Brazil and China plan to create investment fund for infrastructure projects
The fund was announced as an agreement between Brazil's Federal
Published in 20/05/2015 - 13:57 By Michèlle Canes and Paulo Victor Chagas report from Agência Brasil - Brasília
Brazil's and China's governments have announced plans to create a fund for investment in infrastructure projects through an agreement between Brazil's Federal Savings Bank (Caixa Econômica Federal, or simply Caixa) and the Industrial and Commercial Bank of China (ICBC). The announcement was made Tuesday (May 19) by President Dilma Rousseff following a meeting with Chinese Prime Minister Li Keqiang.
According to the Political Under-Secretary-General of Brazil's Foreign Ministry, Ambassador José Alfredo Graça Lima, the investment fund could amount to $20 billion. “Prime Minister Li Keqiang mentioned a $10-$20 billion contribution from China that could be used to support projects in infrastructure and production capacity.”
The ambassador explained that although the announcement was not part of any of the agreements signed in the morning, it is testament to China's interest in investing in key areas for growth in Brazil. The rules for forming the fund are still pending. A total 35 government and business agreements were signed for investment and trade during the visit from the Chinese committee.
Plans for preliminary studies to create the fund were outlined in a memorandum of understanding signed by the two banks, with a view to promoting and creating business opportunities. According to Márcio Percival, Vice-President of Finance and Control at Caixa, other financing solutions may be created in addition to the fund.
Within two months of the memorandum signature, work plans will outline business opportunity areas that are a priority for both countries. According to Percival, the plan will also establish which projects and industries will use the funds, including infrastructure, highways, railways, airports, telecom, housing, and energy.
“Within 60 days, we'll be announcing details of the business areas, financing models, projects, and companies involved,” the bank executive said. Investments in Brazil are expected to be even larger than initially estimated. “China wants to form a fund with Caixa that could grow as big as $50 billion over time.”
Ambassador Graça Lima mentioned a document signed between China's National Development and Reform Commission and Brazil's Ministry of Planning, Budget and Management (MPOG) for investment and cooperation in production capacity. “This agreement includes existing initiatives and opens up new opportunities in such areas as energy, mining, infrastructure, and manufacturing,” he said.
Cláudio Puty, Secretary of Foreign Affairs at Brazil's Ministry of Planning, said that a Committee for Investment Monitoring and Promotion of Public and Private Initiatives was established in order to track performance of a memorandum signed between Brazil and China last year.
According to Puty, China presented a list of projects in which it is interested in investing. He said no amounts were mentioned in the agreement because it involves projects that are still not in the bidding stage. “What we do have is a clear sign from the Chinese government that they want to make investments, a listing of existing construction projects at different stages that they have an interest in.”
The agreements signed by Brazil and China include feasibility studies for a railway linking Brazil to the Pacific Ocean through Peru, the so-called Bioceanic Railway Connection. The studies will be conducted by the three parties – Brazil, Peru, and China – and are expected to be delivered to the governments by May 2016.
Translated by Mayra Borges
Fonte: Brazil and China plan to create investment fund for infrastructure projects
Edition: Fábio Massalli
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