IDB Approves $1B Loan to Power Brazil’s Green Reform Through Eco Invest Plan

The Inter-American Development Bank (IDB) has approved a groundbreaking $1 billion (approximately R$5.5 billion) policy-based loan to support Brazil’s ambitious Ecological Transformation Plan, a sweeping reform agenda aimed at aligning sustainable development with economic growth. The financing package underscores international confidence in Brazil’s emerging role as a green economic leader and represents one of the largest green-oriented support operations currently underway in Latin America.

At the core of this initiative is Eco Invest Brasil, a forward-looking partnership between the IDB and the Brazilian government. The program is designed to attract private sector investment, catalyze financial innovation, and address one of the most persistent barriers to foreign capital inflow in Brazil: currency volatility.

“The Eco Invest goal is to attract more private capital to the country through financial innovations such as blended finance and tools to manage foreign-exchange volatility,” said IDB President Ilan Goldfajn. “Our collaboration intends to unlock investments in Brazil, creating jobs and opportunities that will generate tangible benefits for Brazilians.”

Driving Investment with Financial Innovation

Eco Invest is not just about green intentions — it is a structural reform package that utilizes cutting-edge financial mechanisms to make sustainable investment more attractive and resilient. The plan includes:

• A blended-finance facility to combine public and private funds for green projects.

• A project preparation facility to support the technical and regulatory groundwork needed to make projects bankable.

• A liquidity facility to ensure funding stability in turbulent financial markets.

• A foreign exchange (FX) derivatives program to hedge against currency risk, thereby reducing perceived investment risk for international partners.

The Brazilian Ministry of Finance estimates that these innovations will help mobilize up to $10.8 billion (R$60 billion) from private sources by 2027, with the majority expected to flow into sectors such as renewable energy, sustainable agriculture, reforestation, and biodiversity preservation.

“The innovations promoted by Eco Invest and the green investment agenda, with support from the IDB, are foundational and powerful,” said Rogério Ceron, Brazil’s National Treasury Secretary. “We are talking about advances that amplify Brazil’s potential for greater productivity and better employment and income conditions, in a way that aligns with social and environmental responsibility.”

Strengthening Institutions and Market Confidence

To achieve its ambitious goals, the program also invests in governance and institutional reform. The IDB loan supports the establishment of a governance framework for the Ecological Transformation Plan through cooperation between Brazil’s executive, legislative, and judiciary branches. This includes:

• Setting robust standards for the issuance of sovereign sustainable bonds.

• Developing a national bioeconomy strategy aimed at tapping into Brazil’s vast natural resources for sustainable development.

• Promoting transparency, accountability, and fiscal responsibility through alignment with Brazil’s recently enacted tax reforms.

These structural elements are intended to provide investors with regulatory clarity, fiscal stability, and long-term visibility — all essential ingredients for driving transformative investment at scale.

Long-Term Terms Reflect Long-Term Vision

The loan itself reflects Brazil’s long-term commitment to reform and green growth. Structured as a policy-based loan, it comes with a 20-year maturity period, a 5.5-year grace period, and an interest rate indexed to the Secured Overnight Financing Rate (SOFR) — ensuring sustainable debt service terms while allowing Brazil to focus on implementation.

This is not an isolated initiative. The Eco Invest framework is embedded within a broader multilateral push to enhance Latin America's resilience to climate change, promote inclusive economic growth, and transition to sustainable infrastructure. The IDB’s involvement also signals strong multilateral backing for Brazil’s efforts ahead of its hosting of COP30 in Belém in 2025.

Brazil’s Green Turn Gains Momentum

Eco Invest is seen as a cornerstone of President Luiz Inácio Lula da Silva’s environmental and economic agenda, which aims to rebrand Brazil as a global climate leader and a green investment hub. From Amazon preservation efforts to bioeconomy development and digital inclusion, the plan seeks to modernize the Brazilian economy while preserving its unique ecological heritage.

This IDB-supported transformation could mark a turning point for Brazil’s economic trajectory, helping the country shed decades of boom-and-bust cycles and persistent inequality in favor of a more stable, inclusive, and sustainable future.