EXCLUSIVE: Government announces exchange rate protection for green investment with World Bank and United Kingdom

The finance ministry and the central bank will announce a major exchange rate protection scheme next Monday, with the aim of attracting foreign investment to finance the environmental transformation programme.

As announced during COP28, the initiative, which already had resources at the Inter-American Development Bank (IDB), will now also have contributions from the World Bank and the United Kingdom, the report said. Restore.

Initially, the program is expected to reach up to US$3.4 billion in currency hedging activities financed by the IDB. But the number should grow significantly with the entry of new partners.

Exchange rate risk is highlighted by experts as one of the main obstacles to making returns on Brazilian green projects attractive.

One of the premises for the success of the climate change program is to mobilize foreign direct investment for climate mitigation and adaptation projects, mainly long-term, where the government has no budget and local investors have shown no appetite.

The solution was born out of provocation to the IDB by Minister Fernando Haddad's team, looking for ways to unlock resources.

According to the published report Restore In December, three exchange rate protection products were created for low, medium and high risk. In all of them, the principle is the same: using the program partners' “Triple A” balance sheets to transfer exchange rate hedging mechanisms to Brazil at low cost, which the country cannot access directly. High country risk.

The plan will be the subject of an interim measure, which could be unveiled by the government on Monday.