DEVELOPMENT BANK AND CORPORATE LONG-TERM CREDIT MARKET: PAST, PRESENT, AND FUTURE

Abstract

This article analyzes the recent evolution of long-term corporate credit in Brazil, historically concentrated in public development banks, particularly BNDES, financed through budgetary sources and parafiscal funds. Following the Real Plan in 1994, it was expected that monetary stability would gradually encourage private sector participation in long-term financing for industry and infrastructure, a process that materialized only two decades later. This development depended on structural reforms, including improvements in public debt management, the creation of incentivized debentures, the modernization of capital markets, and a significant reduction in interest rates between 2016 and 2021. The expansion of private long-term credit coincided with a sharp contraction in BNDES operations, whose disbursements declined by approximately 80 percent in real terms between 2013 and 2019. This reduction was not driven by increased private competitiveness but rather by a federal policy to reallocate the bank’s resources toward reducing public debt. As a result, a dual structure emerged between public and private financing mechanisms. Overcoming this fragmentation is essential to establish an integrated financial environment in which public and private actors can both compete and collaborate, thereby fostering a recovery in investment levels that have remained historically low over the past decade.