Brazilian government aims to raise $2 billion in funding through new Eco Invest Auction
By Bernardo Caram
BARSILIIA (Reuters) – President Luiz Inácio Lulada Silva’s government is expected to raise $2 billion in sustainable project financing through a new auction announced on Monday, part of the ECO Invest Brazil plan, highlighting the initiative to raise the recovery of degraded ranches.
According to Brazilian Finance Minister Rogério Ceron, the country has the capacity to implement the world’s largest land restoration plan.
“It has a huge environmental impact, a huge international appeal, and many people are looking for us. In the best case, our goal is to restore about 1 million hectares. It is very radical,” Theron said.
The new auction is part of the ECO Invest program’s “hybrid finance” line, which combines public and private capital to reduce financing costs and stimulate sustainability initiatives in the private sector, while also reducing the risk of exchange rate exposure.
The official announcement of the auction will be made on Monday by the Ministry of Finance, Agriculture and Environment.
The ordinance to regulate auctions will be issued this week, with the deadline for banks to submit proposals at 45 days.
The secretary said that while the exact value cannot be disclosed so as not to hinder competition among financial institutions, the auction is expected to provide about $1 billion in catalytic capital from the climate fund, requiring at least half of the leverage.
Financial institutions that provide the highest leverage of private capital will win the auction. So if the auction is successful, at least $500 million in private resources will increase to $1 billion in climate funds, which can be increased according to competition.
Ceron believes there is an appetite to exploit, allowing financing to include $1 billion in public capital and $1 billion in private resources.
According to the Finance Minister, at least 60% of leveraged capital must come from foreign fundraising activities, and the remaining 40% may come from domestic resources.
The new auction is part of the government’s ecological transformation plan that could promote the national plan to transform degraded ranches, which was launched in 2023 with a focus on restoring low-productive land and expanding areas of food production without increasing deforestation.
(Reported by Bernardo Caram in Brasilia; Editor of Matthew Lewis)
