Eco Invest: Program fosters investments in projects aimed at ecological transformation

New effort by the Federal Government aims to attract foreign capital and promote green investments

At the end of April, the Federal Government of Brazil issued Provisional Presidential Decree No. 1,213/2024, introducing policies to foster and boost entrepreneurship in the country. Among the most significant provisions set out in the regulation is the creation of the Program for Foreign Private Capital Mobilization and Forex Hedging - Eco Invest Brasil.

Announced in February, the effort is aimed at making stock market transactions more feasible, enabling companies, investors, and financial institutions in Brazil to raise funds from abroad. The goal is to help finance projects that contribute to ecological transition without disrupting the foreign exchange market.

To this end, the program offers credit facilities and protection instruments to offset against currency fluctuations. Key areas include investments in sustainable technologies, biobased economy, circularity, energy transition, infrastructure, and climate change adaptation.

The initiative also seeks to promote the development, liquidity, and efficiency of long-term forex hedging, aiming to reduce exchange rate risk for investors.

Financing lines

To achieve its objectives, the project provides for the extension of a credit facility at a competitive cost, with the creation of the following specific lines: 

According to the provisions, the Green Climate Fund can be directly accessed and operated by financial institutions accredited by the Central Bank, provided they assume the credit risk of the operations. Previously, access to the fund required intermediation by the National Bank for Economic and Social Development (BNDES).

The Eco Invest lines will be allocated through auctions. Each line will have its own financial resources, and the National Monetary Council (CMN) will be responsible for approving specific resolutions governing each one. So far, only the blended finance line has been regulated (CMN Resolution 5,130/2024).

Future developments

The CMN is expected to issue new regulations for the remaining sub-lines soon. Concurrently, the Ministry of Finance will define the eligibility criteria for investments and standardize the demonstration of effective foreign fundraising by financial institutions.

It is important to note that since Eco Invest was established by a Provisional Presidential Decree, its initial validity is 120 days from its publication date (April 23). After this period, the National Congress must approve and sign its provisions into law to ensure the program's continuity.

Investor support

DPC offers comprehensive solutions to support foreign investors and investment recipients, providing advice on best practices to ensure compliance. Talk to one of our experts at: dpc@dpc.com.br.