and
from there we came out with a number of strategic guidelines. We revived the
Planning Committee, of which the Board of Directors and the deputy managing
directors were part. We recreated the Management Committee, through which
the deputy managing directors attend to Bank management on a weekly basis,
and we started defining priorities that the Bank should pursue: infrastructure,
the areas surrounding large-scale projects, sustainability, innovation,
production capacity, micro and small companies. In these cases, the credit
conditions were better, and there was never a lack of funds for them.
Everyone taking part
Expanding spaces
This strategic planning that is in
effect is one of the most successful
in the Bank’s history, with employees
participating significantly.
The Department of Production Systems and Regional Development ended up
incorporating a number of the BNDES’ other strategic, transversal issues, such as
innovation and socio-environmental development. President Luciano Coutinho’s
idea was to expand the transversal vision and operations to the BNDES’
varied operational divisions in a more integrated, systematic and harmonized
manner. He felt that we could help significantly in the trans-sectorial vision that
some of the systems required. His idea also included a policy for gaps, not related
to people, nor to activities, but to political support for the less developed regions
in Brazil, where the BNDES’ activities faced more difficulty in to reaching. We
should be able to not repeat the same errors, which reinforce inequality, but rather
develop policies that, in a renewed way, manage to include players, regions and
activities in their agenda, which are generally excluded from it.
Gabriel Rangel Visconti, economist,
interviewed in 2012
Helena Maria Martins Lastres, economist, interviewed in 2012
FUNTEC supported the project which includes radio-frequency identification to track cattle, which is an
important innovative step forward for Brazil
172
Planning is needed
Since 2007, the Bank’s thinking has been notable for two
important aspects: one is to use each structuring project
as a development tool in that region, that territory – we
call this Analysis of the Surrounding Areas. A project is
an opportunity to bring social, environmental, relational
and political development to the people in that region.
And the other is to work on the gaps in public policy:
there are entire populations in this country that are not
even considered. And they are not in far off places. In
the “favelas” here, there is a significant policy gap. In
both these cases, the APLs [local production systems] are
strong operational tools. We often see a businessman
who wants to destroy his supplier, who wants to
eliminate his competitor so that he can make more. The
APL is the other way around. Instead of competition,
cooperation. And to cooperate it is necessary to plan.
Walsey de Assis Magalhães, economist, interviewed in 2012
United we stand
You can have a large company, but the main thing about
the local production system is to have a large number of
small and medium-sized businesses and, because you
have that cluster in a given sector, there is a production
system for underwear, for footwear. This kind of cluster
contributes to establishing certain research support
bodies focused on the sector. The proximity allows for
the creation of a production sector to possibly establish
a sector that meets those companies’ machinery needs.
You also manage to better develop a brand, because
there is a market there, so you can create a sort of
certificate of quality.
Fernando Pimentel Puga, economist, interviewed in 2012
The following year, the Bank’s operational activities
included: “innovation,” “socio-environmental” and
“regional and local development.” The new concepts
began to permeate throughout all of the BNDES’ efforts
and, above all, providing Brazil with more sustainability
and economic development.
It is important to stress that this set of changes
– structural, organizational and cultural – which
included modernizing processes, procedures and
systems, included the active collaboration of the
BNDES’ staff. Involving the Bank’s workforce
guaranteed more commitment to the planning
strategies that were adopted.
Modernizing management also meant more attention
to the BNDES’ institutional image, including adapting
the logo, which is synonymous with the development of
the country. A new management policy was created for
the brand, encompassing the Bank’s other brands and
products. The new management policy was designed to
ensure that these brands would be treated as strategic
assets and protected in a suitable fashion, due to the
heightened integration of the BNDES’ image.
In terms of structure, at the end of 2007, the Risk
Management Division (AGR) was created. The BNDES
has always been rather concerned about risk, as it
was one of the first Brazilian banks to develop its
own methodology for portfolio assessment. However,
management responsibilities were distributed across
a number of the Bank’s different divisions. Therefore,
when the regulations established within Basileia II
moved into effect, and with the intention of improving
risk management, the AGR was created.
Incentives for technological innovation received a
further boost in 2007 when the BNDES started to operate
the CRIATEC, a seed capital investment fund. This was
a pioneering fund for Brazil, designed for investments
in innovative emerging companies, with expectations
of high returns. CRIATEC’s financial assets of 100
million reais was established in partnership with the
Nordeste Bank, and the larger part – 80 million reais –
was provided by the BNDES. The fund invested in 36
companies, based on the analyses of regional managers
working in the innovation ecosystems in the states of
Santa Catarina, São Paulo, Rio de Janeiro, Minas Gerais,
Pernambuco, Ceará and Pará.
173
The companies supported by CRIATEC provided
solutions in several different sectors, such as
biotechnology, software, nanotechnology, new
materials, automation and microelectronics.
The challenge the fund faced was to work on the
development and insertion of these companies into
the market. The support provided was not restricted to
financial investment, as the companies in this portfolio
received support in different aspects of business,
including financial planning, hiring qualified executives
and structuring intellectual property strategies.101
At this time, the BNDES’ role became even more
focused on being an agent to foster innovation and
raise the country’s competitive edge. The incentive for
innovation spread to other areas, as well. A good example
was the increase in support for the production of clean
energy and the development of a bio-fuels industry.
What everyone wants
There is an enormous list of businesspeople wanting
money from CRIATEC. Approximately 1,800 companies
were registered with the fund [in four years], and of
these we invested in 36. Which of the sectors are going
to provide the most profitability for the portfolio? Within
the sectors, what are the best technologies? Within the
technologies, which are the best businesspeople? Which
of them have a vision that is in keeping with the fund?
This is a set of elements that needs to be addressed
satisfactorily. We invested in seven regions across the
country, although it was not possible to invest in all of
states: as these are very small companies, our managers
need to be there at the companies every week, helping
the owners, working late into the night and eating cold,
stale pizza with them.
Márcio Bernardo Spata, accountant, interviewed in 2012
Very first world
101 The fund’s period of investments came to an end in 2011, as the main focus
became the acceleration of sustainable growth for the companies in the
portfolio.
Two professors from the Federal University of São Carlos,
from the Optics Department in the Physics Institute,
founded a company and we financed it. It started
manufacturing optical instruments for ophthalmology,
eye exams, and lenses. In the end, we were financing
a lens project for a satellite that was going to perform
meteorological scans. It needed a special lens for a camera;
one of those that you see in science fiction movies, with
one of those guys all the way up there looking at the
number you’re dialing on your cell phone. This company
won the bid to manufacture the set of optics in this
satellite’s camera. This was very first world technology,
financed by the Bank. We went to see the company. And
they had a model: “The satellite will be like this, and our
camera will go in here.” It was state-of-the-art.
Claudio Cezar Carvalho de Almeida, systems analyst,
interviewed in 2012
174
The group of financed projects for sugar and alcohol
accounted for most of the investments made in the
sector in Brazil, which demonstrated the importance
of the BNDES in encouraging the increase in the offer
of bio-fuels in the country. With warnings abound
concerning the consequences of global warming, the
rising oil prices (which in 2008 reached record levels)
and the increase in the number of flex fuel vehicles
on Brazilian roads, the BNDES felt that it was time to
reinforce development efforts in this area.
An entire highway
Companies with intangible goods, in the area of
electronics and software, normally grow with the
support of capital, which is why [there is] the new line
of biotechnology. Professor [Antônio Barros de] Castro,
at the last lunch we had together, about three months
before he died, said: “Júlio, everything that is ‘bio’ is a
highway. You have to embrace this. It is bio-ethanol,
it is bio-chemicals, the whole transversal area of
biotechnology, in industry, in agribusiness.” This lesson
from Castro has already led to results in the Industrial
Division. We have managed to put together a program
which attracted more than fifty business plans from the
sugarcane energy sector, which provides ethanol, but can
also provide a wide range of products, and has opened up
a whole highway of bio-chemicals.
Júlio César Maciel Ramundo, economist, interviewed in 2012
The BNDES supported projects in alternative energy sources, such
as the Alto Alegre Power Plant, in Santo Inácio (PR), which produces
sugar and ethanol. The plant’s project also includes an electric
energy co-generation unit, with 35 MW of installed capacity
In 2006, the Department of Culture, Entertainment and
Tourism (DECULT) was created with the strategic mission
of developing a production sector for the cultural economy,
repositioning the BNDES’ activities in this area. To enhance
this new approach, the Programa de Apoio à Cadeia Produtiva
do Audiovisual (PROCULT – Audiovisual Production Sector
Support Program) and the Fundos de Financiamento à
Indústria Cinematográfica (FUNCINES – Cinema Industry
Financing Funds) were created. During 2007, projects were
supported in different segments in the audiovisual production
sector. As well as PROCULT the culture industry was provided
with support by means of other instruments, such as calls-tobid for cinema and collections, as well as the Historic Assets
Preservation Program.
Intangibles
I had some experiences with software companies, which are
companies that have intangible assets – their main asset is
their knowledge. In the case of software, it is the knowledge
of that system and in the case of the creative culture economy
it is even more fluid – it is the understanding of how to make
creative projects in the audiovisual area: films, music etc. They
are companies that do not fit into the way the BNDES is used
to working, financing and constructing a factory, a large-scale
project where the guarantee is the property itself, or the land
and the constructions that are built; this is the Bank’s traditional
model. In the case of companies based on intangibles, both
cutting-edge technology companies and creative economy
companies, what they have are people, creativity, knowledge of
how to do things, inspiration, art – basically a mixture of different
things. However, they have a lot of value and can generate
financial and development results.
Luciane Fernandes Gorgulho, economist, interviewed in 2012
175
Innovation
Natura is a Brazilian cosmetics company, created in 1969,
which has been developing both in Brazil and abroad.
Since 1997, it has received support from the BNDES for its
business and to expand its institutional headquarters, the
“Cajamar Area”, inaugurated in 2001.
The BNDES has played, plays and will continue to play a
substantial role for Natura. The company started in 1969.
I joined in 1995, and in 1997 the company decided to
expand its facilities. This was when we decided to contact
the BNDES directly and, since then, we have been building
a relationship that, in my view, is a winning one. We signed
the agreement to move ahead with the construction of the
Cajamar plant, which was inaugurated in 2001 and, from
then on, all our projects have been negotiated directly with
the Bank’s Industrial Division.
Inside a Natura factory
Marco Oliveira, Financial and Commercial director, Natura
At a later stage, the BNDES invited the company to help
implement the Innovation line of credit, as Marco Oliveira
explains:
For us, it was very rewarding because when the
BNDES opted for this strategy, encouraged by the federal
government, via Luciano Coutinho, we were invited to take
part in a special forum to develop this line of innovation.
We even participated in the concept of innovation, whose
wording refers to the Oslo manual. There is a fine line
concerning what innovation is and what it is not. However,
together with the BNDES, we developed it. If we were not
the first, we were certainly one of the first to effectively
contract the Innovative Capital line of credit, and this was
in 2007. Another very interesting aspect is that we posted
gains in terms of concept because the Bank understood
that, in terms of innovation, I would necessarily provide
the innovative effort, because quite often, what you had
in the market were very specific projects. I will give you a
practical example: in pharmaceuticals, for example, I am
going to develop medicine to cure a certain illness. There is
a great deal of motivation and the company develops the
medicine, but in the case of Natura, which has a significant
marketing appeal, there is a project and within months
this project might become unfeasible from a marketing
perspective, but this does not mean that I have not been
innovative. And the Bank accepted this as a concept,
because the innovative effort is what is worthwhile, and
not necessarily the innovation in itself. This totally shifted
the paradigm.
176
Natura is currently expanding, preparing the international
commercialization of its products:
Today, we are undergoing a real revolution in terms
of our commercial models, which is CRM [Customer
Relations Management], and we need to reinvent the
model, but avoiding conflict with our model of direct
sales, with our army of 1,400,000 sales consultants,
so we have important projects to develop this model
that involve including information and communication
technologies to optimize the channel. It is not about
salvaging, but rather optimizing to continue our growth
curve. I think that the BNDES can help a great deal in
this process, as well as in our internationalization. I know
that the BNDES cannot provide support for anything
abroad, but I also believe that the Bank will understand
that what is involved in a multinational with Brazilian
headquarters located in Brazil. We already have five
operations established in what we call the Latin block, in
Mexico, Chile, Peru, Argentina and Colombia. These are
commercial operations with results that are not nearly as
expressive as revenue in Brazil, but they have perspectives
for growth. Furthermore, we have a technology center in
France and, for us, it is a sort of laboratory because that is
the Mecca of world cosmetics.
Marco Oliveira, Financial and Commercial director, Natura
A setback in the way
[Lula’s second administration]
I
n 2008, until the third quarter, the economy continued to grow at an
accelerated rate, led by investment and household consumer spending.
The robust cycle that strengthened the domestic market and expanded the
manufacturing capacity of the Brazilian economy reached its peak. In September,
this cycle was interrupted by a serious international financial crisis that affected
virtually every economy.
The crisis began in the aftermath of the collapse of the system linked to subprimes102 in the United States, when a number of banks went bankrupt. The crisis
quickly spread to other countries. Companies the world over were obliged to cut
expenses and personnel, causing unemployment rates to explode, especially
in western countries. Globalization clearly showed its other side. Projections
for 2009 were gloomy for both rich and developing countries. The World Bank
predicted a downturn in international trade, and the IMF estimated world growth
of around 2%.
Brazil also felt the effects of this crisis. There was a drop in GDP, and a certain
decline in the domestic economy. Despite these effects, Brazil was one of the
countries that was least affected by the crisis, managing to preserve its reserves
(approximately 200 billion dollars), while several countries saw theirs fall. The
federal government reacted quickly and organized itself to make resources
available, seeking to maintain internal investments. National banks had no
problems, and the financial system was left unaffected.
It should also be mentioned that strengthening the domestic market over the
years prior to the crisis also helped Brazil cope with this critical period. With
falling poverty and the growth of a more robust middle class, the so-called
Class C (lower middle class), the country’s consumer market continued to
openly expand, even after the crisis had erupted. Poverty rates also continued
to drop in 2008.
102 Mortgage loans considered high-risk and which, as a result, have higher interest rates. In the USA,
approximately 25% of mortgages are considered subprime.
177
Social inclusion advanced even further in 2008. The Family Assistance
Program reached 11 million homes, meaning benefits for more than forty
million people. The minimum salary increased by an average of 8.4% per
year between 2006 and 2008, well over GDP’s average annual growth.
