National Bank for Economic Development (BNDE)

Created in 1952 by the Joint Brazil-United States Economic Commission (1951–1953), the National Bank for Economic Development (Banco Nacional de Desenvolvimento Econômico e Social—BNDES; originally the BNDE) has been the major source of long-term financing of capital investment in Brazil since its creation. The scope of its operations was somewhat limited in the 1950s. The Bank Reform Act (Law 4595 of 1964), however, expanded its functions and programs by creating a group of special funds designed to serve different sectors of the economy, the most important of which was the Special Agency of Industrial Financing (FINAME). The BNDES's funds stem from two forced savings funds: the Program of Social Integration (PIS) and the Public Employees Financial Reserve Fund (PASEP, originally at the Bank of Brazil). The BNDE carried out a selective credit policy according to the norms determined by the National Monetary Council (CMN) through the network of public and private development banks set up with the 1964–1966 reforms.

The main publicly owned development banks subordinate to the BNDES are the Bank of the Northeast (BNB, 1952), the Bank of Amazonia (BASA, 1966), the National Bank of Cooperative Credit (BNCC, 1966), the Regional Development Bank of the Extreme South (BRDE, 1962), and the state development banks, which are owned and operated by the various states. The BNDES also owns its own participation corporation, BNDES Participações (BNDESPAR), to spur equity financing in addition to the BNDES system's role as a minority shareholder.

The divestiture (privatization) of enterprises held by the BNDES, started in late 1991, should decrease the BNDES's role in direct ownership of the Brazilian corporate structure. However, the BNDES should still have an important role in financing basic infrastructure investment.

See alsoBanking: Since 1990; Economic Development.

BIBLIOGRAPHY

John H. Welch, Capital Markets in the Development Process: The Case of Brazil (1993).

Additional Bibliography

Bacha, Edmar Lisboa and Luiz Chrysostomo de Oliveira Filho. Mercado de capitais e crescimento econômico: Lições internacionais, desafios brasileiros. Rio de Janeiro: Contra Capa Livraria: ANBID: IEPE, CdG, 2005.

Love, Joseph LeRoy. Crafting the Third World: Theorizing Underdevelopment in Rumania and Brazil. Stanford, CA: Stanford University Press, 1996.

                                        John H. Welch