This is a translation of the original article in Portuguese. Read the original (Português).
A climate credit program of Brazil’s federal government, Eco Invest, passed public funds to banks at interest rates of 1% a year, and part of that money financed the construction of high-end residential properties. Brazil’s Ministry of Finance says it will begin requiring environmental certifications for the projects that receive the funds.
The report comes from the newspaper Folha de S.Paulo, the Brazilian daily. According to the paper, ten projects received about R$ 1.3 billion, including the Residencial City Park, in Goiânia.
Banco do Brasil, the state-controlled bank, said it passed on R$ 1.15 billion under the program. That amount is the same one Folha cites as allocated to projects considered sustainable, but which, in part, financed luxury developments.
Inesc, the Brazilian institute that monitors the public budget, questions whether the environmental criteria adopted justify a subsidy of this size. The central question is what, in practice, separates a building considered sustainable from a high-end development that simply receives cheap credit.
What changes for the reader
The 1% annual rate is far below ordinary real estate financing, which weighs on the budgets of the middle class. Because the program’s funds are public and subsidized, how they are allocated matters to taxpayers, at a time of tight household budgets and high interest rates in the country.
The Finance Ministry’s promise to require environmental certifications suggests that the program’s access rules will be tightened. The details of how this will be done, which certificates will be accepted, and whether they will apply to contracts already signed have yet to be defined by the responsible agencies.
Reporting from Folha de S.Paulo (p. 1, caderno nacional: Crédito climático do governo financia imóveis de luxo), Folha de S.Paulo (p. 25, caderno nacional: Crédito climático com juro de 1% financia imóveis de luxo).
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