IDB Approves $100M to Support Brazil’s Push for Private Sector-Led Growth

The Inter-American Development Bank (IDB) has approved a $100 million loan to support Brazil’s ongoing efforts to strengthen its business environment and foster long-term private sector growth. The funding will reinforce the country’s Institutional Reforms Program for Competitiveness and Business Improvement, a strategic initiative led by Brazil’s Ministry of Development, Industry, Trade, and Services.

This operation, issued as a policy-based loan (PBL), is aimed at consolidating structural reforms, reducing transactional costs, and enhancing institutional efficiency to create a more conducive environment for investment, particularly for small businesses and innovation-driven industries.

Strategic Objectives Through 2027

The newly approved program seeks to generate measurable improvements by 2027 in several critical areas of economic administration and regulatory oversight. Key expected outcomes include:

• Strengthening institutional capacity for regulatory policy, ensuring that Brazil's rule-making processes are more transparent, efficient, and responsive to business needs.

• Accelerating intellectual property (IP) processing, specifically by increasing patent deposits and reducing processing times, which is crucial for innovation and technology-driven enterprises.

• Modernizing trade facilitation by reducing the number of required import licenses and streamlining approval times through the implementation of the New Import Process under the Single Foreign Trade Portal Program.

• Expanding access to credit, particularly for Micro, Small, and Medium Enterprises (MSMEs), women-led exporting firms, and sustainable infrastructure projects, helping to address persistent credit gaps in the Brazilian economy.

Tackling “Custo Brasil” to Unlock Investment Potential

A central focus of the program is to reduce the so-called “Custo Brasil”—the hidden and structural costs of doing business in Brazil. A study by the Competitive Brazil Movement has estimated these costs at approximately R$ 1.7 trillion annually. These inefficiencies stem from bureaucratic delays, complex regulatory frameworks, and underdeveloped infrastructure, all of which discourage foreign and domestic investment.

By addressing these systemic barriers, the IDB-financed reforms aim to boost productivity, lower operational costs, and increase Brazil’s attractiveness as a destination for long-term investment.

A Long-Term Commitment to Structural Reform

The financing aligns with the IDB’s broader strategy to foster sustainable and inclusive growth across Latin America and the Caribbean. It builds upon years of technical cooperation and advisory support provided to Brazil in areas such as trade policy, financial inclusion, and regulatory reform.

“This operation is emblematic of our commitment to strengthen institutions so they act as catalysts for productivity and inclusive growth,” said Annette Killmer, Head of the IDB’s Representation in Brazil. “It demonstrates our support for the Brazilian government’s agenda to build a more dynamic and resilient economy.”

The IDB emphasized that the program is not just about regulatory simplification, but about laying the groundwork for a long-term, systemic transformation of Brazil’s economic framework.

Loan Terms and Financial Structure

The $100 million loan comes with a 20-year amortization period and a 5.5-year grace period, offering Brazil flexible repayment terms. The interest is based on the Secured Overnight Financing Rate (SOFR), reflecting international best practices in loan pricing.

This financial support is expected to mobilize additional investments and technical collaborations in the coming years, further accelerating Brazil’s modernization trajectory.

Strengthening the Private Sector to Drive National Development

The IDB’s initiative recognizes the pivotal role of the private sector in Brazil’s economic resurgence. By working through public institutions to clear obstacles and increase transparency, the program seeks to catalyze private investment across sectors such as manufacturing, digital services, green infrastructure, and international trade.

Through its partnership with Brazil, the IDB aims to ensure that the benefits of reform—increased competitiveness, innovation, and job creation—are distributed widely, particularly among small businesses, women entrepreneurs, and underserved regions.