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Between 1998 and 2017, Brazil Funded More Than R$ 10 Billion in Works in Latin America and Africa. Part of the Value is Still Pending from Countries in Crisis.
Over nearly two decades, Brazil invested more than R$ 10 billion in the export of engineering services to various countries in Latin America and Africa. The resources, primarily from credit lines of the National Bank for Economic and Social Development (BNDES), financed large-scale infrastructure projects — from highways and ports to power plants and urban transport systems. However, a significant part of this amount still depends on payments from countries facing severe economic and political crises, jeopardizing the full recovery of the funds.
Understand What “Engineering Service Export” Means
The export of engineering services consists of contracts signed between Brazilian companies and foreign governments for the execution of infrastructure works outside of Brazil.
In practice, financing is granted by BNDES, but the money is not transferred directly to the borrowing country. Instead, the resources are paid to the Brazilian companies responsible for the works, ensuring investment in national products and services.
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This modality gained strength from the 2000s onwards, driven by the internationalization of large construction companies and the Brazilian government’s strategy to expand economic and diplomatic presence in strategic regions. Latin American and African countries were the main destinations, given the geopolitical proximity and the lack of infrastructure in these areas.
Main Financed Works
Between 1998 and 2017, dozens of projects received funding, particularly highlighting high-value and high-visibility ventures. Among the most well-known examples are:
- Port of Mariel, in Cuba: one of the largest works funded by Brazil abroad, which included the construction and modernization of the port complex.
- Subways of Caracas and Los Teques, in Venezuela: expansion and modernization of urban transport lines.
- Highways and hydropower plants in Angola and Mozambique: integration and electricity supply works.
- Port and roadway projects in Ecuador, Peru, and Ghana: expansion of logistics capacity and modernization of export corridors.
Many of these works were carried out by Brazilian companies such as Odebrecht, Andrade Gutierrez, and Queiroz Galvão, which gained international prominence but were also involved in corruption investigations.
Modality is Defended by Experts as a Way to Generate Jobs and Income in Brazil
Although the modality has been defended as a way to generate jobs and income in Brazil, a significant part of the financing has still not been paid off. Several benefiting countries are facing economic and political crises that hinder the payment of installments, such as Venezuela, Cuba, and Mozambique.
According to the latest data from BNDES and the Ministry of Economy, a large part of these operations has been classified as delinquent or in renegotiation processes. In these situations, the Export Guarantee Fund (FGE) comes into play, a mechanism funded by the National Treasury that covers unpaid amounts and transfers the responsibility of recovering the debt to the Brazilian government.
This means that BNDES does not register direct losses, but the final cost falls on the Brazilian taxpayer. And experience shows that, in many cases, the return is uncertain or can take decades to occur.
Venezuela and Cuba are the Biggest Debtors
Among the largest debtors are Venezuela and Cuba, both with a history of financial difficulties and international sanctions that hinder access to foreign currencies. In the African continent, countries like Mozambique are also facing challenges to meet commitments, especially after external debt crises.
The risk for Brazil is not only financial. There is also a diplomatic component, as tighter collection of these debts may create tensions with governments that have historically maintained close relations with the country.
On the other hand, maintaining delays without effective recovery measures fuels internal criticisms regarding the viability of continuing to offer this type of financing.
BNDES International Financings are Frequent Targets of Political Disputes
BNDES international financings are frequent targets of political disputes. Critics argue that the model favors allied governments for ideological reasons and exposes Brazil to high risks without proportional guarantees.
Supporters argue that the operations strengthened the presence of Brazilian companies abroad, generated jobs in the country, and helped consolidate Brazil as a relevant player in the infrastructure development of emerging nations.
In recent years, measures have been adopted to increase transparency and limit exposure to risks. BNDES began publishing the list of international operations and the conditions of contracts, as well as tightening criteria for granting new financings. Nevertheless, older operations continue to generate debates and controversies.
The Role of the Export Guarantee Fund
The FGE is a central piece in this process. Created to ensure that Brazilian exporters receive the contracted amount even in the face of delinquency, it is funded with public resources and acts as a sort of insurance against international defaults. When a country fails to pay, the FGE covers the debt to BNDES and takes over the collection, often through diplomatic negotiations and long-term agreements.
In practice, this mechanism prevents the bank from recording immediate losses, but transfers the risk to the National Treasury. Experts point out that, although the FGE is essential for enabling large international contracts, it needs to be managed rigorously to avoid becoming an instrument for absorbing recurring losses.
What Changed After 2017
After corruption scandals involving construction companies and questions about the effectiveness of these financings, Brazil drastically reduced the granting of credit for works abroad. Today, projects must meet stricter criteria for economic viability and payment guarantees.
Still, debts accumulated before this period remain a challenge. For some experts, it will be necessary to revise agreements, establish realistic timelines, and even accept partial losses to settle litigations that drag on for years.
Economic Impacts and Lessons for the Future
The Brazilian experience with the export of engineering services to developing countries leaves important lessons. While it has generated gains for companies and for national diplomacy, it has also exposed weaknesses in risk management and assessment of the payment capacity of contracting countries.
In the current scenario, with heightened global competition and limited public resources, the trend is for Brazil to prioritize financing projects with more predictable returns and partners with a solid track record of fulfilling obligations.
The challenge for Brazil is to find a balance between exercising diplomatic influence through financing and protecting public coffers from losses. The export of engineering services will continue to be a strategic tool, but recent history shows that caution is indispensable.
With countries in crisis and outstanding debts, the debate about the use of public resources to finance works abroad will certainly continue to generate controversy in the coming years — and the Brazilian taxpayer will remain vigilant to know if the investment of more than R$ 10 billion will indeed yield a return.
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