In March 2010, Lula launched the PAC 2, with expected investments of
1.59 trillion reais between 2011 and 2014. The focus of the program was on
those areas of high social sensitivity, such as enterprises connected with
housing and health. The measures adopted by the federal government
were reflected in a rise in GDP to a rate of 7.5% in 2010. The internal
market was the main engine behind this recovery, compensating for
the fall in foreign demand. The recovery of investment was even more
impressive, with an increase of 21.8% in relation to 2009, returning to the
levels attained before the crisis.
Between 2007 and 2010, the country made a number of significant
advances: GDP grew at an average of 4.6% and approximately eight million
new registered jobs were created. Employment growth was most noticeable
in the highways and railways sectors, where it was almost five times higher
than the national average. The sectors of civil construction and sanitation
also performed very well, becoming three times larger, and energy
generation and distribution sector came in third.
The recovery of planning in the infrastructure area is also worthy of
mention, with new structuring investments in areas that had long been
abandoned. A stronger partnership between states and municipalities
contributed to these good results. There was also better dialogue between
the federal government and other entities of the federation to select
sanitation and housing projects.
Another important point was the increase in the number of partnerships
between the public sector and private investors, registered in highway,
railroad, electrical energy and irrigation concessions. Increases were also
posted in the contracting of services in the oil sector, in port dredging, and
in the sanitation and housing segments.
178
Constructing the future
[BNDES | 2008-2010]
F
or the BNDES, 2008 was especially noteworthy, with several challenges, but also
many achievements and innovations. The Bank’s performance was astonishing,
with disbursements registering at a sum 42% higher than that registered in 2007,
and releases growing steadily throughout the year. Investments financed by the BNDES
were associated with creating and maintaining 2.8 million jobs.
The activity of the BNDES and other publicly-owned banks, such as the Federal
Savings Bank and the Bank of Brazil, was extremely important during the worldwide
financial crisis in 2008, assisting the federal government and reducing the effects
on the Brazilian economy. The BNDES operated in partnership with other spheres of
government to maintain the expanding path of investment. Among the initiatives, of
special note is support for the PAC, which was of fundamental importance, during the
crisis, in guaranteeing jobs and income for thousands of people, and, in turn, keeping
the economy operational.
For our beloved Brazil
At the start of our government, we had a certain amount of difficulty in working
with a development bank of this magnitude, because we had very few resources
and very limited experience. It was when the 2008 crisis came along that we took a
giant leap forward, injecting 180 billion reais to definitively boost the BNDES. It was
thus transformed into this extraordinary bank, much larger than the World Bank. The
BNDES grew fourfold since I started in government. Today, we have a robust bank,
with the capacity to raise funds, to invest, that thinks of large companies, that thinks
of small companies, that thinks of social mobility, that thinks of paper waste pickers.
In other words, the BNDES is truly contributing in a decisive manner to boosting the
development of our beloved Brazil.
Luiz Inácio Lula da Silva, President of the Republic between 2003 and 2010, interviewed in 2012
The world stopped
When the Lehman Brothers Bank went broke and the international crisis started, on
September 15, 2008, the world stopped, the world credit system stopped. I went to the
United States to hear about it from the inside. I attended a meeting of bankers and I
was absolutely stupefied by the seriousness of the crisis. I realized that, if we in Brazil
could not manage to counter-balance the enormous credit crunch within the system, we
would be taking Brazil into a long and very serious recession. On my return, I, together
with my Board of Directors, started to take a number of immediate measures: expand
the line of export credit and increase lines for working capital, but we had the problem
of a lack of resources. We ended 2008 with a low cash flow.
Luciano Galvão Coutinho, economist, interviewed in 2012
179
Loans are not donations
Why didn’t it stop?
During euphoric and optimistic times, private Banks accelerate
their lending at a much greater speed than the BNDES. During
periods of more uncertainty they understandably retract
much more than the BNDES. Those who have the National
Treasury as their boss, we say have got broad shoulders, and
can think in the long term. When the Lehman Brothers crisis
hit, the speed private credit was made available was greater
than earmarked credit and than that of the BNDES. And it was
moving, at that time, I think more than 25% from the private
sector and a little less than 25% from public banks. But then
the crisis came along and the private banks credit expansion
was a mere 3%. At public banks, which was between 20% and
25%, it rose to between 25% and 30%. And look! Europe and
the United States spent the money. The Treasury lent money to
the BNDES. This was a very long-term loan it was almost as if
it were an equity loan. But the BNDES loaned the money; it did
not give it to companies. And it is returned with interest that
pays for the costs, and a little profit.
The Bank’s budget started to grow with the economy
in 2006, 2007. When the crisis came along, the Bank’s
budget continued to grow. The Bank moved up to the
next level at that time. It had to function and sustain
the economy strategically so that companies would not
suffer more than they were already, as they had taken a
severe hit at that time. Even the American government
at that time was quite interested in understanding how
Brazil had managed to get out of this.
Behind it…
From September 2008 to September 2009, private credit
grew from a position of 100 to 110, meaning 10%, and
public bank credit rose 70%. The BNDES is probably
responsible for two thirds of this growth, effectively feeding
the economy.
The Bank’s investments related to the PAC were made
in areas considered a priority for the institution, such as
infrastructure and social inclusion. At that time, there
were 287 projects underway in these areas. Of this total,
some 113 focused on energy infrastructure; 104 on logistics
infrastructure; 55 on social and urban infrastructure; and 15
on public administration, specifically designed to finance
the implementation of the Public Digital Bookkeeping
System.103 To do so, the BNDES established a potential
portfolio of projects valued at 93.7 billion reais, which
represented a “boost” in investment of 181 billion reais.
103 Instituted by Decree Nº. 6,022, of January 22, 2007, the Public Digital
Bookkeeping System (SPED) is part of the federal government’s Growth
Acceleration Program (PAC 2007-2010) and represents another step forward in
digitalizing the relationship between the tax authorities and the tax payers. Cf.
<http://www1.receita.fazenda.gov.br/sobre-o-projeto/apresentacao.htm>.
180
Wagner Bittencourt de Oliveira, engineer, interviewed in 2012
Construction of the Jirau Hydroelectric Plant (RO)
The year 2008 was also noteworthy due to internal changes that altered the
profile of the BNDES, the result of strategic planning that started in 2007. To
accompany the pace of expansion, the BNDES developed and approved its 20092014 Corporate Planning. This plan established significant modifications in the
Bank’s organizational structure, including the creation of a board of directors
focusing on corporate management to better integrate those issues related to its
staff. As such, the new Board of Directors was responsible for the new Human
Resources Division, for the Information Technology and Processes Division, and for
AGIR project.
It is worth highlighting that the BNDES began a period of generational
transition, with the renewal of one third of its staff. The initiative to revise its
human resources policy was also compatible with this period. A large number of
new technicians came into the Bank, bringing new understandings and abilities
with them, which needed to be added to those already developed by the institution.
The BNDES considers that its human capital is one of its most valuable assets.
The new human resources policy thus started stimulating even further development
of corporate skills, behavior and techniques, as well as skills needed to perform
activities well and efficiently, continuing to foster efforts to retain and improve the
BNDES’ intellectual capital.
Engagement
The Bank’s budget had been growing outrageously each year, by approximately
20%, 25%, and this meant that people needed to be hired. When the Bank had a
budget of R$ 10 billion per year, it had 1,800 people. Today, the Bank has a budget
of approximately R$ 15 billion and 2,700 people. Proportionally, there has not been
a substantial increase in the number of people, but this is due to the development
of technology. Half of the employees have been here for less than five years, in an
institution that is going to celebrate its sixtieth anniversary. I would go so far as to
say that a third have been here for less than three years.
Carlos Roberto Lopes Haude, attorney, interviewed in 2012
New workforce
The growth of the Bank brought with it a considerable challenge, which is, at the
same time, knowing how to preserve the BNDES’ core values, being able to bring in a
new, skilled and committed work force – a new energy that was arriving at the Bank.
I think that the Bank has been able to deal with this quite well.
Marcelo Porteiro Cardoso, administrator, interviewed in 2012
181
Another measure established in the Strategic Planning was to expand and
improve its activity in the capitals market, which gave rise to a specific area to
take care of shareholdings in small and medium-sized companies.
At the end of 2008, another important area was created: the International
Division (AINT). The BNDES’ support for exports and the internationalization
of Brazilian companies had grown a great deal over the previous few years.
AINT was also responsible for raising funds abroad and for structuring
funds focused on the internationalization of the Brazilian economy. As such,
the Bank’s internationalization was planned with a view to the growth of
Brazilian companies and an increase in Brazil’s presence abroad.
Taking care of small matters
The same the world over
If accounting information is the tool
to be used to make a decision, there
is no reason to spend enormous
amounts transforming your
accounting system into one from
another country when you are going
to do business in here. Information
has to be dealt with the same way
the world over. So, as of 2006, we
started to help the Central Bank
and the Securities and Exchange
Commission in Brazil’s migration to
the new international standard called
the International Financial Reporting
Standards (IFRS). Accounting
information has the power to cause
serious damages to capitals market. If
the quality of the information is good
and transparent, investors are always
aware of the risks that they are
assuming and they manage to protect
themselves better.
Vânia Maria da Costa Borgerth,
accountant, interviewed in 2012
182
The Social Division had to take care of the small matters, the poor and urban
infrastructure. Urban infrastructure skyrocketed in terms of volume, and
the area supporting low-income economic activity started to grow. Another
department was created to resolve a long-standing problem from the past
involving agricultural credit, and it seemed sensible to bring this low-income
activity in and create a division for agriculture and social inclusion. So it was
divided up like this: the Social Inclusion Division became the Social Infrastructure
Division, which only supports improvements in public management, sanitation,
urban subways systems, and the construction of hospitals and schools. And
the Agriculture, Cattle-Raising & Social Inclusion Division was constructed to
support low-income activity in both rural areas and the city, using credit, such
as PRONAF and Microcredit, and using non-reimbursable resources, such as that
from the Amazon Fund and the Social Fund. This is the division that provides
support to eradicate poverty, from the point of view of production insertion. It
is a story that is yet to be put together. The very fact that it exists shows that
the BNDES has made extraordinary advances. The Environmental Division has
come here, because the discussion as a whole is not just about preservation,
it is not just about financing knowledge structures to follow others, to see
where deforestation is taking place, but it is also about building alternatives for
sustainable economic activities, about management and much more.
Elvio Lima Gaspar, engineer, interviewed in 2012
AINT was structured to include branches of the
BNDES abroad. Initially, the Bank established a
representative in the Mercosur countries, opening an
office in Montevideo, in Uruguay. Shortly afterwards,
a subsidiary was founded in London, in the form of a
holding company with no financial activities.
Another result of the planning process was to update
the Code of Ethics, with a view to improving the Bank’s
interaction with Brazilian society. A new social clause
was adopted which raises red flags on financing for
projects that are detrimental to the development of
Brazil. In addition, the Transparent BNDES Project was
created, highlighting the value of transparency in its
activities and increasing the amount of information on
financed projects available on the Bank’s website.
Transparency
I do not know of a bank that is more transparent than
the BNDES. I have dealt with the IDB and the World
Bank, and there is not one that provides society with as
much information as the BNDES does. Furthermore, the
people are very receptive, trying to help, seeking to be
clear in their information and on how to make operations
feasible so that they really happen. It is a bank that that
has excellent technical staff, has a very cooperative way
of working in all senses of the term, both internally and
with the companies that turn to the Bank for help. It is
not a bureaucratic bank that says: “These are the rules
and that is that.” The BNDES tries to find ways for good
projects to move ahead, but it does not say “yes” to
everything, because you just cannot do everything.
Maria Isabel Rezende Aboim, economist, interviewed in 2012
Also as part of this process, in 2009, the BNDES
added a declaration of values to its bylaws, in which it
reaffirms its commitment to ethics, to developing the
country, to the interests of Brazilian society (the public
spirit) and excellence, involving technical proficiency
and applied knowledge.
The positive results from 2008 were repeated the
following year. In 2009, for the first time, the Bank’s
disbursements broke the three digit barrier, reaching
137.4 billion reais, a record surpassing the previous year
by 49%.
The BNDES continued as the PAC’s main financial
agent. In 2009, the Infrastructure Division accounted
for 36% of the total amount disbursed. Efforts designed
to reduce regional inequalities were also expanded.
Those earmarked for the North and Northeastern regions
represented 24% of the total number of disbursements.
In relation to 2008, growth rates were 126% for the North
and 189% for the Northeast.
A serious solution
Over the last ten years, there has been a change in the
way we look at the Northeast, in the sense that it is
now seen as a solution rather than a problem. There
is a serious industrial area on the move in Recife at
the Suape Port. There are enormous enterprises there,
with a 25-billion-real refinery, a shipyard worth billions,
the Suape petrochemicals plant manufacturing PET
products for bottles, and the textile thread sector, which
has an effect on the country’s entire synthetic clothes
manufacturing industry, to lighten the dependence on
textile imports from China.
Fernando Castilhos de Araújo Galindo Felix, administrator,
interviewed in 2012
183
Practically every sector registered growth. Another
highlight was the Bank’s efforts as an important
provider of resources for micro, small and mediumsized companies, especially through BNDES Automatic
and the BNDES Card. In 2010, this sector continued
to expand. Investments for this and for individuals
increased 91%, totaling 45.7 billion reais. This sum
accounted for 27% of the BNDES’ total releases that year.
Of the 610,000 or so financing operations performed by
the Bank in 2010, some 93% were earmarked for MSMEs.
Particularly noteworthy was the enormous increase
in disbursements via the BNDES Card, which was
established as a genuine instrument for democratizing
credit. In 2008, the total amount of disbursements
provided via the card was 846 million reais; in 2010, the
amount had risen to 4.3 billion reais, while the number of
operations reached more than 320,000.
Within such renovation, culture was not left behind
and was treated as a means to boosting Brazil’s
sustainable development. The cultural economy is a
strategic and dynamic sector, with its activities creating
work, jobs and income, besides providing opportunities
for social inclusion to young people and minorities.
In 2008, to help encourage this sector even more, the
BNDES created the Cultural Fund, which expanded
support for sectors defined as a priority: historical
heritage and collections; the integration of tourism and
culture; music; and animation.
The series “Meu Amigãozão” by Andrés Lieben, from the 2DLab production
company. The BNDES supported the production of the children’s animation series
through the Support Program for the Audiovisual Production Sector
184
Expanding the vision
The PAC also sought investments in the work of local
production arrangements. From there, it resumed a
territorial vision that gradually became more and more
far-reaching. Its importance was evident in its ability to
shift the paradigm from a vision of development – or
macro-economics – that was purely sectorial to a vision
of territory as a place for development, where things
take place, where people live, where the results of
development must be found and not just a place to insert
infrastructure. So you are constructing a hydroelectric
plant that will bring energy to the South-Southeast, but
what about the people from there? What is going to
happen to them? What sorts of opportunities exist in
that region?
