The president of the National Bank for Economic and Social Development (BNDES), Gustavo Montezano, announced yesterday, Monday, 8, the suspension, until December, of payments related to financing taken by states, the Federal District and municipalities. The decision allows to extend the terms of the operations for an equal period. The BNDES also approved an emergency transfer of funds to the 13 states that have active contracts with the Bank, so that they can invest in actions to combat the pandemic and mitigate its economic consequences. The announcement is part of a third set of measures presented by Montezano and other BNDES directors to combat the economic effects of the Covid-19 pandemic. Added to the measures announced on Monday, the BNDES has already presented actions that total an impact of R $ 138 billion in fighting the crisis.

Known as standstill, the temporary suspension of payments to public entities - which has already been implemented for companies - has the potential to irrigate the economy with R$ 3.9 billion in 2020, as these resources may remain in the accounts of all states and the District In addition to 44 municipalities.

The suspension mitigates risks of future defaults, in view of the prospect of a sharp drop in the collection of these entities due to the crisis, in addition to helping the Government to face the new coronavirus. Requests must be made by letter from the head of the Executive Branch to BNDES, in the case of direct operations. For non-automatic indirect, the requirements will be verified by the financial agents with whom the operations were contracted.

Another new BNDES initiative directed at the public sector is the emergency transfer of resources to all 13 states that have active contracts with the Bank, so that they can invest in actions to face the pandemic and mitigate its economic consequences immediately. In practice, they will be able to use the balance to be disbursed from current operations to combat the crisis - with the condition that this does not compromise the conclusion of works in progress. With a total potential of R$ 456 million, the funds released will be adjusted to the investment execution capacity of each state. Acre, Amapá, Bahia, Espírito Santo, Goiás, Maranhão, Minas Gerais, Mato Grosso do Sul, Pará, Paraíba, Piauí, Rio Grande do Sul and Santa Catarina may be included with the measure.

Emergency Direct Credit - The new BNDES Emergency Direct Credit program was created to meet the need for working capital in sectors whose preservation is of vital importance for the recovery of the Brazilian economy. In the first phase, the program will serve, through loan operations contracted directly with BNDES with a budget of R$ 2 billion, healthcare companies, such as hospitals and laboratories.

Beneficiary companies must have gross operating revenue (ROB) equal to or higher than R$ 300 million. The minimum and maximum amounts of financing from the BNDES will be R$ 10 million and R$ 200 million.

Seeking to maintain jobs and income in the country, the program foresees that companies that maintain or expand jobs for 12 months will have access to a lower interest rate.

Other recent measures - BNDES announced, in the last week, other new actions such as BNDES Credit Production Chains, the Emergency Access to Credit Program (PEAC) and the Support Program for the Sugar and Alcohol Sector (PASS).

BNDES Cadeias Produtivas, which has a budget of R$ 2 billion, will offer credit to suppliers of anchor companies that contract services mainly for micro, small and medium-sized companies. In this modality, the anchors will transfer the funds raised from the BNDES to the companies that provide services to it, at no additional cost.

Bearing in mind that the difficulty of risk assessment by banks is one of the main obstacles to accessing credit, BNDES works to structure the Emergency Program for Access to Credit (PEAC), made possible through Provisional Measure 975, of June 1st. The action will facilitate credit operations for small and medium-sized companies by offering a guarantee of up to 80% of the contracted amount.

With an initial budget of R$ 5 billion for the provision of guarantees, the program may irrigate the market with R$ 25 billion in financing.

The Support Program for the Sugar and Alcohol Sector (PASS) aims to support the storage of ethanol. The ethanol sector employs around 1 million workers and has been suffering a sharp drop in consumption due to the Covid-19 pandemic. PASS makes available, together with commercial banks, at least R$ 3 billion (R$ 1.5 billion from BNDES) to stock the input, reducing the risks for those who sell and those who buy.

This program also provides lower interest rates for those who keep jobs, as well as Emergency Direct Credit for health.

Previous measures - The measures in this third round are joining the actions already announced by the BNDES since March. Since the beginning of the programs against the effects of Covid-19, more than 136 thousand companies have been supported - 99.7% of which are micro, small or medium-sized - with the approval of R$ 17.5 billion to combat the effects of the pandemic. Altogether, these companies employ 4.1 million workers.