Brazil to Honor R$1.8 Billion in UN and BRICS Bank Debts in 2019

RIO DE JANEIRO, BRAZIL – The federal government will pay debts of R$1.815 billion (US$465 million) to the United Nations (UN) and the BRICS bank (a group comprising Brazil, Russia, India, China and South Africa) by the end of the year.

On the other hand, it will no longer honor commitments to the Latin American Development Bank (CAF), the Inter-American Investment Corporation (IDB Invest), the Financial Fund for the Development of the La Plata Basin (FONPLATA), and the International Development Agency (IDA).

According to O Estado de S. Paulo/Broadcast, there are no budgetary plans to pay these international organizations in 2019, which precludes the transfer of funds.

For the UN and the BRICS bank, however, the payment was authorized after the approval, on Tuesday night, of a bill amending this year’s budget by the National Congress. The economic team awaits only President Jair Bolsonaro’s endorsement to transfer the funds.

The non-payment to the UN could cause Brazil, for the first time, to lose the right to vote in the body as of January 1st. The approved project earmarks R$549 million for the contribution to the United Nations.

The debt updated on November 21st with the organization amounts to US$415.9 million, of which US$143 million is a regular budget and the remainder to commitments to peace missions and international courts.

As for the BRICS bank, the project provides for the allocation of R$1.266 billion for the payment of capital quotas. When the financial institution was founded in 2014, the countries agreed to contribute US$10 billion each by 2021. This year, Brazil has to pay approximately US$300 million.

The project approved on Tuesday night opens an extra credit of R$9.6 billion for the federal government. In addition to international organizations, the resources will also be used for expenses such as strengthening family farming, education, health and regional development.

No money

According to O Estado de S. Paulo/Broadcast, the country will not pay the CAF US$45 million, the IDB Invest US$27.6 million, the FONPLATA US$27.6 million and the AID US$43.2 million.

As the report revealed earlier this month, the need for payment to these agencies and to the UN was the subject of discussion in the government and is considered urgent.

In a technical note, the Ministry of Economy states that, as a result of non-payment to CAF, the bank’s exposure to countries such as Venezuela and Argentina, currently in economic crisis, means that the Brazilian debt on the 2019 portion increases the chances of downgrading the institution’s rating by international risk rating agencies. Brazil has been a member of the bank since 1995 and holds 8.9 percent of its capital.