Venezuela, Cuba and Mozambique owe Brazil

The governments of Venezuela, Cuba and Mozambique have accumulated debts of more than 2 billion reais (EUR 460 million) as a result of loans granted by the Brazilian National Economic and Social Development Bank (BNDES).

The BNDES loans were used to finance infrastructure works, the newspaper Estado de São Paulo reported on Thursday. The contracts – estimated today at almost 14 billion reais – were signed during the mandates of previous Brazilian presidents Lula da Silva and Dilma Rousseff, and arrears today amount to R$2.3 billion, according to the Estado de San Paulo newspaper, and confirmed by the bank to Globo’s Jornal Nacional (TV newscast). In operations of this type, the BNDES disbursed funds in Brazil, in reais, to the Brazilian company responsible for the works or the export of goods and services to the foreign country, with the beneficiary country repaying the loan, with interest, in dollars.

Venezuela, for example, received money to build a factory, a shipyard, and the Caracas metro. Cuba modernised the port of Mariel, while Mozambique invested in an airport and a hydroelectric. Works in these countries were carried out by the Brazilian construction companies Odebrecht and Andrade Gutierrez, which confessed to have participated in the ‘Lava Jato’ (‘car-wash’) corruption schemes in Brazil.

Mozambique started delaying repayment instalments in 2016, and now owes 456 million reais, in updated values. Cuba has a debt of 232 million reais, and Venezuela owes the most: 1.6 billion reais. The loans for these countries are covered by Brazil’s Export Guarantee Fund, but since the losses were not foreseen in the country’s budget, its government last year had to transfer 1.3 billion reais from the Workers’ Assistance Fund to the BNDES.

Armando Castelar, coordinator of Applied Economics at FGV / Ibre, says that the operations were considered high risk.

“This is the result of having lent over purely political motivation to countries which had very high credit risk and we taxpayers put the money back with the taxes we pay to the federal government,” he explained. The 2019 budget foresees another $1.5 billion reais of expenditures from the Export Guarantee Fund. BNDES president Joaquim Levy, who declined to record an interview, has said that the bank will no longer lend to foreign governments.