The Brazilian and Chinese governments have launched a joint US$20bn fund for mutually beneficial infrastructure projects in Brazil, which will begin operations this week (June 1st).
The announcement was made during the Brazil Investment Forum 2017 this week in São Paulo, by planning minister Dyogo Oliveira, but the initiative began with Chinese President Xi Jinping’s visit to Brazil in 2015.
Of the US$20bn, US$15mn were provided by Claifund, the Chinese vehicle for investment in Latin America, and US$5bn were contributed by Brazilian financial institutions.
Sectors considered in priority by the new fund will include logistics, energy, mining, technology, agriculture and agribusiness.
“This is a confirmation of the trust relationship that exists between Brazil and China,” said Olivieira at the launch. “This is a special moment for Brazil, in which we are looking for support from our international partners for large infrastructure projects.”
BNDES, the Brazilian development bank, and state-owned bank Caixa, will be the fund’s agents.
According to the planning ministry’s international affairs secretary, Jorge Arbache, this is the first fund created by Claifund which works under a parity agreement, meaning that Brazil and China will have the same weight in financing decisions, despite the fact that Claifund will contribute three times the amounts provided by Brazilian institutions in each project.
Brazil desperately needs its economy to pick up after over two years of its worst recession in history. The country’s hopes for improvement are being threatened by its latest political crisis, as President Michel Temer is now under investigation for corruption.