12/03/2013
BNDES is good for whom? Autor: Revista Exame
The state bank has never loaned so much. But much of their cheap credit, rather than encouraging innovation, serving large groups to do more of the same - sometimes with disastrous results. Maybe it's time to reread the playbook
One of the examples of questionable strategy BNDES is trying to anoint a national champion milk. In 2011, BNDES contributed 700 million reais in the creation of the LBR, one of the largest milk producing country. The company, which owns brands Parmalat, Wells Caldas and Good Taste, came into trouble about to take a third of the line brands and close 11 of the 31 plants.
The LBR resorted to bankruptcy protection on Feb. 15. The bank has said it gave writedown of 865 million reais, for the loss on investment frustrated. The setback adds to other leading BNDESPar to make provision of 3.3 billion reais in 2012 against losses - accumulated since 2008, 4.6 billion are reserved.
Cases like the LBR show how big the difference between being "pro-market" - ie, in favor of free competition, regardless of the potential of each of the contestants - and "pro-business". When betting on a single company's dairy sector, which holds a share of 30%, BNDES believed reshape an entire industry.
The reality was stronger than the uto-pia. Says economist Steven Horwitz, a professor at Saint Lawrence University in New York: "If a government benefits a company, the competitors will spend time and money on lobbying to receive the same benefit given to the elect."
Not only within sectors benefited from the ample, cheap money from BNDES that competition is out of plumb. Also in the credit market itself is uneven fight. Each loan from state bank to a large company is possibly a capture unless the bond market. As mastodons and Ambev Valley, two of the companies that received loans from BNDES in recent years, did as they fit: they were after money they could find cheaper.
What is the effect of this size enterprises - with ability to access the capital markets to finance their activities - they hand money that should be reserved for modernizing the Brazilian economy? "The competition in the capital market with BNDES is direct and uneven," says one industry executive financial heard by EXAM. "You can not compete with a government-subsidized loan."
The government has signaled that it will not be the wet nurse BNDES forever. The Treasury Secretary Arno Augustin, has informed that the transfers this year will be lower than the 55 billion reais in 2012. It's the beginning of a change in the cards of the game? The background, at least, does not seem close to being revised. Internally, executives did not admit that BNDES has chosen priority sectors. Resources, they argue, are accessible to every type of company and sector.