In June 2009, the Bank launched the Programa de
Sustentação do Investimento (Investment Maintenance
Program), the BNDES-PSI, aimed at providing support
in the struggle against the effects of the world financial
crisis. At the end of 2010, the effects of the crisis had
been significantly subdued. General calculations show
that the stock of the Bank’s portfolio related to the PSI
reached 124.5 billion reais, with 75% of the total portfolio
earmarked for the capital goods sector, to finance not
only buses and trucks, but also the purchase of other
capital goods for other sectors.
The BNDES’ results continued along this path of
excellence. In 2010, disbursements were even higher,
with an increase of 22.6% against 2009.
Only with them
There is that tale that the BNDES is a bank for large-scale
business, but this is a fallacy. In 2011, we performed
almost 900,000 operations just with micro, small and
medium-sized companies – approximately 96% of our
operations. We also broke a record when 36% of the
disbursements went to this sector.
Simone Carvalho Mesquita, administrator, interviewed in 2012
A watershed
I went to President Lula and had the opportunity to
say: “President, if we do not eliminate this uncertainty
concerning the BNDES’ capacity to operate affirmatively
with the private sector, showing that we have the
capacity to expand, to sustain the recovery of the
economy, we will have no credibility.” So the President
made a decision: “Let’s organize a large-scale loan
and announce it.” The confidence in our responsibility
that we gained form this large amount of resources to
counterbalance the crisis was a watershed, and it was
very important. In 2009, we battled, we worked hard, and
we anxiously followed the development of the economy,
the battle to sustain the level of employment, to prevent
employment from dropping and taking the economy into
a recessional tailspin. We saw minister Dilma’s anxiety,
with the tremendous effort she had to make to get the
PAC projects underway, and keep them up and running,
the work to create the Minha Casa, Minha Vida (My
Home, My Life) program, to create urban employment, to
reactivate construction… And we strove to boost industry,
services and infrastructure. It was a very tense period,
and it demanded a lot of work. The Bank’s best talents
were, in part, dedicated in teams to confront the crisis. In
the second half of 2009, company confidence was already
returning and we launched an essential program: the
Programa de Sustentação do Investimento [Investment
Maintenance Program].
185
The BNDES and socio-environmental
development
I
n Brazil, the BNDES was a pioneering institution in the defense of the
environment. Its first efforts in this area date back to the 1970s, when a new
global awareness concerning environmental conservation started to take shape.
The first warnings concerning the need for more attention in the environmental
area were sounded in 1972, with the Stockholm Conference, where this issue was
established at a global level, with the objective to establish public policies. That
same year, a report entitled “The Limits of Growth”, from the so-called Rome
Club,104 suggested a crucial problem in relating demographic growth, natural
resources, energy, pollution, sanitation, the environment and technology.
At that time, conclusions heralded a troubling future for humanity if the model
of global consumption were to continue at the rate that was taking place. The
publication of this report, which sold 30 million copies, helped awaken public
attention over the importance of preserving the environment. Since then, the
issue has attracted followers and won a number of victories.
The BNDES has a long history linked to this issue. From 1976 on, the Bank
started to formally consider the environmental variable in its analysis procedures
and the concession of credit. With the institution of the National Environmental
Policy, in 1981, contracting an operation included the environmental compliance
of the enterprise and the project in question.
In the 1980s, following exchange programs with the World Bank and other
international organizations, the BNDES intensified its involvement in the
environmental issue, creating a specific line to support industrial projects to
conserve and recover the environment. In 1984, the Bank created the Programa
de Conservação do Meio Ambiente (CONSERVE – Environmental Conservation
Program), with lines of credit to control pollution, which started to be used in the
Cubatão industrial complex and in treating effluents from the pig farming industry
in the Southern Region.
104 The Rome Club is the name given to a group of scientists, economists, industrialists, businessmen and
government employees from 53 countries who felt the need to reflect upon the complex problems involving
industrialized and developing societies. The group was the brainchild of Aurelio Peccei, a member of the Fiat
Advisory Board, and King Alexander, a Scottish scientist, former director of the Organization for Economic
Cooperation and Development. The name is linked to its first meeting in Rome, at the Accademia dei Lincei, on
April 8, 1968.
186
Waste Treatment Center, Itu (SP). Since
2002, the BNDES has supported projects
with alternative solutions for the disposal,
treatment, recycling and reuse of waste, with
a view to improving the standards of living for
urban populations
In 1992, the BNDES took part in the United Nations Conference on Environment
and Development, better known as Rio 92, to sign and implement the Green
Protocol, a federal government initiative for federal banks to incorporate the
environmental variable. As such, the BNDES helped extend its own experience
concerning environmental issues to the other banks.
It is worth highlighting that, also at this time, the BNDES was a signatory of the
United Nations Environment Program (PNUMA)’s Charter of Bank’s Principles for
Sustainable Development, and became a member of the directing committee of the
PNUMA initiative for the international financial sector which included membership
of more than 200 banks from across the five continents.
In 1999, it was the tenth anniversary of the formal support for the sustainable
development cause. Up until that point, the Bank had provided approximately five
billion dollars in financing for investments in the environmental area, a sum which
represented around 6% of the BNDES’ investments in this ten-year period.
Accompanying international environmental management trends, the BNDES has
supported the modernization of several industries, with effective environmental
benefits, including the substitution of wood pulp bleaching, taking advantage of
coke oven gas to generate electricity, the optimization of petrochemical processes,
and the environmental certification of companies in this sector.
187
Over these years, the BNDES has increased its efforts
related to the environmental cause. In 2003, the BNDES
published new socio-environmental guides, with criteria
and directives to guide the projects receiving support.
Over the following years, the Bank’s attention to this
area was increased by adopting new procedures and
programs. In 2006, the Bank’s environmental policy was
reformulated, and the main initiatives consist of creating
an Environmental Line as part of the Programa de Apoio
a Projetos de Eficiência Energética (PROESCO – Electrical
Efficiency Projects Support Program), designed for energy
conservation service companies.
Currently, the Amazon Fund, created by means of Decree
Nº. 6,527, of August 1, 2008, is being administrated by the
BNDES which has taken responsibility for raising funds,
as well as contracting and monitoring supported projects,
such as: control of forests and protected areas; recovery
of deforested areas, and; economic activities based on the
sustainable use of the forest, among others.
In 2008, in keeping with its commitment to sustainable
development, the BNDES took another important step
towards improving its initiatives designed to influence the
protection of the environment by creating the Environmental
Division (AMA). Previously, these efforts had been
concentrated in the Planning Division, but the new division
was made responsible for managing the Amazon Fund.
During its first year, AMA was responsible for two
important initiatives: the first was the launch of the
Programa BNDES Mata Atlântica (BNDES Atlantic
Rainforest Program), designed to support efforts to combat
deforestation of the forests and reforestation with native
species, through non-reimbursable investments.
Good news
The Bank was presented with the challenge of managing the
Amazon Fund, in partnership with Norway, which provided the
Bank one billion dollars to promote sustainable development
in the Amazon and program a series of efforts to reduce
deforestation. This has been an amazing and innovative
experience that is going according to plan and provides the
Bank with enormous visibility. The whole world is watching
the Amazon Fund. Normally, a fund of this type has a period
in which it is studied and structured, but the Amazon Fund
jumped straight into the water on the first day. There are
advantages and disadvantages to this process, but it is
something that is going really well.
Sergio Eduardo Weguelin Vieira, economist, interviewed in 2012
188
The BNDES manages the Amazon Fund, which aims to
attract donations to invest in preventative and monitoring
efforts, as well as those designed to combat deforestation,
while fostering conservation and the sustainable use of the
forests in the Amazon Biome
Looking towards the future
The second initiative was to sign the Protocol of
Intentions for Socio-Environmental Responsibility,
together with the Ministry of the Environment, the
Federal Savings Bank, the Bank of Brazil, the Banco da
Amazônia (Amazonia Bank) and Northeastern Bank. In
this document, all the entities acknowledge their role
in creating sustainable development and state their
intention to undertake bank policies and practices
that are pioneering and demonstrative, that have a
multiplying effect, or which are exemplary in terms of
socio-environmental responsibility.
In 2009, AMA organized an update of the
Environmental Procedures Guides, originally published
in 2003, but now called Guides for Socio-Environmental
Procedures. The new guides represent a step forward
in this issue at the BNDES. This is because, as well as
the traditional role of technical support for analysis
and follow-up, they are important instruments in
establishing sectorial policies. This is made possible by
identifying the socio-environmental risks and impacts,
by mapping the socio-environmental aspects of the
sector, and by defining the criteria and directives to
provide support for projects.
In 2010, the BNDES formalized its Social and
Environmental Responsibility Policy (RSA), aiming to
develop and improve financial products, methodologies
and other instruments that incorporate socioenvironmental criteria and contribute to local and
regional sustainable development. The Bank began to
monitor and assess the socio-environmental impacts
and results generated by the BNDES itself and by the
activities that it supports financially.
The BNDES is obliged to have one “foot” in the present,
and another “foot” carrying the Bank’s work that is
different and differentiated to what is done elsewhere.
Our struggle for innovation, at the moment, is along
these lines. The BNDES can finance companies normally,
but has to somehow encourage innovation that is so
important for us to be able to change the face of our
country. This is the Bank’s challenge. The BNDES has to
have a challenge; it can finance whoever it wants within
the economy on a daily basis, but it has to have an eye on
the future. I remember that, in 1986, an Environmental
Department was created to address sustainability.
The projects had to look at the environmental issue.
At the time, this was preposterous. Now, we have
an Environmental Division and no one questions its
importance any more. How many years ahead of its
time was the BNDES? Twenty, thirty years ahead? It
is important. This is our main challenge as a financial
institution, as a development bank. You work in 2012, but
you have to have one “foot” here and the other in 2025.
You have to be thinking about how things are going to be
for the economy, for life in Brazil, what Brazil needs and
to see what you can do. If you only look at today, you miss
the opportunities we have as a development bank.
Gil Bernardo Borges Leal, economist, interviewed in 2012
Golden-lion-tamarin monkey at the Poço das Antas Biological Reserve
in Silva Jardim (RJ). Through the “BNDES Mata Atlântica”, the Bank
supports efforts designed to conserve the biodiversity of the Atlantica
Rainforest, the natural habitat of endangered primate species
189
The path to sustainable growth
[The Dilma Rousseff administration]
I
n the 2010 presidential elections, Lula managed to ensure that the candidate,
his former minister of Mines and Energy and Chief of Staff, Dilma Rouseff was
successful in her first attempt at the polls. It was also the first time a woman
had taken the position of President of the Republic of Brazil.
Dilma took office in January 2011, promising to continue the efforts made in the
Lula government, with an emphasis on two central policies: ridding the country
of poverty and continuing with the cycle of growth, which, in practice, meant
maintaining social programs and the PAC. She also committed to maintaining
economic stability. She kept Guido Mantega at the Ministry of Finance. To preside
over the Central Bank, she nominated Alexandre Tombini, who had been a
member of the institution’s Board of Directors since 2005. And she confirmed
Luciano Coutinho as president of the BNDES.
One of her first measures was to increase the interest rate in an attempt to
prevent inflation reaching uncomfortable levels, and thus prevent compliance
with the target established by the National Monetary Council (CMN) for 2011.
Following this came cuts in the federal government’s budget, meaning a reduction
in the order of 36.2 billion reais. The government justified the cuts as a means to
combating the pressures of inflation and easing the basic interest rate.
Throughout 2011, inflation was kept under control, remaining within the goal
of 4.5%, and GDP grew by 2.7%. The domestic market remained buoyant, allowing
the creation of two million jobs. Inequality continued on its downward curve.
Monetary stability, the renewal of investment and growth, the recovery of
employment, the real gains in salaries, and the drastic fall in poverty were
favorable for the country to start taking bolder steps in its development. It was
within this context, in 2011, that the federal government launched “A Better Brazil
Plan” (Brasil Maior), which defined the industrial, technological and foreign trade
policies for the coming years.
The plan was one more instrument to strengthen Brazil’s sustainable and
inclusive growth within a complicated global context, and help the country
to overcome the international crisis more securely. To do so, the plan defined
innovation and the expansion of Brazil’s industrial culture as the focus. The idea
was to mobilize the country’s production strengths to innovate, compete and grow
even more to achieve a better position in the world economy.
190
On April 2, 2011, the O Estado de S. Paulo
newspaper carried this report on the federal
government’s anti-poverty plan which
prioritized access to water for the poorest
sector of society
The issue of the moment
The priority issue in the Industrial Division is innovation
because Brazil’s list of exports is heavily concentrated
on commodities. Brazil’s exports of high technology
products are not thriving. Amid world competition, I need
to be a more productive, innovative country, producing
goods with more technology, but more efficiently, with
innovation; cheaper goods with distinct features.
Mauricio dos Santos Neves, engineer, interviewed in 2012
During the first year of Dilma government’s, higher
levels of approval were recorded than during Lula and
FHC’s first mandates. Other good news at the same time
came from a British research institute, published in the
London press: Brazil was now the sixth largest economy
in the world, overtaking the United Kingdom.
The Brazilian government also moved forward
defining concessions and public-private partnerships in
the area of logistics infrastructure (highways, railroads,
ports and airports), opening up another channel to
develop supply chains for equipment, raw materials and
services. Programs were created, such as the Airport
Concessions Program, connected to the Civil Aviation
Department. New measures aimed to bring about a
positive impact on the national economy and help
reduce the bottlenecks that hold Brazilian companies
back from increasing their competitive edge.
191
At the beginning of 2012, the government granted control of three Brazilian airports to the
private sector under the concession system. Agreements were signed to expand, maintain and
explore economic activities in Guarulhos Airport in São Paulo, Viracopos Airport in Campinas
and Juscelino Kubitschek Airport in Brasília.
In the same year, a decision was reached concerning the monthly kickback scheme (in
Portuguese, the “mensalão”), considered to be the most important case in the history of the
Federal Supreme Court since the re-democratization of the country. The independence between
two of the country’s most significant branches showed the strength of Brazilian institutions.
In September 2012, the Institute of Applied Economic Research (IPEA) published a study
based on the IBGE’s National Household Survey (PNAD), according to which the gap between
the richest and poorest had been reduced between 2001 and 2011. The accumulated per capita
income of the richest 10% had increased by 16.6%, while that of the poorest 10%, by 91.2%.
According to these calculations, the process had lifted 23.4 million people out of poverty and
placed social inequality at the same standards recorded in 1960. There is, however, still a lot
to be done.
