The Minister of Finance, Dario Durigan, signaled that the panda bonds issued by Brazil in the Chinese market could, in the future, finance sustainable investments, including the production of biofertilizers. The statement was made at a press conference in Beijing this Friday (26).
Durigan said he spoke with People’s Bank of China Governor Pan Gongsheng about the possible creation of panda bamboo bonds, a green version of panda bonds with even lower interest rates. Unlike conventional issuance, whose resources go to the Treasury’s coffers, the green version requires that the money be directed to specific sectors.
“I even joked with the president of the Chinese Central Bank who, in addition to panda bondswe can have the bamboo panda bondswhich would be sustainable panda titles”, says Durigan.
Durigan stated that the first step will be conventional issuance, to pay off public debt, but that this does not prevent Brazil from moving towards sustainable issuance in China in the future.
EcoInvest
When talking about what could support a future green issue, the minister cited EcoInvest, a program created by the Lula government as part of the Novo Brasil plan (Ecological Transformation Plan), to attract foreign investment in long-term sustainable projects. The program defines five priority axes. “We are talking about biofertilizer, biofuel, battery, critical mineral and artificial intelligence. There are five projects and programs that we have established as a priority for the Brazilian economy”, stated Durigan.
EcoInvest’s main differentiator would be exchange rate protection. Durigan explained that the volatility of the real is the biggest barrier highlighted by foreign investors. “You arrive with a foreign investor and say the following: ‘Make an investment in Brazil, Brazil has potential for biofuel, for biofertilizer’, and the investors say: ‘It’s true’. What is Brazil’s problem? It’s exchange rate volatility. If I put my money into a 15-year project to build a biorefinery, to build a SAF plant, sustainable aviation fuel, in 15 years I don’t know what will happen”, said the Minister of Finance.
To resolve this, the government creates, in partnership with private banks, an exchange rate protection band for projects approved as strategic. “If you make an investment in Brazil, in a contract in which you establish 5 dollars in relation to the real, as a reference exchange rate, if you have a variation of up to 5.30 or even 4.70, it is a variation of the game, of the business, it is a risk for the entrepreneur. What’s different is if this variation exceeds these levels, which then raises the risk of businesspeople saying: ‘No, then I can’t put the money in Brazil’. So we are saying: ‘No, put the money here and you have a level of results’”, explained Durigan.
“These five projects, which we have been talking about a lot here in China, could be supporting future sustainable emissions,” said the minister.
Source: www.brasildefato.com.br
