In a move aimed at spurring U.S. exports of construction equipment and services to Brazil, the U.S. Export-Import Bank is providing a $1-billion line of credit for infrastructure projects in that country. A particular focus will be on public-works projects tied to the 2014 World Cup and 2016 Summer Olympics, both to be hosted by Rio de Janeiro.
Announced by Ex-Im Bank President and Chairman Fred P. Hochberg during President Obama’s March 19-21 trip to Brazil, the aid is for infrastructure projects in the state of Rio de Janeiro.
In a March 19 speech in Braslia, Obama said Brazil is expected to spend more than $200 billion to prepare for the World Cup and Olympics. He added, “And as you look for businesses to design and build new roads and bridges and stadiums, American companies stand ready to help you meet this challenge on everything from engineering to manufacturing to construction.”
Maura Policelli, the Ex-Im Bank’s senior vice president for communications, says the line of credit is an incentive that can be used in different ways, including serving as insurance for a private bank’s loan to a U.S. manufacturer to finance exports of equipment.
“[Without the line of credit] U.S. companies would have less of a chance of competing for all of these opportunities in Brazil. Because China is competing, India is competing. Everybody around the world knows that Brazil is building and building fast,” Policelli says.
The Export-Import Bank line of credit is “like putting a marker in the sand,” she adds. “Governments are trying to help their industries get in on the action. Our billion-dollar line of credit is a way to say the U.S. is engaged. We want to get in on the game here and not be stuck on the sidelines.”
Nick Yaksich, the Association of Equipment Manufacturers’ vice president for global public policy, says his group is encouraged by the Export-Import Bank’s announcement, adding that construction equipment is one of the sectors that should benefit from the bank’s line of credit.
“There’s great interest in Brazil,” Yaksich says. The line of credit “just gives added incentive to export to Brazil.”
Yaksich says the Association of Equipment Manufacturers is working on a trade mission to Brazil for small and medium-sized construction equipment manufacturers. The trip, now in the planning stage, would take place in the fall, he adds.
World Cup, Olympics Infrastructure
Estimates of Brazil’s planned expenditures on infrastructure upgrades for the World Cup and Olympics have varied wildly. Early on, the government said such spending would be about $13.3 billion. In March, President Dilma Rousseff cited a $20-billion figure. As mentioned above, Obama suggested a $200-billion estimate. A recent Reuters report put the price tag at a whopping $1 trillion.
To coordinate the Olympics improvements, Henrique Meirelles, a former Brazil Central Bank governor, was appointed on March 14 to lead the country’s Olympic Public Authority for the 2016 games. The agency will work with a budget of $18 billion, according to the government.