Financing for infrastructure and the resumption of sustained economic growth

Unlike previous growth cycles in Brazil, the new one that will complete the Realstabilization plan can no longer count on the state as the main financier and undertaker ofthe infrastructure investments. This represents a world trend, that originated the projectfinance, a way to finance heavy investments designed to make possible the private/publicpartnership. The project finance separates the firm risk from the business risk, and designsfinance arrangements that are specific to each investment project. In Brazil, now that thelaw that regulates concession to the private sector has been enacted and the privatizationprogram has been accelerated, the project finance will probably constitute the main financeprocedure for infrastructure investments. For the project finance to work, the regulatoryenvironment should be clear, and the contracts should be credible, preventing the public sector to be put into a corner, forced to bail out insolvent projects. A new proposal for theBNDES system – an insurance against the macroeconomic risk in credit operations – is laidout. This proposal aims at building a long-term credit market in Brazil. JEL Classification: H30; O40.