Faced with a statistic that puts 16.27 million people, or 8.5% of the population, still living
in extreme poverty, the government launched the Brazil Without Extreme Poverty (Brasil Sem
Miséria) program, aiming to guarantee transfers of income, access to public services and
production inclusion, as well as the Caring Brazil (Brasil Carinhoso) program, aiming to lift all
families with children up to six years of age out of poverty.
Over the last few years, Brazil has achieved important victories, including economic stability
and the significant improvement in social indicators, which have registered a drop in poverty
and social inequality. However, there is a long way to go and a lot of challenges to overcome.
Strengthening education is one of them since it will certainly pave the way for victories in both
the social and economic fields.
192
Valuing the past to build
the future
T
Aerial view of the Rio Negro (Amazon
state). Responsible for managing
the National Climate Change
Fund, the BNDES has supported
the preservation, conservation and
recovery of environmental resources,
aimed at fostering the country’s
sustainable development
he BNDES has remained one of the government’s most important partners,
providing support to its central programs, such as the PAC and Brazil Maior, as well
as backing other initiatives, such as the National Policy on Climate Change (PNMC),
launched in 2011. Operational regulations for this policy were established by the minister
of the Environment together with the BNDES.
The PNMC resulted in the creation of the National Fund for Climate Change (the Climate
Fund), which was placed under the responsibility of the BNDES, and the Climate Fund
Program, which is divided into the following sub-programs: efficient transport, renewable
energies, efficient machinery and equipment, solid waste with energy uses, vegetal-based
coal and combating desertification.
Another plan established in 2011 was Brazil Without Extreme Poverty (Brasil Sem
Miséria), featuring three approaches to eradicate poverty: guaranteed income, access to
services, and production inclusion. The latter two are in accordance with the activities
of the BNDES, or in other words, some of the approaches prioritized by the plan, such as
modernizing public administration and infrastructure, among others, could employ the
policies, programs, products and credit lines that already exist within the BNDES.
Strengthening the
environment
Some of the BNDES’ features include:
concerns over the renewable energies,
carbon emissions, environmental subcredits, environmental conditions;
the Environmental Division creating
environmental guides, seeking to
take part in discussions on the best
environmental technology for a
certain industry, whether industry
has been using the most up-to-date
resources in terms of equipment,
control and emissions, a concern over
the emission of particles, pollution,
CO2 emissions. The matter of energy
efficiency is also an important feature
in the history of the Bank. Just as the
social issue was in the beginning of
the 2000s, so did the environment
receive a lot of backing in the middle
of the first decade of the century.
Sometimes, we would say: “The
project is beautiful, really great, but
what are important are the social
and environmental aspects.” The
importance of looking at the social
and environmental aspects is deeply
ingrained in the Bank’s technical staff,
because without this, the project
does not move forward. Obviously,
all the environmental legislation that
is being passed and the importance
of environmental licensing also help
and contribute to giving the due
attention to these issues. The concern
shown for alternative and renewable
energies was a very important
feature.
Rodrigo Matos Huet de Bacellar, engineer,
interviewed in 2012
A vast matter
Our idea was always that the environmental issue should not be restricted to
the Environmental Division, but rather it should be part of the Bank as a whole.
So a socio-environmental work group was put together with representatives
from every division and everyone started to provide ideas. The department,
despite not being operational, did not analyze; it accompanied projects, but it
also formulated them. Creating the Energy Efficiency Program was based on
one of our initiatives which, at that time, together with the Department of
Energy, bought our idea and we managed to create PROGER, which still is not
working as I would like it to. In the forestry area for example, with the Forest
Recovery Program, we reinstated the idea that every project that enters the
Bank should undergo an environmental check, and recommendations that
have to be followed further down the line. At that time, the discussion started
(in fact, it had already started but it became more important) on climate
change. The Bank started to take part in this discussion on climate change.
A support line was created for environmental projects that also involved
these clean development mechanism projects and, based on these, this
environmental issue started to become part of our day-to-day; it returned to
being part of the BNDES’ day-to-day. At the end of my time there, I started to
intensify this discussion on deforestation in the Amazon, and the Amazon Fund
was created. We negotiated the Amazon Fund resources with the Norwegians
at the Bali Conference in 2007, and it became a reality. A 2008 presidential
decree created the Amazon Fund, which was under the responsibility of one
department. At the end of that year, the Environmental Division was created.
This division listened to our claim. The Environmental Division incorporated the
Environmental Department as well as the operational departments to fill this
gap which we felt at times made it impossible to do things we were unable
to. We built this whole structure and included an Amazon Fund Management
Department. With this new area, I left the Environmental Department and
went to be the head of this Amazon Fund Management Department.
Eduardo Carvalho Bandeira de Mello, administrator, interviewed in 2012
A challenge
The Bank’s main challenge is to develop the interior, of the most distant and
poorest areas. It is very difficult to decentralize, often because of local issues –
people cannot manage to organize themselves to present a project.
Martha Gubernikoff Guimarães, administrative technician, interviewed in 2012
194
Much more
Several infrastructure areas are going to be prioritized, and it is necessary
to invest a lot more, in more than energy. We have to support logistics –
and I am speaking specifically of ports, railroads and highways. In airports, I
think that the BNDES has provided a contribution. Our dynamic managing
director, Wagner Bittencourt put together a large office to tackle the
enormous challenge in the airports. This is a significant challenge. By 2013,
2014, the president wants the infrastructure that generates efficiency to
be the flagships to recover the increase in the rate of investment. Besides
this, and it is nothing new, we want to strengthen the production sectors
and supply equipment, engineering and inputs to these production
sectors. We also have a substantial challenge in structuring the production
supply chain of Petrobras’ investments. They include shares, equity funds,
platforms, equipment that goes out to sea, ducts, umbilical cables,
equipment for drilling operations at the wells, support vessels, helicopters,
storage platforms, it is a whole world for the oil industry. We have to
develop the supply industry, and it is a considerable challenge. We also
have to recover investments in several other large sectors, encourage
investments in telecommunications; none of this is so new, we have to
give all this a boost, finance it all.
In 2012, the BNDES turned sixty years old.
Over these six decades, the Bank has sought
to understand and accompany each moment
that the country has experienced, adjusting
its processes, reaffirming its values and
investing to train its employees, to improve its
procedures and its methodology. Throughout
this time, the Bank has acted as an agent for
change, confronting challenges and driving
the Brazilian economy.
Brazil and the BNDES have both changed,
and they will certainly both undergo new
transformations. Recognizing that there will be
new paths to follow and obstacles to overcome,
the Bank is thinking of the country’s future
in support of more sustainable development
and a more competitive economy, seeking to
generate employment and reduce social and
regional inequalities.
Presidents
•
•
•
•
Carlos Francisco Theodoro Machado Ribeiro de Lessa | 2003-2004
Guido Mantega | 2004-2006
Demian Fiocca | 2006-2007
Luciano Galvão Coutinho | Since 2007105
Administration of Funds – Instruments of Creation
•
•
•
•
•
•
•
Technology Fund (FUNTEC) – Law Nº. 10,973, of December 2, 2004
Audiovisual Sector Fund (FSA) – Law Nº. 11,437, of December 28, 2006
Project Structuring Fund (FEP) – BNDES Resolution Nº 1,417, of April 5, 2007
Cultural Fund – BNDES Resolution Nº 1,685, of December 23, 2008
Amazon Fund – Decree-Law Nº. 6,527, of August 1, 2008
Investment Guarantee Fund (FGI) – Provisional Measure Nº. 464, of June 9, 2009
National Climate Change Fund (Climate Fund) – Law Nº. 12,114, of December 9, 2009 and regulated by Decree Nº. 7,343,
of October 26, 2010
•
•
•
•
•
•
•
•
•
•
Zero Hunger Program. Lula’s first administration | 2003
Family Assistance Program. Lula’s first administration | 2004
Electricity for All Program. Lula’s first administration| 2003-2010
Brazil for All Multi-year Program. Lula’s first administration | 2004-2007
Development with Social Inclusion and Quality Education Multi-year Plan. Lula’s second administration | 2008–2011
Growth Acceleration Program (PAC). Lula’s second administration | 2007-2010
My Home, My Life Program. Lula’s second administration | 2009
Growth Acceleration Program 2 (PAC 2). Dilma Rousseff administration | 2010
More Brazil Multi-annual Program. Dilma Rousseff administration | 2012-2015
Brazil Without Extreme Poverty Plan. Dilma Rousseff administration | 2011
105 Current president of the BNDES.
195
Sustainability
Emílio Odebrecht at the company’s
annual general meeting, in 2009
Odebrecht was founded in 1944 and became a national
and worldwide benchmark in the area of construction and
infrastructure. Over the years, it expanded its operations.
The BNDES has provided support to develop Odebrecht and
its business segments.
The history of our partnership is very rich and useful, and I am
sure it has been educational for both Odebrecht and the BNDES.
What has always prevailed in our discussions, our conversations,
our conflicts, has been the search for what was right and not
who was right. This is what has made this relationship richer,
a relationship which has become more trustworthy over time.
The partnership with the BNDES was decisive in the growth not
only of Odebrecht, but of other production agents in Brazil, and
the country as a whole. We have done a lot of good business
throughout our history, and we are continuing to do a lot more.
I would say that the role of the BNDES in Odebrecht’s enterprises
has been decisive.
Emílio Alves Odebrecht, president of the Odebrecht Group
ETH, the Odebrecht Group’s bio-energy company, was
founded five years ago with the aim of producing clean and
renewable energy for the country. Taking on the challenge
of leading the production of bio–fuels in Brazil, Odebrecht
bought two production units that already existed, one of
which was Alcídia (in Pontal de Paranapanema, São Paulo),
which was the first Proálcool Program plant in the 1970s.
Today, there are ten production poles distributed around
Brazil, producing sugar, electrical energy and ethanol.
Since 2009, the BNDES has supported 47 projects within
ETH’s socio-environmental program. The company sees the
relationship as a fundamental basis for its understanding
of socio-environmentalism, as its director of Sustainability,
Carla Pires, explains:
Forty seven projects make up of the program that is
entirely financed by the BNDES. We are two and a half years
into a program with 11 million reais invested in several
projects. In the first year, the large-scale investment was in
people. These are people identified by the community itself
that have done important work there. We have defined four
central features for our work. The program has a number of
basic references, which include: the eight millennium goals;
the Earth Charter, because the Earth Charter prioritizes a
culture of peace and non-violence; the Flower of Culture of
Sustainability, which says that we need to care for each other
and for the earth, and share out the surplus. This is written
at the center of the flower. Afterwards, each petal deals
with an issue: water, local energy, food security, each petal
has a topic, and we felt that the flower brought a sense of
196
levity that we could fill with each community and print a
banner of the flower that accompanies the project at all its
meetings. It is also an instrument to deal with the priorities
of sustainability, because if anyone comes along and has an
idea to build a soccer stadium, for example, we will have the
means to gauge to what extent a soccer stadium would be
a sustainable priority. It is also a way of escaping from the
technicalities and working in a more lighthearted way.
Carla Maria Pires, director of Sustainability at ETH
Meeting of the members of the Social Energy Program of the
Araguaia and Alto Taquari Poles, held during a congress in the city
of Mineiros (GO)
A bank of
memoirs
The BNDES understands that knowledge does not
exist without memory, which is just as valuable as any
physical or financial asset. As early as 1972, the Bank
was a pioneering institution in Brazil in collecting the
statements of previous employees, in an efforts to record
their memories. Over the last three decades, this type of
activity has not been forgotten, and a memory bank has
been built up. This initiative has helped preserve the
BNDES’ values, providing the institution with its “soul”
and a capacity for self-renewal.
Within this book, we have traced sixty years of the
Bank and have come to understand a little of its history,
through statements from people who experienced the
different times. These reports show that the BNDES is
the result of all that has been and all that is to come.
In this recreated past, a product of our present, what
emerges is not only the institutional history. Some of the
memories also record a more personal side. However, a
common foundation underlies all the reports, and this
can be transcribed as the real identity of the BNDES.
As was said at the beginning of the book, the history
of the BNDES is an integral part of Brazil’s history.
Therefore, in sharing and communicating its memories,
the BNDES is reaffirming its commitment to society and
assuming its historical responsibility. There will be more
anniversaries, and a new story will be told, through the
eyes of their times. For now, let us celebrate these sixty
years, remembering other stories because, when all is
told, a celebration is also an act of collective memory.
Memory for the future
An institution that does not cultivate its memory is an
institution that will have no structural backbone for its
future. The BNDES is the result of a truly long history
of highly qualified people with great public spirit. It
had been a long time since a public recruitment exam
was held, but now there is a renewal of generations. A
large portion, almost half of the institution, is ready for
retirement, and a new group is arriving – generation
“y,” a generation that wants immediate success, one
with social networks, with another state of mind, which
perhaps has not experienced the whole struggle, the
whole dream that defined my generation. And this
awakened a concern: is it possible that we will lose our
culture, the memory of the Bank, which was transformed
into an institution of such excellence? We started the
Values Project, which, together with the employees of
yesteryear, consensually established ethics as the Bank’s
foundation, commitment to developing Brazil, the
public spirit and professional excellence. Commitment
to Brazil and the public spirit, which also means to say
non-discrimination of creed, sex, race, nor the small nor
the large. Public spirit is committed to developing the
country, and this needs to be done competently and with
professional excellence. These values that have moulded
the development of the institution for so many years
need to be handed on to the new generation, who will
have the right to aggregate new things and give them
new meaning. These values need to be cultivated, and
they need to be preserved in memory. Understanding
the values of the institution walks hand-in-hand with
the history of the institution. I believe that preserving
and keeping the history of the Bank is part of a legacy for
the future. Sixty years is a very important number, and
cultivating memory is vital for an institution that wishes
to conserve the best of itself.
198
From one generation to the next
High value
The institution is made up of memories, I mean, one of
the things that has kept me here, even though I could
retire, is this idea of passing on a culture to the young,
leaving a legacy of culture that is important, a superb
culture in terms of the work environment and the high
level of intellectual discussion. I have been here for 36
years, this is my home, I spend more time here than I do
at home awake. So there is this concern about passing
on a little of what we understand as the Bank’s culture to
the young people, and I can see a lot of this in those from
my generation who are still here.
The BNDES’ values have not changed much, they
are basically the same. There is an environment for
exchanging information, [that is] intellectually rich. In
joint decisions, in the multidisciplinary team discussions,
from the beginning, I interacted quite a lot. Very often
there were disagreements, but you manage to convince
and be convinced, arriving at a compromise. The Bank
has exceptional capacity to come together solutions
that meet our needs, the needs of our clients and which,
afterwards, are supported by management. At the
BNDES, the decision-making process is not individual, it
is a building process that comes from the teams, goes
through the boards, and on to the Board of Directors,
which is also collective and has the same kind of values
and vision. So they are extremely solid values and
benchmarks.
