Brazilian Bank Lifts Veil Surrounding Cuba Loans

Jose Alberto Gutierrez  (Cafe Fuerte)

BNDES-display-300x202HAVANA TIMES — The National Bank for Economic and Social Development of Brazil (BNDES) has put an end to the secrecy surrounding its contracts and divulged classified information about loans advanced to Cuba, including a more than US $680 million investment destined to the Mariel Port mega-project.

The financing destined to construction in Cuba, offered by the Compañía de Obras e Infrastructura (“Construction and Infrastructure Company”) – a subsidiary of the construction giant Odebrecht – is of US $832 million. Of that total, $682 million were used to finance construction work at the Mariel Port, whose total cost was over $900 million.

The Brazilian financial entity made five yearly disbursements (from 2009 to 2013) to finance each of the stages of the expansion and modernization of the port, located in the province of Artemisa, as well as its access infrastructure. A term of 300 months was established for the repayment of each of the loans, which carry yearly interests between 4.44 and 6.91 %.

Airport Expansions

In this type of bank loan, the Brazilian company abroad also handles the financing, but the final client is responsible for settling it.

In addition to the sums secured for the Mariel Port, Cuba also received a $150 million loan from Brazil to expand and modernize Havana’s Jose Marti International Airport, expand the Santa Clara airport and purchase equipment for the Holguin, Cayo Coco and Cayo Largo terminals. This loan, signed on August 2014, has a 180-month settlement term and a yearly interest of 7%. The construction work will also be carried out by Odebrecht.

The BNDES also opened up its wallet to TPRO Engenharia y Pharmaster do Brasil, for the construction of a parenteral solutions and hemodialysis manufacturing plant in Cuba. The $14.8 million dollar loan has a 120-month repayment term and a yearly interest of 4.69%.

Brazil’s financing of construction projects in Cuba has been prompting criticisms since January of 2014, when President Dilma Rousseff attended the inauguration of the Cuban port (built using Brazil’s public funds) as a special guest. Since then, the government has defended the financial operations as advantageous, but had till now been reluctant to reveal the details of the transaction.

Pressure from the Opposition

Pressured by the opposition, seeking to secure consensus for the assembly of a parliamentary commission that is to investigate the operations of the bank and following an unprecedented decision by the Supreme Court that put an end to the secrecy surrounding another controversial loan made by the entity, the bank decided to pull the curtains and divulge the details of the contracts it began to sign as of 2007, through the BNDES Transparente at the bank’s web-page.

The decision was announced by Minister for Development, Industry and Foreign Trade Anmando Monteiro and by Luciano Coutinho, president of BNDES. According to Coutinho, the hitherto secret information will be published gradually. The bank president mentioned that the bank’s international loans portfolio is of US $11.9 billion.

In addition to Cuba, the countries receiving Brazilian financing include Angola, Argentina, Costa Rica, Ecuador, Ghana, Guatemala, Honduras, Mozambique, the Dominican Republic and Venezuela.

Though the financial advantages of these transactions can only be adequately gaged through more complex calculations and on the basis of information that has not yet been revealed by the banking institution, according to economist Sergio Lazzarini, professor at the Insper Higher Institute and BNDES analyst, the long-term interest rates negotiated with Cuba, with guarantees from the Brazilian government itself, are very favorable conditions and treat the country is “risk-free.”

Credit Risks

“Cuba has one of the highest credit risks in the world and it was granted extremely favorable conditions,” Lazzarini said during an interview for the newspaper O Estado de Sao Paulo. According to the expert, a study conducted by the University of New York calculated that any financing offered Cuba should carry interests between 11.5 and 12.5 %.

According to Samuel Pessoa, researcher for the prestigious Brazilian Economy Institute of the Getulio Vargas Foundations (IBRE/FGV), BNDES operations in Cuba do not follow standard market practice and entail an enormous, implicit subsidy.

“The question that should be asked is whether the investment is worth it and what returns Brazilian society will see. The decision to subsidize projects such as the Mariel Port is a political decision made by the Brazilian government, I do not believe it was a financial decision by BNDES,” Pessoa affirmed.

The political use of State funds and the favoring of allied countries during the administration of former Brazilian President Lula da Silva and current President Rousseff, to the detriment of national investments, is the main practice questioned by the opposition.

14 thoughts on “Brazilian Bank Lifts Veil Surrounding Cuba Loans

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  • Americans sleep better at night because of the vigilance provided by our northern neighbors (smile ).

  • Moses, where did I “bash” the US? A little sensitive are we? I agree…stability (and progress) in this hemisphere does indeed rest on the leadership of the US…hence why the Obama administration is determined to move things forward in that direction for the betterment of all…including that of the US. btw, my freedom is guaranteed by my Canadian government and military…but hey, thanks for watching my back…Canada will continue to do the same for you too.

  • Exactly. While it may make you feel good to bash the US, the very freedom you exercise to do so is guaranteed by the very same US. Despite lip service to the contrary, stability in this hemisphere rests on the leadership of the US.

  • Oh! Well! Disneyworld and iPhones…sounds like everything is just perfect then. What was I thinking?

  • Socialism comes in many flavors;

    The claim is that Raul’s Socialism is going to have aspects that include free market. The Marx-Lenin model is dead. With Cuba receiving these kinds of investments, US embargo will not mean much to them. I hand it to Raul to slap a socialist label on good old fashion state capitalism and move on. What these other countries get in return we shall see.

