Government Freezes Export Credit Line After Defaults From Cuba and Venezuela

After Mozambique, Venezuela, and Cuba defaulting, the Brazilian government froze credit lines for new exports, a measure that will affect mostly small and medium-sized businesses. The Brazilian Treasury Department will spend US$ 6 million (R$ 23,4 million) to reimburse BNDES (National Bank For Economic and Social Development) for Cuba's default. Following Venezuela and Mozambique, the Cuban government defaulted on its payments to BNDES, in a credit line insured by the Treasury in the case of nonpayment. The amount is from an installment due in July, which Cuba paid partially. The Cubans paid US$ 4 million (RS 15.6 million) from the US$ 10 million (R$ 39 million) that were due. During the Lula and Rousseff administrations, the countries mentioned above hired large Brazilian contractors for infrastructure works. One example is the modernization of the Mariel Port in Cuba, performed by Odebrecht. The foreign governments also bought buses, industrial goods and foodstuffs using the credit line. When the defaults happened, the Treasury had to pick up the tab. The government will spend almost US$ 400 million (R$ 1.5 billion) to cover the foreign countries' defaults in 2019, and that will cause a shortage of money for new credit lines for Brazilian companies.