Paulo Sergio Moreira da Fonseca, economist, interviewed
in 2012
Living companies
Companies are alive, they are all made up of people.
Processes are created by man. So recalling or recording
this memory is actually what explains the process. A
hypothetical example: the resolution on how the Bank
will support innovation, that is one of the groups that
I support today, the role says quite clearly what the
Bank does. But behind this, there is a story, there are
experiences, there are decisions and a large number of
people. In my case, there is knowledge that I even went
abroad to find. So there was a lot involved. If we do not
put the two parts together, there will only be that part
where you can know what happened, because this has
been recorded, but you do not know why it happened.
And the “whys” are deep inside the lives of each one of
us. It is the sum of these stories that creates something.
So it is a project that is very important in preserving the
BNDES’ memory.
Mauricio dos Santos Neves, engineer, interviewed in 2012
Sergio Foldes Guimarães, systems analyst, interviewed in 2012
A beautiful construction
The BNDES is a beautiful institutional construction,
the blending of the dreams of a group of people who
want a better country, owners of their own destinies,
who want to see the country transform. But Brazilian
society knows very little about this. We have difficulties
in communication, in managing to show this to society.
So a project like this gives it life, showing that behind
this Bank, which handles so many billions, is a group of
normal people, who have life stories, who have these
dreams. The history of the people and that of the Bank
blend together. There are statements from important
people in the BNDES’ story, like Juvenal Osório, who gave
his name to this building. Whenever I speak to younger
people, I use his statement because it is so rich. It shows
how the first “BNDESers” were fearless; they did not
know how to analyze projects, had no techniques, but
they created a methodology, with the desire to transform
the country. And we cannot lose this, because it is what
makes the BNDES so strong.
Júlio César Maciel Ramundo, economist, interviewed in 2012
199
Observation deck
A structuring proposal
The BNDES is an extraordinary observation deck for
Brazil, the economy and the reality in the country. You
start to understand what makes this country tick, what
the challenges and the important points are. I have
travelled all over Brazil and, even here at the headquarters,
I have had access to the problems and the main issues of
national development. It has been an extraordinarily
rich experience.
We have had all possible types of political mishaps in
Brazil: one president of the Republic committed suicide,
another resigned seven months after taking office,
another died before being inaugurated, after a terrible
struggle to replace the dictatorship. The military regime
itself was unstable: the changeover from Costa e Silva
to Médici was dramatic, no one knew what was going
to happen. The Collor government, resulting from the
Sarney government, suffered an impeachment. The
Itamar government had six finance ministers. In an
environment like this, if there were not institutions like
the BNDES, you would not have a country today. It was
institutions like the BNDES, with its structuring proposal
for production and economic development, that secured
the country.
Almost together
The BNDES has provided a vision of Brazil that is totally
different to other public entities since it has a rather
long history of operation which is quite rare in this
country. This institution has always maintained its
professionalism and this has been extremely rich in
terms of debating ideas, training people and attracting
exceptional staff. And this is very important. Over the
last few years, Brazil has grown enormously and the
country is so much better than when the Bank was set
up. The history of the Bank is tied together with the
country’s history of development.
Márcio João de Andrade Fortes, engineer, interviewed in 2002
The professor
Society has an understanding of what a project is, what
the efficient use of public resources is. The Bank has
always been the eminent professor, the grand master of
this issue.
Eleazar de Carvalho Filho, economist, interviewed in 2002
Isac Roffé Zagury, economist, interviewed in 2002
Different, but the same
Everything changes
The BNDES has this incredible quality of being able to
mutate. It is the same, but it changes every ten years. And
this is what gives the Bank such endurance. The BNDES
will always have a fundamental importance, not only
in the economy, but in Brazilian society, because it has
financial and understandable resources.
Throughout my career, the Bank has always had the
task of helping out with the programs that the federal
government has wanted to implement. In 1975, when I
came in, it was the program to substitute imports, there
was a need to create an industrial culture in Brazil, and
the Bank worked towards helping this effort. From then
on, there was a string of programs. We received Proálcool,
which produces ethanol; since 1980, the BNDES has
invested in this area. Then came the FINSOCIAL [Social
Investment Fund]. We had the Merchant Navy Fund. We
also had privatization and the internationalization of the
Brazilian economy. All of the federal government’s largescale projects came through the BNDES.
José Pio Borges de Castro Filho, engineer and economist,
interviewed in 2002
Sallustio Amerio da Rosa, attorney, interviewed in 2012
200
It was all go, go, go!
A small bank
The BNDES of the future will not be the same as
that of the past, but I hope that this characteristic
of attracting and retaining talents and the ability to
provide solutions remains, because this has been a key
advantage. If the BNDES were just an infrastructure bank,
it would have died because at certain times, there was
no infrastructure to invest in. Afterwards, the BNDES
became a privatization bank, now it is the PAC bank and
the innovation bank, so it was all go, go, go! Throughout
the years, the BNDES has been able to adapt.
I have a photo of my father at the newly-inaugurated
BNDES – it was a small bank. He needed resources from
insurance companies. Afterwards, I started to accompany
the history of the Bank from the other side, as one who
paves the way for industrialization, shortly after Geisel’s
“Brazilian Miracle,” in reconstructing the petrochemical
industry, because I was involved in the corporate side.
During my time, in 1970, the Bank was at Presidente
Vargas Avenue and it was very modest, indeed. Today,
you see the BNDES as an investment bank, as the largest
development bank in the world and a reference for other
countries, and it is quite impressive.
Ricardo Luiz de Souza Ramos, engineer, interviewed in 2012
Taking part
I am very proud to work here. I think that the “S” for
the ‘social’ in the BNDES is fundamental. I come from
upstate Minas Gerais and I grew up watching my father
doing his part in our town. He is Vincentian, and the
aim of the Nossa Senhora de Paula society is to help the
neediest and oldest people. I saw my father doing this
his whole life, and I always truly admired what he did
there with the needy community in my small upstate
town. Now, here, I feel I am taking part in an institution
that is doing a social job on a large-scale for our country.
I can see that I am part of a company that is concerned
with the social aspect of things, and that the result
is multiplied many times more than what I had as an
example with my father there in Minas Gerais.
Jaqueline Lemos Almeida, attorney, interviewed in 2012
Eduardo Eugênio Gouvêa Vieira, engineer and businessman,
interviewed in 2012
Still small
The Bank was small – it had just 300 employees and very
few departments: Projects, Administration, Financial and
Legal Aid Departments. It did not have many organs, nor
was it subdivided into sections. I remember the project
to implement Usiminas (power plant), using Japanese
capital, and the automobile industry, and the National
Steel Industry… A lot of industries were created at that
time, I cannot name them all. There were also railroads,
trains. Basic investments went to heavy industry, and
afterwards it started to diversify into other areas, but
in the beginning it was more in heavy industry and in
creating industry itself. The Bank always pushed for the
economic development of the country.
Challenges in the future
Elpídio Coimbra, administrative assistant, interviewed in 2012
The BNDES’ challenges are enormous because they are
Brazil’s future challenges. We, here inside the Bank, each
one of us in his own division, each one playing his part, have
managed to positively influence the development of Brazil.
A dream
Laís Maria Veríssimo Reis Costa, attorney, interviewed in 2012
I have a dream in which I look into the future and see
the amazing technological transformations. The main
challenge is to create the bases so that Brazil can once
again take risks and move towards the frontiers of
technological innovation, developing new industries here,
industries for the future. We have to create this entire
base; we have a lot of work ahead of us.
201
A fitting tribute
Consistency
Maria do Rosário Rodrigues Piso was perhaps the first
woman to hold an executive position, that is, deputy
managing director at the Bank, in the Infrastructure
Division. She was full of enthusiasm, full of Brazil, with
lots of ideas. A very competent executive and, at the
same time, a real person. She really was fantastic. And
she taught me such a lot. I was very lucky to have known
her, for her to have been a part of my life.
I was fortunate enough to work with the president of the
Joint Commission. The Americans worked together with
the Brazilians, but they ran it. What I remember is that
this tradition of doing projects did not exist here; they
brought this down here. There were several projects; the
“Central do Brasil” project, the National Alkalis Company…
And then they created the BNDES, and I went to the Bank
in March 1953. Dr. Glycon de Paiva, who had been on the
Commission, was already a managing director and was
nominated president of the BNDES; he appointed me
to be his secretary. After that, I was the secretary at the
meetings of the Board of Directors. I learned so much –
they were first-class teachers. The managing directors
held very consistent positions. Always. So you knew who
would be against this, and who would be in favor of that,
and what the argument would be, because they were
very consistent.
Mariane Sardemberg Sussekind, attorney, interviewed in 2002
Great thinkers
I arrived in 1974, in the Bank’s Planning Division, where
there were some great thinkers: Ignácio Rangel, Américo
Cury and Leão [Henrique Carneiro Leão Teixeira]. People
who we spent the afternoon with, talking and learning
about economics. It was an economics school inside the
Bank. [Ignácio] Rangel spoke and you listened, thinking
it was just magnificent. And it really was. Juvenal
Osório was an incredibly practical man who also had
an extraordinary theoretical foundation – he was the
striking personality in the department, the guy everyone
listened to. I was really happy to work with him.
José Mauro Mettrau Carneiro da Cunha, engineer, interviewed
in 2002
Brilliant
I started at the BNDES in June 1971, in the Economic
Studies Division. There were two people who influenced
people’s training at the Bank, and who were not directors.
One was [Ignácio] Rangel and the other was Eurícles
[Pereira], a brilliant and very charming man, who brought
me in to the BNDES and who opened my eyes to the
project, to development. There was Saturnino Braga… All
of them very forthcoming. You lived with these people.
There was an interest immediately created among the
young people: have you read this? It was difficult to read
those texts and have a relationship with reality as close
as we had at the BNDES. These problems, the idea of
substituting imports, sub-development… that was not
fiction, it was not abstract. It was the reality we were
living there.
José Pio Borges de Castro Filho, engineer and economist,
interviewed in 2002
Gilda Decourt Borges, administrative technician, interviewed
in 2002
A tribute
Afterwards, in 1952, the BNDES did not have any regular
staff, so the Brazil-United States Joint Commission
assigned me to the Bank and I joined in September 1952,
to provide services. The Finance Ministry was on the 14th
floor, and it provided 14 offices to the BNDE. So I started
to take care of those offices, I arranged everything. At
that time, Dr. Walder Lima Sarmanho, who was Mrs.
Darci Vargas’ brother, was the president. He was the first
president of the BNDES. Dr. José Soares Maciel Filho was
the deputy managing director; Dr. Cleantho de Paiva Leite
was one of the managing directors, and an advisor to
Getúlio Vargas. I gave my son the name Cleantho in honor
of Dr. Cleantho, who was a very good friend as well as a
managing director.
Cândido Rodrigues, administrative technician, interviewed in 2002
Exciting work
I started working in the investment control division. There
were two large sectors in the BNDES: the project sector,
which analyzed the viability of projects, and the priority
sector. After a project had been implemented, it was our
department’s responsibility to control investments, and
this was headed by Hildebrando Horta Barbosa, the first
boss, who followed the Bank’s financial investments,
with periodical visits, with reports. It really was exciting
work. I was aware of [what was going on] and followed
the industrial development of the whole country: steel,
railroads… It was an incredible school.
Alvaro Cesar Café, engineer, interviewed in 2002
202
Scoring high
A good atmosphere
The Bank scored very high by holding a government
recruitment exam through the old DASP, the Public
Service Administration Department, which prepared
public recruitment exams and established the criteria
for individuals to join the public service. It was DASP
that organized the BNDES’ first recruitment exam, which
was extremely rigorous and very well-managed. In my
category, for example, there were 2,200 candidates for
33 jobs. The recruitment exam had to be rather strict to
select so few people from so many who were interested.
I think this contributed a great deal to the quality of the
employees and the work that the Bank started to do in
its early years. This was essential in consolidating the
prestige of the BNDES.
Everyone knew each other, and there was a very good
working atmosphere. We believed in what we were
doing. Like all young people, we were ambitious, we
talked about politics and the project itself involving the
development of Brazil. For instance, one of the things
discussed was this: should the BNDES keep everything
focused on the economic side, or should it also start
opening up the social aspect, in terms of distribution. And
the overwhelming majority thought that no, the Bank
ought to stay on the economic side. We had this idea that
it was necessary to build an economic base, implement
a solid Brazilian industrial base and, first, guarantee the
growth process – this was relevant to that time. I took
part in it. Afterwards, we started to look at it the other
way around.
Cid Salgado de Almeida, engineer, interviewed in 2002
A tricky job
The position of head porter was rather tricky because you
had to maintain discipline among your co-workers. At
that time, the Bank’s administration required employees
to dress impeccably; they provided uniforms, ties, shoes,
everything, and I had to make sure they did not come to
work wearing just anything. There was always someone
who did not like it. The Bank gave out metal tags with
“BNDE” engraved on them, which everyone was supposed
to wear, and I had to make sure they used them, but
many would not wear them. So I said to my department
boss: “Instead of the tag, let’s embroider the name on the
uniforms.” So we did that, but they asked the boss not to
have to wear them. “Only if you promise to use the tags.”
So they took off the embroidered name. It was a really
good relationship we all had.
Cândido Rodrigues, administrative technician, interviewed in 2002
The soul of the business
One thing that really left its mark was the soul of the
Bank, the soul of the business: the enthusiasm. Everyone
worked because they loved the business. They knew that
they were working for a noble cause, one that was very
important. And the work environment was fantastic.
Everyone working towards the same goal. There were
not many people, but they were united, hard-working
and competent.
Another era
We worked with a very large IBM computer with a
perforated card, and the programs were not typed
directly on the computer. We wrote the programs out
on paper then handed them over to a typist. Instead
of printing them out on paper, the machine perforated
the card. What we wrote was perforated onto cards.
A program had a thousand instructions, a thousand
instruction cards, a box this big, weighed down with
cards containing a program. These days, a pen-drive can
store a lot of applications, but at that time, there were
sometimes two boxes of cards. I worked on Presidente
Vargas [avenue] on the corner of Rio Branco [avenue], and
the building, where the computer was, was on Visconde
de Inhaúma [street]. For us to go over there, we needed
to cross that Rio Branco-Presidente Vargas Intersection,
and there were many times we had to cross the street
with a box of cards, and we would fall over, or the lights
would change, the box of cards would get dropped and
we would have to pick the cards up off the street. This
happened a few times.