  • Your second attempt picked up a lot of the typos but continues the anti-capitalist claptrap. Where exactly has this socialist utopia of yours existed. By the way, the government of Mexico SOLD that land to the US. As a descendant from slaves, I can affirm that as bad as life is for illegal immigrants employed in the US, it is far better than the life of my antecedents. Your flair for the dramatic is noted but ill-placed. This thread is about Brazilian loans to Cuba.

  • I have never expressed “disdain and horror” for anyone in this blog. Especially at the same time. Your comments are so full of time-worn socialist cliches, I am left wondering if you are thinking for yourself or cut and pasting from some 50 year-old Soviet magazine article. Capitalist money, like Socialist money, is a medium of exchange. You would do well to at least browse a lower division Economics textbook. You might also consider turning on the spell check app on your computer. You managed to comment on this post without using the word Cuba. There are lots of blogs better-suited for anti-capitalists. You are probably at the wrong site.

  • Correction to Moses! Moses, where did the capital of the Capitalists

    come from? Isn’t it from cheap labour and exlpoitaion of the working class? Mexicans risking life and limb to cross over the border to slave on plantations situated on lands which were originally theirs; together with other people from Latin America whose natural resources have been milked by the multinationals leaving them in abject poverty, ignorance and disease, forcing them to journey to the so-called land of the free to eke out a living, enduring a life worse than that of a dog and a slave?. Cheap labour, exploitation of the natural resources of third world countries, oppression,repression, abject poverty, squalor, ignorance are factors which enabled the capitaists to realize huge profits and capital to be placed on the market. How could capitalism which introduced slavery on a large scale, now turn around and liberate the masses they enslaved? Could somebody please point the way to me? On the other hand, Socialism which is devoid of capital goes on the capitalist markets, borrow that capital, uses it in the consruction of a fair and just society, ensuring that the masses are compensated for their hardships by introducing them to free education from kindergarten to university, free medical attention and proper housing. Socialism infiltrares new life, new hope, new visions for a brighter, more prosprerous tomorrow where the fruit of the land will be shared by all and not just a privileged few.. Moses, are you not touched by the degradation, discrimination, oppression, exploitation, dehumanization. of your fellow men? Do you experience feelings of compassion toward them as you witness them writhing and squirming in squalor, ignorance and disease? Are you not touchwd by their plight? Are you capable of feelings,of empathizing, of reaching out and touching somebody’s hand so that the world could be transformed into a better place for mankind to live in peace and harmony? What makes you tick Moses? Why are you so puffed up with hatred, contempt, disdain, for the working class masses, their leaders and their ideology, which lifts them from the morass of backwardness, hunger, deprivation,ignorance and darkness? Abraham Lincon, in one of his masterful quotations said, “God must have loved the common people. He made so many of them?” Why hate the leaders who work in the interest of GOD’S PEOPLE, to ensure that they live like the HUMAN BEINGS HE CREATED THEM TO BE? Who are you, Moses, to thwart the effors of those men who work in the interest of GOD’S PEOPLE? This is a corrected version of one which was written before but which contained too many mistakes.

  • Moses, where id the capitalist money come from? Cheap labour,exploitation of the working class, Mexicans crossing the border to slave on plantations situated on lands which originally beloned to them; totherLatin American countries whose natural resources have been milked by the multinationals, leaving them in povet and focing them out of their countries to eke out a living in the land of the free whic treats them like dogs and slaves. Cheap Labour, explotstion.oppression, abject overty and ignorance, enable the cpialists to access capital. Socialism enlightens the masses by lifting them out of the darkness of ignorance, povert and disease, so that they can go on the market, borrow capital in an effort to build a more humane, fair and just society. Moses, doesn’t your conscience bother you when you observe the plight, the degredation, the oppression and repression of your fellow men? Do you possess feelings of compassion for your fellow men whom you see grovelling in squalor and ignorance? Are you not touched/ Are you capable of loving, of feeling of empathizing, of reaching out and touching so that this world could become a better place for mankind to dwell? What makes you tick Moses? Is it hatred when you see the advancements made by the poor, downtrodden, exploited, repressed degraded people of the world living like you? What makes you feel that you are better tan we the massess of the working class people of the world? Abrahan Lincoln in one of his masterful quotations once said and I quote, “God must have loved the common people; He made so many of them.” End of Quote.If you believe this quotation, how can you express disdain and horror for those who work in the interest of GOD’S PEOPLE? Tell me! PLEASE TELL ME?

  • Is the Venezuelan Bolivar worth anything? …well actually it is. But last time I checked it was .002 to the US dollar. The awesome power of socialism!!

  • Given the strength of the US dollar against the Brazilian Real, the Venezuelan Bolivar and the Argentinian and Mexican pesos AND the relative strength of the US economy worldwide, exactly how are US “interests” being hurt? More Latin American tourists will visit Disneyworld in Orlando, FL this year than ever before. Sales of iPhone 6s in Latin America are breaking sales records. If this is hurt, I’ll take another please.

  • Then get rid of it. Ironically, the US embargo on Cuba now does more to hurt US interests in this hemisphere. What goes around comes around?

  • More than a billion dollars in loans extended at highly favorable terms to finance infrastructure projects that anticipate full immersion in first world capitalism? Is that what Raul means when he says Cuba must “perfect socialism”? Doesn’t seem like the US embargo is hurting Cuba in any way.

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