George Nelson Schmidt Teixeira, systems analyst, interviewed
in 2012
Cid Salgado de Almeida, engineer and economist, interviewed
in 2002
203
Expectations
At a scheduled time
I was Dr. Álvaro Leão Sande’s secretary, and he was the
brother of the president of the Bank, Dr. Luiz Antonio
Sande [de Oliveira]. I stayed there until 1982; when we
moved to this building here, it was just being finished.
The building was really modern for that time. Imagine
this building, on pillars, with no walls! Everyone had a
lot of expectations. And also because we were all going
to come together. We were all going to get to know
each other, all of us at the same address, all our other
colleagues, because we all met at the cafeteria at Rio
Branco [avenue], 53, which was our building.
One memorable thing was the arrival of the computer.
Wow, what a moment! Because none of the floors had
a computer, we had to go to the Systems Department,
which was on the first floor. Those who wanted to do
some work went there, scheduled a time – three in the
afternoon, you would go there, there was a computer,
but no one knew how to work it and kept asking for
help: “Hey, I don’t know what to do.” Long lists would
come out, the paper was all joined together; it was not
a single sheet of paper like today. So we would do all the
work down there, and it would take all afternoon, but
the room was cool, so you would take a lot of work to do
there. Afterwards, they put computers where the elevator
pillars were; they put them around these so that a group
could use them, but there was a lot of bickering, because
someone would be taking forever, but we needed that
computer, and we would say “Hey, it’s mine! It’s my turn!”
Jenny Maria dos Santos, administrative technician, interviewed
in 2012
A big family
When I joined, the BNDES was on Visconde de Inhaúma
[street]. We came here in June, 1982, when we were still
called the BNDE, then afterwards the ‘social’ came in and
they added the “S,” in June 1982. It has been thirty years
since we came to this building, and I was privileged to
be one of the first to come here, because I worked with
the Board of Directors. The first employees to come here
were those working in the President’s Office and with
the Board of Directors, then came the administration
staff and support. It was really grandiose and only the
private elevator and one other worked; they were still
finishing the building. As time passed, the whole of the
institution came here, bringing together the subsidiaries
which are today the system itself. The BNDESPAR and
FINAME joined the BNDES as well as the associations,
building staff, security, those from general services, and it
became a great big family. You could say that the BNDES
is a family because people have all lived here for so many
years. And I am privileged to have been here for all these
thirty years.
Roberto Luiz do Nascimento Reis, attendant,
interviewed in 2012
Rute Sueli Lima Nascimento, administrative technician,
interviewed in 2012
Evolution
When I joined the Bank, there was a Systems
Department. We were part of the Administration
Division, which incorporated administration, human
resources and information technology. Within this
department, there were two managing bodies – one for
production, another for support, and another three for
development. I joined the Support Management group.
We had a machine that was almost a computer, for each
of the Bank’s divisions, and all the cables ran across the
floor. We would pull a cable, “it’s stopped working”;
“where did it stop?” So you would reach down and pull
it. There was not one computer per person. There was a
nucleus of computers and you would use one, move over
and then someone else would use it. Telephones; there
was not one for each person either. This has evolved.
Today, with all the technological resources the Bank has,
this was a huge leap forward, evolution.
Luciana Giuliani de Oliveira Reis, systems analyst, interviewed
in 2012
204
A unique experience
Making the difference
Within Brazil’s financial history, we have been through
a lot. All those economic plans caused a truly serious
accounting problem in trying to balance the books; the
currency was changed, a million was cut, and much
more... It was a serious problem. Today, you can see, it is
a problem that I do not think anyone in accounting will
ever have again. You will look back at history and see that
it happened. But living it day after day was a significant
learning experience. With the crisis, you learn; after it is
over, you look at things: “Why did we think about this?
Why did we think like this? How did we resolve this?” It
is what we take forward. For example, an accountant in
the United States must get really bored. Here, we have
experienced so many wild things. You never knew what
was going to happen with each new law: “How are we
going to do this here? How shall we do the accounts?
How are we going to show this?” You had to read a lot,
study the old theories and the new views, exchange
ideas, take part in seminars and bring all the information
together. It really was a learning experience.
At the BNDES, you have the opportunity to make the
difference. Although it is a large institution, and of
enormous importance to the country, it is basically quite
a small company in terms of the number of people. We
have less than 3,000 employees. So you have a lot of
rather direct input in important areas. At the BNDES, you
can see your fingerprint not only in projects, but also in
internal activities. It is quite rewarding to see a largescale industry and know that you took part in its growth,
and this is true for technicians and executives, everyone
takes part, discussing these large projects. It is very
different to other places, where your role is important,
but you do not realize just how much. At the Bank, you
can feel that you really did take part in it, it is visible. It is
a work life, but it is a very rewarding one.
Ricardo Massao Matsushima, accountant, interviewed in 2012
Sketch and scribble
My career as an artist started here at the BNDES. I was
working and there was a sketch and a scribble, and I
scribbled a lot. Suddenly, the thing was to paint and
paint. I worked with a secretary called Heloísa, who
gave me a “sketch and scribble,” a pad, and I scribbled
and designed lots of things on it. I started to sketch,
and sketch, and sketch and a certain style started to
appear. Then people started calling me an artist, and I got
enthusiastic and left the bank. At the second ExpoArte
[exhibition] that was held here at the Bank, I displayed
my work, people liked it and started to encourage me.
Ivânio and Armando Leal encouraged me a lot and they
saw that I had a kind of style. I put on a show at the
opening of a bar that they had at the AFBNDES and, at
that time, Abelardo Zahluar, a great artist who is now
dead, liked it a lot as it was work with a certain naïvety.
And so it went on, that was my path. People like it, they
have bought quite a few of my works, and here I am –
an artist.
Luiz Fernando Linck Dorneles, accountant, interviewed in 2012
Good practice
One thing that we have always done at the Bank is listen
to people from outside, call people in to critique us. It
is important that this happens. The BNDES is a very
open institution. I have seen so many people invited
to come here to the auditorium and then they attack
the Bank. This is good. If you are secure about yourself
and what you are doing, then there is no problem. And
if you do not agree, then disagree. People realized that
they could do this, they did not feel scared, they came
here and spoke. This happened here a lot of times. Why?
Because we have opened up the space for it. We listen to
different opinions.
Carlos Henrique Reis Malburg, architect, interviewed in 2012
Nelson Cruz Dias, administrative technician, interviewed in 2012
205
Large-scale Brazil
Still under construction
I joined through FINAME, in January 1981, and went to
work with the registration of manufacturers. I analyzed
equipment. In this area of registration, we received
the large-scale national plans: the National Steel
Manufacturing Plan, the Energy in Brazil Plan. We took on
the construction of Itaipu (power station). We financed the
turbines at Itaipu; in fact we visited Itaipu, and went inside
the turbines while they were being assembled. It was the
period of “Large-scale Brazil.”
Tocantins was a striking place. I went there with Luiz
Carlos [da Rocha Messias], if I am not mistaken. The city
of Palmas was still under construction. Tocantins looked
like Brasília, still being built, but if you stopped there, that
red dust that would lift up and fly all around. Today, if
you go to Tocantins, to Palmas, you will see a completely
different world, and the Bank played a part in this
transformation.
Gilson Loureiro Roquette, attorney, interviewed in 2012
José Flávio Gioia, engineer, interviewed in 2012
Tracing the future
When you join the BNDES, you start to discover that you
really are working with people’s futures and the future
of the country. The Brazil that I knew from books, from
elementary school, took on new colors when I joined
the Bank. You can see the size of the responsibility in
constructing this nation!
Joselito Bonifácio Oliveira, engineer, interviewed in 2012
Satisfaction
The projects I worked on, all of them, were able to create
a lot of jobs, and this is essential, because it distributes
income. I worked on projects that generated a lot of
employment, which is really satisfying. Implementing
a pulp factory in upstate Bahia, for example, you create
registered jobs at the factory, with good working
conditions including vacations, all above board. When I
went to Aracruz, for the first time, we had to take a little
launch across the river and drive along a dirt road to get
to the factory. Now that the region has hotels along the
beach, good roads and everything started growing out
of that first project, which created jobs, a market, and
increased people’s purchasing power, which effectively
led to the town’s development.
Ruy Carvalho da Silva Junior, engineer, interviewed in 2012
206
On a different continent
I took part in one of the BNDES’ cooperation projects with
an African development bank. I lived in Africa for two
years, in Abdijan, in Ivory Coast, but I travelled to places
that you cannot even imagine. It was a very interesting
experience, entirely different. I went to work in the
transport sector. Brazil’s foreign ministry brought the
Bank into this project, so Brazilian companies could take
part in tenders in Africa, because there had to be some
participation in the African bank. In Zambia, the railroad
was brought back into use, and in São Tomé and Príncipe,
the airport was expanded.
Nora Lopes Lanari, economist, interviewed in 2012
For the new generation
I am close to retirement and I am always worried and
already missing things. You can see that a new generation
is coming in and an old generation is on its way out;
those friends who have retired are leaving and this new
generation is here. I am concerned whether this new
generation will treat the BNDES as a respected and
genuine organization, just like we, the old ones, have
done, that is all.
Wilson Gonçalves dos Santos, attendant, interviewed in 2012
The storytellers
Alvaro Cesar Café; engineer. Joined the BNDES in 1958. He
held several positions at the Bank. In 1972, was transferred to
Mafersa. Interviewed in 2002.
Amaury José Leal Abreu; engineer. Joined the BNDES as
assistant to managing director Roberto Campos, in 1952. He
was technical advisor to the Project Department and the
Special Operations Department. He worked on the Technology
Fund (FUNTEC) and the Financing for Small and Mediumsized Companies Program (FIPEME). Interviewed in 1982.
Angela Lima Martins Lussac; architect. Joined the BNDES
in 1971 as a trainee in the Administration Department.
Currently, she is the Architecture advisor at the EDSERJ
Condominium. Interviewed in 2012.
Carlos Tadeu Moreira Ribeiro; engineer. Joined the
BNDES in 1978. He held several executive positions. In
2011, he was appointed deputy managing director of the
Audit Division. Currently director of Investments at the
BNDES Social Assistance and Security Foundation (FAPES).
Interviewed in 2012.
Celso Monteiro Furtado; economist. Author of a number of
studies on Brazil. In 1953, he was invited to preside over the
Latin America and Caribbean Economic Commission Mixed
Studies Group. He was managing director at the BNDES.
Creator and first director of the Northeast Development
Department (SUDENE), he was also minister of Planning in
the João Goulart government. Interviewed in 1982.
Antônio Carlos Pimentel Lobo; engineer. Joined the BNDES
in 1953. He worked in different areas. Managing director at
the BNDES from 1964 to 1972. Interviewed in 2002.
Cid Salgado de Almeida; engineer and economist. Joined
the BNDES in 1973 as economics assistant. He participated in
the creation of the Federal Electrification Fund which later
became Eletrobras. Interviewed in 2002.
Attílio Geraldo Vivácqua; engineer. Joined the BNDES
in 1953. He worked in the Infrastructure Division and
in FINAME, where he was deputy managing director.
Cláudia Pimentel Trindade Prates; economist. Joined
the BNDES in 1992. She held several executive positions
and is currently the deputy managing director of the Credit
Division. Interviewed in 2012.
Beatriz Azeredo da Silva; economist. In 1996, she was
invited to be deputy managing director at the BNDES. She
was nominated managing director of the Social and Urban
Development Division in 1998, performing this role until
2003. Interviewed in 2002.
Claudio Bernardo Guimarães de Moraes; accountant.
Joined the BNDES in 1984. He held several executive
positions and is currently the deputy managing director of
the Indirect Operations Division. Interviewed in 2012.
Cândido Rodrigues; administrative technician. Joined the
BNDES in 1952 and was transferred from the Brazil-United
States Joint Commission. He worked in general services and
was head porter. Interviewed in 2002.
Carlos Francisco Theodoro Machado Ribeiro de Lessa;
economist. Between 1985 and 1989, he was managing
director of the Social Division, and between 2003 and 2004,
president of the BNDES. Interviewed in 2002 and 2012.
Carlos Gastaldoni; engineer. Joined the BNDES in 1975. He
held several executive positions. Interviewed in 2012.
Carlos Henrique Reis Malburg; architect. Joined the
BNDESPAR in 1980. Currently manager of the Social
Infrastructure Division. Interviewed in: 2012.
Carlos Roberto Lopes Haude; attorney. Joined the BNDES
in 1984. He held several executive positions. Since 2006, he
has been deputy managing director of the Administration
Carlos Santos Júnior; economist. Joined the BNDES in 1957.
He held several executive positions. Interviewed in 2002.
Claudio Cezar Carvalho de Almeida; systems analyst.
positions. Currently a technician in the Agriculture, CattleRaising & Social Inclusion Division. Interviewed in 2012.
Cleantho de Paiva Leite; economist. He was managing
director at the BNDES between 1953 and 1956. He returned to
the Bank’s Board of Directors in 1958, remaining until 1962.
Darlan José Dórea Santos; economist. He was managing
director of FINAME between 1983 and 1999. He was also
managing director at the BNDES responsible for the Regional
Development and Micro, Small and Medium-Sized Companies
divisions between 1999 and 2003. Interviewed in 2002.
Deborah Prates Padilha de Barros Peralles; attorney.
Joined the BNDES in 1978. She held several executive
positions. Interviewed in 2002.
Demian Fiocca; economist, joined the BNDES in 2004, as
advisor to the president. He was vice-president and, in 2006,
took over as president of the Bank where he remained until
207
Denise Nogueira Gregory; economist. She was head of the
President’s Office of the BNDES and advisor to a managing
director between 2002 and 2003. Interviewed in 2002.
Dora Sigaud Vianna Costa; administrator. Joined the
Subsidiary Investimentos Brasileiros S.A. (IBRASA) in 1976.
She held several executive positions. Interviewed in 2002.
Durval José Soledade Santos; attorney. Joined the BNDES
in 1973. He held several executive positions. He was
managing director of BNDESPAR. Interviewed in 2002.
Eduardo Carvalho Bandeira de Mello; administrator.
positions. Interviewed in 2012.
Eduardo Eugênio Gouvêa Vieira; engineer and
businessman. He is president of the Rio de Janeiro
Federation of Industries (FIRJAN). Since 1984, he has been a
member of the BNDES Advisory Board. Interviewed in 2012.
Eduardo Marco Modiano; engineer. He was president of the
BNDES between 1990 and 1992. Interviewed in 2002.
Eleazar de Carvalho Filho; economist. He was managing
director at the BNDES between 2000 and 2002. In this year,
he took over as president of the BNDES, remaining in the
position until 2003. Interviewed in 2002.
Elizabeth Maria de São Paulo; administrator. Joined
the BNDES in 1973. She held several executive positions,
including the deputy managing director in the Institutional
Relations Division. Interviewed in 2002.
Elpídio Coimbra; administrative assistant. Joined the
BNDES in 1954. He held several positions, including
technical assistant. Interviewed in 2012.
Elvio Lima Gaspar; engineer. Joined the BNDES in 2004
as the head of the President’s Office. He was managing
director in the Credit, Social and Environmental divisions.
Eugênio Emílio Staub; administrator. He was president of
Gradiente. He obtained the BNDES’ first credits back in 1966
and took part in the BNDES Advisory Board between 2003
and 2004. Interviewed in 1982.
Expedito Cursino Alves; engineer. Joined the BNDES in
1962. He was a managing executive. Interviewed in 2002.
Fábio Sotelino da Rocha; engineer. Joined the BNDES in
1982. He held several executive positions. Currently advisor
to the Board of Directors in the Industrial, Enterprise Capital
and Capital Markets divisions. Interviewed in 2012.
Fabio Stefano Erber; economist. Joined the BNDES in 1964.
He also worked with organizations such as the Brazilian
Innovation Agency (FINEP) and the National Council for
Scientific and Technological Development (CNPq). His last
mandate as managing director ended in 2004. Interviewed
in 2002.
208
Fátima Regina França Farah; attorney. Joined the BNDES in
1983. In 1993, she was named advisor to the president of the
Bank, working with a number of the institution’s presidents.
She is currently head of the Executive Secretariat of the
BNDES’ President’s Office. Interviewed in 2012.
Fernando Castilhos de Araújo Galindo Felix;
administrator. Joined the BNDES in 2004. Since 2008, he
has been manager of the Northeast Regional Department.
Fernando Marques dos Santos; engineer. Joined the BNDES
has been a managing director at the Bank, responsible for
the Human Resources and Information Technology divisions
as well as the AGIR Project Management Department.
Fernando Pimentel Puga; economist. Joined the BNDES
after receiving the BNDES Economics Award in 1997. He
held several executive positions. In 2011, he took over as
deputy managing director of the Bank’s Economic Research
Francisco Roberto André Gros; economist. He was director
of the BNDES between 1985 and 1987, and president of
the Central Bank twice, in 1987 and from 1991 to 1992. He
was president of the BNDES between 2000 and 2002, and
president of Petrobras between 2002 and 2003. Interviewed
in 2002.
Gabriel Rangel Visconti; economist. Joined the BNDES in
1998. He held several executive positions. He is currently
head of the Corporate Strategy and Budget Management
Department. Interviewed in 2012.
Gabriel Stoliar; engineer. Joined the BNDES in 1978, through
the subsidiary company Insumos Básicos S.A. (Fibase). He
held several executive positions. He was a managing director
at BNDESPAR. Interviewed in 2012.
George Nelson Schmidt Teixeira; systems analyst. Joined
the BNDES in 1975. He held several executive positions. He is
currently a technician with the Agriculture, Cattle-Raising &
Social Inclusion Division. Interviewed in 2012.
Gil Bernardo Borges Leal; economist. Worked as a trainee
between 1978 and 1980. He returned to the BNDES in 1986.
Between 2004 and 2007, he was director of the Nossa Caixa
bank in São Paulo. In 2007, returned to the BNDES as advisor
to the president. He is currently deputy managing director in
the Risk Management Division. Interviewed in 2012.
Gilda Decourt Borges; administrative technician. She
worked as a secretary with the Brazil-United States Joint
Commission. Joined the BNDES in 1953, as secretary to the
president. She has worked in several sectors and divisions.
Gilson Loureiro Roquette; attorney. Joined the BNDES in
1992. He held several executive positions. He is currently
a technician in the Bank’s Administrative Division.
Guilherme Narciso de Lacerda; economist. Joined
the BNDES in 2012 as managing director in the Social
Infrastructure, Environment and Agriculture, Cattle-Raising
& Social Inclusion Division. Interviewed in: 2012.
Helena Maria Martins Lastres; economist. Joined the
BNDES in 2007 as advisor to the president to coordinate
the structuring of the Productive Arrangements and
Local Development divisions, where she currently works.
Hélio Jaguaribe; political scientist. He took part in the
Brazil-United States Joint Commission discussions, that
resulted in the creation of the BNDES. Interviewed in 2002.
Henrique Amarante da Costa Pinto; engineer. Joined
the BNDES in 1982 as a trainee with BNDESPAR. He held
several executive positions and, since 2008, has been deputy
managing director of the Project Development Division.
Henrique Carneiro Leão Teixeira Neto; engineer. Joined
the BNDES in 1955. Interviewed in 1982.
Ignácio de Mourão Rangel; economist. Joined the BNDES
in 1953, was head of the Economic Department, took part in
the implementation of Juscelino Kubitschek’s Development
Plan and was a member of the Development Board.
Irimá da Silveira; engineer. Joined the BNDES in 1971. He
was managing director of Operations and executive director
of FINAME. Between 1990 and 1992 was advisor to the
president of the BNDES, a position he returned to between
2001 and 2003. Interviewed in 2002 and 2012.
Isac Roffé Zagury; economist. Joined the BNDES in 1977. He
held several executive positions. He was managing director
and vice-president of the Bank and dean at the BNDES
University in 2002. Interviewed in 2002 and 2012.
Jany Maria dos Santos; administrative technician. Joined
BNDESPAR in 1979. She was services coordinator and
currently works in the Industrial Division, in the Culture,
Entertainment and Tourism Division. Interviewed in 2012.
Jaqueline Lemos Almeida; attorney. Joined the BNDES
in 1998. She has worked in several areas of the Bank and is
currently advisor to the Board of Directors. Interviewed
in 2012.
Jardy Sellos Corrêa; engineer. Joined the BNDES in 1958
to work as advisor to the then director Cleantho de Paiva
Leite. Participated in the development of projects such as the
BNDES’ Technology Fund (FUNTEC). Interviewed in 1982.
João Carlos Ferraz; economist. Joined the BNDES in
2007 to take over as managing director of the Bank’s
Corporate Planning and Risk Management Division. He is
currently vice-president of the BNDES and is responsible
for the Credit, Economic Research and Planning and Risk
Management divisions. Interviewed in 2012.
João Paulo dos Reis Velloso; economist. Minister of
Planning between 1969 and 1979. He participated in the
creation of institutions such as the Brazilian Innovation
Agency (FINEP), the Institute of Applied Economic Research
(IPEA) and the Brazilian Support Service for Micro and Small
Companies (SEBRAE). He collaborated on the drafting of
the national development plans (First and Second PNDs).
Jorge Cláudio Cavalcante de Oliveira Lima; economist.
positions. He is currently the head of the Credit Department.
Jorge Kalache Filho; engineer. Joined the BNDES in 1974.
He held several executive positions. Interviewed in 2002
and 2012.
José Clemente de Oliveira; economist. Joined the BNDES in
1962. He was executive director and advisor to the president.
José Flávio Gioia; engineer. Joined the BNDES in 1981
to work in FINAME. He held several executive positions.
José Mauro Mettrau Carneiro da Cunha; engineer. Joined
the BNDES in 1974. He was managing director and vicepresident of BNDES. Interviewed in 2002.
José Pelúcio Ferreira; economist. Joined the BNDES in
1953. He was a member of the BNDE-ECLA (Economic
Commission for Latin America) Joint Committee. Created
the BNDES Technology Fund (FUNTEC). Presided over the
Brazilian Innovation Agency (FINEP) between 1967 and 1975.
José Pio Borges de Castro Filho; engineer and economist.
positions. He was vice-president and president of the BNDES
between 1998 and 1999. Interviewed in 2002.
Joselito Bonifácio Oliveira; engineer, joined the BNDES
in 2003. He works in the Relations with the Government
Department of the BNDES. Interviewed in 2012.
Júlio César Maciel Ramundo; economist. Joined the BNDES
has been a managing director at the Bank, responsible for
the Industrial, Venture Capital and Capitals Market divisions.
Júlio Olimpio Fusaro Mourão; economist. Joined the
BNDES in 1966. He held several executive positions. He
was deputy managing director for the Planning Division.
Juvenal Osório Gomes; economist. Joined the BNDES
in 1953. He devoted his studies to the area of economic
development, with an emphasis on infrastructure,
industrialization and the creation of new techniques by
working together with the Economic Commission for Latin
America (ECLA). He also held important positions within the
federal government. Interviewed in 1982.
209
Laís Maria Veríssimo Reis Costa; attorney. Joined the
BNDES in 2002. Currently head of the Legal Department of
the Information Technology Division. Interviewed in 2012.
Licínio Velasco Júnior; engineer. Joined the BNDES in
1975. He held several executive positions. He was director of
BNDESPAR. Interviewed in 2012.
Lucas Lopes; engineer and economist. He was minister for
Highways and Public Works under the Café Filho government,
and minister of Finance in the Juscelino Kubitschek
government. He was president of the BNDES between 1956
and 1958 and coordinated the Development Board which
drafted JK’s Development Plan. Interviewed in 1982.
Luciana Giuliani de Oliveira Reis; systems analyst. Joined
the BNDES in 1992. She held several executive positions.
Currently deputy managing director in the Information
Technology Division. Interviewed in 2012.
Luciane Fernandes Gorgulho; economist. Joined the
BNDES in 1992. She held several executive positions. She is
currently head of the Culture, Entertainment and Tourism
Department of the Industrial Division. Interviewed in 2012.
Luciano Galvão Coutinho; economist. In 2007, he was
invited by the then President of the Republic, Luiz Inácio
Lula da Silva, to take over as president of the BNDES. In 2011,
President Dilma Rousseff reconfirmed his charge at the Bank.
Luciene Ferreira Monteiro Machado; engineer. Joined
the BNDES in 1998. She held several executive positions.
Currently deputy managing director in the Foreign Trade
Luiz Alberto Madeira Coimbra; economist. Joined the
BNDES in 1961 as a trainee. He worked in the International
Operations Department and headed the Bank’s office in
Recife. He also worked under assignment to the State Bank
of Pernambuco. Upon returning to the BNDES, he took over
at the Planning Division. Interviewed in 2002.
Luiz Antônio Araujo Dantas; engineer. Joined the BNDES in
1979. He held several executive positions. Between 2004 and
2010, he was deputy managing director in the Foreign Trade
Luiz Antônio do Souto Gonçalves; engineer, joined the
BNDES in 1982. He held several executive positions. Since
2011, he has been deputy managing director in the Venture
Capital Division. Interviewed in 2012.
Luiz Carlos Mendonça de Barros; economist. He was
president of the BNDES between 1995 and 1998. Interviewed
in 2002.
Luiz Carlos Soares de Souza Rodrigues; engineer.
Joined the BNDES in 1954. He is responsible for the Bank’s
constructions in both Brasília and Rio. Interviewed in 2002.
Luiz Eduardo Melin de Carvalho e Silva; economist. Joined
the BNDES in 2003 as a managing director. He assisted in the
creation of the South American Interaction Foreign Trade
Division. In 2011, he returned to the BNDES as managing
director of the International and Foreign Trade Departments.
Luiz Fernando Cardoso Chaves; attorney. Joined the
BNDES in 1992. He held several executive positions. He is
currently head of the Legal Department of the Financial
Luiz Fernando Linck Dorneles; accountant. Joined the
BNDES in 1978 as a trainee. He held several executive
positions. He was a managing director in the Human
Resources and Information Technology divisions and on the
AGIR Project. Interviewed in 2012.
Luiz Inácio Lula da Silva; one of the founders of the
Workers’ Party (PT) in 1980 and was a federal deputy elected
to the Constituent Assembly in 1986. Between 2003 and 2010
was President of the Republic.
Luiz Orenstein; engineer. Joined the BNDES in 1978. He held
several executive positions. He was a managing director in
the Credit and Financial divisions as well as at BNDESPAR.
Luiz Paulo Vellozo Lucas; engineer. Joined the BNDES in
1980. He held several executive positions. He is currently a
technician in the Human Resources Division. Interviewed
in 2002.
Marcelo Nardin; economist. Joined the BNDES in 1978 as a
trainee. He held several executive positions. He is currently
a technician in the Human Resources Division. Interviewed
in 2002.
Marcelo Porteiro Cardoso; administrator. Joined the
BNDES in 2004. Since 2011, he has been a deputy managing
director in the Agriculture, Cattle-Raising & Social Inclusion
Márcio Bernardo Spata; accountant. Joined the BNDES
in 2004. He is currently a Manager in the Venture Capital
Márcio João de Andrade Fortes; engineer. He was a
member of the Board of the Bank between 1979 and 1980. In
1987, he took over as president of the BNDES, remaining until
Márcio Macedo da Costa; engineer. Joined the BNDES in
2001. He is currently head of the BNDES’ Environmental
Department. Interviewed in 2012.
Marcos Pereira Vianna; engineer. He took over as president
of the BNDES in 1970 and continued until 1979. He was the
president who held the position for the longest period of
time. Interviewed in 2002.
Margarida Maria Pedrosa Sá Freire de Souza; systems
analyst. Joined the BNDES in 1982. She held several
executive positions. She is currently head of the Projeto AGIR
Management Department. Interviewed in 2012.
210
Maria da Conceição Keller; economist. Joined the BNDES
as a trainee in 1973. She held several executive positions.
She was deputy head of the President’s Office. Interviewed
in 2012.
Maria da Conceição de Almeida Tavares;
economist,congresswoman and economics professor. Joined
the BNDES at the end of the 1950s. She was head of the
BNDE-ECLA office in the 1960s. Interviewed in 1982.
Maria das Graças Amaral Passos; economist. Joined the
BNDES in 1973 as a trainee. She coordinated the Northeast
Regional Representation in Recife. Interviewed in 2002.
Maria Isabel Rezende Aboim; economist. Joined the
BNDES as a trainee in 1975. She held several executive
positions. She was deputy managing director in the Finance
and International divisions. Interviewed in 2012.
Maria Lídia de Moraes Sá Peixoto Montenegro; attorney.
Joined the BNDES in 1976. Interviewed in 2002.
Mariane Sardemberg Sussekind; attorney. Joined the
BNDES in 1976 as a trainee. She held several executive
positions and was head of the President’s Office. Interviewed
in 2002.
Mario Guedes de Mello Neto; economist. Joined the BNDES
in 1974 as a trainee. He held several executive positions
and was deputy managing director of the Credit Division.
Martha Gubernikoff Guimarães; administration
technician. Joined the BNDES in 2008 and is currently a
secretary in the Basic Inputs Division. Interviewed in 2012.
Maurício dos Santos Neves; engineer. Joined the BNDES
in 2000. He held several various executive positions. He
is currently a deputy managing director in the Industrial
Milton Cesar Teixeira Dias; engineer. Joined the BNDES in
1974 as a trainee. He held several executive positions. Was
responsible for the creation of the BNDES Card. Interviewed
in 2012.
Mônica Gallardo Rey; attorney. Joined the BNDES in 2006.
Is currently a manager on the AGIR Project. Interviewed in
2012.
Nelson Cruz Dias; administrative technician. Joined the
BNDES in 1975. Interviewed in 2012.
Nelson Fontes Siffert Filho; economist. Joined the BNDES
has been deputy managing director in the Infrastructure
Nely de Araújo Starling; administrative technician. Joined
the BNDES (in EMBRAMEC) in 1975. She held several
executive positions. Interviewed in 2012.
Nildemar Secches; engineer. Joined the BNDES in 1973. He
held several executive positions. He was vice-president of the
BNDES. Interviewed in 2002.
Nora Lopes Lanari; economist. Joined the BNDES in 1975 as
a trainee. She held several executive positions. Interviewed
in 2012.
Oscar Felipe Lopes Quental; engineer. Joined the BNDES
in 1973. He held several executive positions. Interviewed
in 2012.
Paulo de Sá Campello Faveret Filho; economist. Joined
the BNDES in 1993. He held several executive positions.
He is currently a deputy managing director in the Human
Resources Division. Interviewed in 2012.
Paulo Diederichsen Villares; engineer and businessman.
Started his activities with the Empresa Villares company in
1959, where he performed various executive positions. In 1972,
he became president of the company. Interviewed in 1982.
Paulo Libergott; engineer. Joined the BNDES in 1978. He
held several executive positions. He is currently a department
head in the Finance Division. Interviewed in 2012.
Paulo Mizushima; economist. Joined the BNDES in 1979. He
held several executive positions. Interviewed in 2012.
Paulo Sergio Ferracioli da Silva; economist. Joined
the BNDES in 1977. He held several executive positions.
Paulo Sérgio Moreira da Fonseca; economist. Joined the
BNDES in 1975. He held several executive positions. He was a
managing director in the Planning Division and is currently a
technician with the Boards of Directors of the Infrastructure,
Basic Inputs and Project Development divisions. Interviewed
in 2012.
Renato José Silveira Lins Sucupira; engineer. Joined the
BNDES in 1986. He held several executive positions, including
managing director of FINAME. Interviewed in 2002.
Ricardo Albano Dias Rodrigues; engineer. Joined the
is currently head of the Internet Operations Department.
Ricardo Luiz de Souza Ramos; engineer. Joined the BNDES
in 1992. He held several executive positions and currently
a deputy managing director in the Social Infrastructure
Ricardo Massao Matsushima; accountant, joined the
BNDES in 1977. He held several executive positions.
Roberto de Oliveira Campos; economist and diplomat,
deputy, senator and minister of Planning in the Castelo
Branco government. He was a managing director between
1952 and 1953, and president of the BNDES between 1958 and
Roberto Felix de Oliveira; engineer. Joined the BNDES in
1956. He held several executive positions. Interviewed in 1982.
Roberto Procópio de Lima Netto; engineer. Joined the
BNDES in 1971. He created Cebrae. Interviewed in 1982.
211
Roberto Luiz do Nascimento Reis; attendant. Joined
the BNDES in 1979. Currently works in the Administration
Sol Garson Braule Pinto; economist. Joined the BNDES in
1975. He held several executive positions. Interviewed
in 2002.
Roberto Saturnino Braga; engineer. Joined the BNDES in
1956. He held several executive positions. Was a Senator from
1975 to 1985. Interviewed in 2002.
Terezinha Moreira; economist. Joined the BNDES in 1974.
She held several executive positions. She was a deputy
managing director in the Urban Infrastructure Division.
Roberto Zurli Machado; engineer. Joined the BNDES in 1984.
He held several executive positions. Since 2011, he has been
a managing director at the Bank, responsible for the Basic
Inputs Project Development divisions. Interviewed in 2012.
Rodrigo Matos Huet de Bacellar; engineer. Joined the
BNDES in 2000. He held several executive positions and
is currently responsible for managing the Basic Inputs
Wagner Bittencourt de Oliveira; engineer. Joined the
BNDES in 1975. He held several executive positions. In 2006,
he became a managing director of the Bank. He is currently
minister of Civil Aviation. Interviewed in 2012.
Rômulo Barreto de Almeida; attorney and economist. He
took part in the Abbink Mission and headed the Economic
Advisory Body to the President of the Republic during Getúlio
Vargas’ second administration. He was also responsible for
the creation of the BNDES in 1952. In 1985, he took over as
Planning director for the BNDES. Interviewed in 1982.
Walsey de Assis Magalhães; economist. Joined the BNDES
in 1974. He held several executive positions. In 2009, He
became advisor to the president. Interviewed in 2012.
Rute Sueli Lima Nascimento; administration technician.
Joined the BNDES in 1984. Currently works in the Capitals
Market Division. Interviewed in 2012.
Ruy Carvalho da Silva Junior; engineer. Joined the BNDES
with FINAME in 1980. Currently works in the Foreign Trade
Ruy Coutinho do Nascimento; attorney, joined the BNDES in
1975. He held several executive positions. Interviewed in 2002.
Sallustio Amerio da Rosa; attorney. Joined the BNDES in
1975. He held several executive positions. He was head of the
President’s Office. Interviewed in 2012.
Sebastião José Martins Soares; engineer. Joined the
was deputy managing director in the Planning Division.
Sérgio Besserman Vianna; economist. Joined the BNDES in
1987 after having won the BNDES Economics Award. He held
several executive positions, including director of the Bank.
Sergio Eduardo Weguelin Vieira; economist. Joined
BNDESPAR in 1982. He held several executive positions.
Since 2009, he has been a deputy managing director in the
Environment Division. Interviewed in 2012.
Sergio Foldes Guimarães; systems analyst. Joined the
BNDES in 1993. He held several executive positions. Since
2010, he has been a deputy managing director in the
International Division. Interviewed in 2012.
Simone Carvalho Mesquita; administrator. Joined the
BNDES in 1993. She held several executive positions. She
is currently head of the Communication of the President’s
Office. Interviewed in 2012.
212
Vânia Maria da Costa Borgerth; accountant. Joined the
BNDES in 1992. She held several executive positions. She is
currently an advisor to the president. Interviewed in 2012.
Wilson Gonçalves dos Santos; attendant. Joined the
BNDES in 1980. In 1991, he became a reproductions operator.
Yolanda Maria Melo Ramalho; economist, joined the
BNDES in 1976. She held several executive positions. She
was a deputy managing director in the Planning Division.
About the statements
The statements used in this book are part of the BNDES’
collection. In 1982 and 1992, they were collected
in partnership with the Center for Research and
Documentation of the Contemporary History of Brazil
(CPDOC), a department of the Getulio Vargas Foundation.
In 2002 and 2012, the collection of statements was
conducted in partnership with the Museu da Pessoa, with
the exception of those interviews conducted with Cleantho
de Paiva Leite, Fabio Stefano Erber, Hélio Jaguaribe,
Luiz Carlos Mendonça de Barros, Nildemar Seches
and Sérgio Besserman Vianna, which are published in
AZEVEDO, Elisabeth; GORAYEB, José. BNDES: 50 anos de
desenvolvimento. São Paulo: DBA Artes Gráficas, 2002, and
are available on the BNDES website: http://www.bndes.
gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/
Arquivos/conhecimento/livro50anos/Entrevistas.PDF
Some statements collected in 1982, such as those from
Celso Monteiro Furtado, Eugênio Emílio Staub, Ignácio de
Mourão Rangel, Juvenal Osório Gomes, Lucas Lopes, Maria
da Conceição de Almeida Tavares, Paulo Diederichsen
Villares, Roberto de Oliveira Campos, Rômulo Barreto de
Almeida and Sebastião José Martins Soares are available
on the website of the Celso Furtado International Center of
Policies for Development: http://www.centrocelsofurtado.
org.br/interna.php?ID_M=138
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CPDOC-FGV/BNDES. COLLECTION of Statements from the 30
Year Memory Project (Phase I) 1982.
MUSEU DA PESSOA/BNDES. COLLECTION of Statements from
the 50 Year Memory Project. 2002.
. COLLECTION of Statements from the 60 Year Memory
Project, 2012.
Credits for images
p. 8 & 9 – Claudine Petroli – AE
p. 102 – Carlão Limeira – AE
p. 10 & 11 – Arcelor Mittal Brasil Collection
p. 104 – Hilton Lucio – Brazilian Numismatics Society Collection
p. 13 – Orlando Machado – Diário da Noite – JCom – D.A. Press
p. 107 – Daniel Mansur – Usiminas Collection
p. 17 – BNDES Collection
p. 112 & 113 – Embraer Collection
p. 20 – Eletrobras Communications
p. 114 – Geraldo Falcão – Petrobras image bank
p. 117 – Celso Junior – AE
p. 23 – National Archive – Correio da Manhã
p. 119 – CDMCC Collection
p. 27 – JCom Archive – D.A. Press
p. 120 – Salviano Machado – Vale News Agency
p. 28 – DN Archive – D.A. Press
p. 121 – Nelsina Vitorino – DB – D.A. Press
p. 30 – Eletrobras Communication
p. 124 – Patrick Grosner – Andrade Gutierrez Collection
p. 33 – AE Archives
p. 128 – Embraer Collection
p. 36 & 37 – CDMCC Collection
p. 137 – Caru Ribeiro – Rio de Janeiro Municipal Theatre Collection
p. 41 – Ricardo Telles – Suzano Collection
p. 140 – Roberto Setton – AE
p. 42 – Oswaldo Palermo – AE
p. 142 – Egmar Del Bel Filho – BNDES Collection
p. 48 – Sergio Rocha – O Cruzeiro – EM – D.A. Press
p. 144 – Luciano Andrade – AE
p. 146 – ‘Objectivo Foto’ Studio – CDMCC Collection
p. 51 – National Archive Collection – Correio da Manhã
p. 148 & 149 – Gabriel de Paiva – O Globo News Agency
p.154 – Marcos Valadares – Odebrecht Collection
p. 157 – BNDES Collection – Marcellus Souza – BNDES Collection
(right-hand image)
p. 56 – COPPE/UFRJ Communication
p. 64 – Hilton Lucio – Brazilian Numismatics Society Collection –
Denyse Emerich (second image from bottom to top)
p. 160 & 161 – Epitácio Pessoa – AE
p. 162 – CPFL Renewable Energies
p. 166 – Suape Communication
p. 169 – Roberto Rosa – Petrobras image bank
p. 170 – COPPE/UFRJ Communication
p. 70 & 71 – Luiz Pinto – O Globo News Agency
p. 172 – CEITEC S.A. Communication
p. 73 – Rolando de Freitas – AE
p. 175 – Rogério Franco Coelho Collection
p. 176 – Monique Renne – Esp. CB – D.A. Press
p. 180 – Paulo Vitale – CDMCC Collection
p. 81 – Túlio Vidal – TOTVS Communication
p. 184 – LD Design Laboratory Collection
p. 188 – Araquém Alcântara
p. 88 – Gabriel Abreu – Health and Happiness Project Collection
p. 189 – Sérgio Castro – AE
p. 191 – AE Collection
p. 94 – Fibria Collection
p. 193 – Alexandre Fonseca – AE
p. 196 – Odebrecht Collection (upper image) – Eduardo Moody –
ETH Collection
215
Technical index
BRAZILIAN DEVELOPMENT BANK (BNDES)
President
Luciano Coutinho
Vice-President
João Carlos Ferraz
Managing Diretors
Fernando Marques dos Santos
Guilherme Narciso de Lacerda
Júlio César Maciel Ramundo
Luiz Eduardo Melin de Carvalho e Silva
Maurício Borges Lemos
Roberto Zurli Machado
Coordination
President’s Office
Communication Department
memoria@bndes.gov.br
Collaborators
Ana Cláudia Duarte de Além
Gisele Pinheiro Costa
Guilherme Guimarães Studart
Gustavo Affonso Taboas de Mello
Helena Tenório Veiga de Almeida
João Paulo Carneiro de Holanda Braga
Juliana de Castilho Alvim
Lavinia Barros de Castro
Marcelo Trindade Miterhof
Margareth Ramos do Carmo Freitas
Shirlene Linny da Silva
MUSEUM of the person’s STAFF
Executive Committee
Karen Worcman – Diretora-presidente
Márcia Ruiz – Memória Institucional
Sônia London – Disseminação do Conceito
Special Projects
José Santos Mattos
Collection
Ana Maria da Costa Leitão Vieira
Institutional Memory Division Assistant
Taís Motta
Support
Keli Cristina Garrafa
Marcela Fogare Meira
Bruce Gonçalves
Jefferson Morgado
Jefferson dos Santos
THE PROJECT:
Original idea
Museu da Pessoa
Supervision
Márcia Ruiz
Coordination
Denyse Emerich (1st phase)
Laura Olivieri Carneiro de Souza (2nd phase)
Text
Márcia de Paiva
Consultancy
Laura Barbosa de Carvalho
Mauro Malin
English Translation
Steve Wingrove
Revision in Portuguese
Sílvia Balderama
Revision in English
Anthony Rosenberg
Expressão Editorial
Researchers
Carolina Lage Borges
Hiolly Batista Januário de Souza
Isaque Procópio dos Santos Júnior
Julianna Luzia de Sant´Ana Paes
Larissa Rangel da Silva
Leda Agnes Simões de Melo
Mariana Pontim
Interviewers
Denyse Emerich
Laura Olivieri Carneiro de Souza
Márcia Ruiz
Mariana Pontim
Raquel Luise Pret Coelho
Rosana Miziara Lopes
Statement Editing
Luiz Gustavo de Souza Lima Junior
Mariana Pontim
Archivists
Billy Dudley Sena do Valle
Raquel Luise Pret Coelho
Graphic Design and Layout
Fonte Design | www.fontedesign.com.br
Illustrations
Gilberto Tomé
Production Executive
Taís Motta
Video
Cartola Filmes
Image Research
Denyse Emerich
International Cataloguing Data in the Publication (CIP)
(Brazilian Chamber of Books, SP, Brazil)
BNDES: um banco de história e do futuro –
text Márcia de Paiva.
São Paulo: Museu da Pessoa, 2012.
978-85-60505-43-2
1. Banco Nacional de Desenvolvimento Econômico e Social (Brasil) –
História I. Paiva, Márcia de.
12-14233CDD-332.280981
Systematic Cataloguing Indexes:
1. Banco Nacional de Desenvolvimento Econômico e Social:
Brasil: História 332.280981
2. BNDES: Brasil: História 332.280981
BNDES:
A bank with a
history and a future

BNDES: A bank with a history and a future

Transcription

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