'We will discuss, at BRICS, how to improve relations between all affected countries,' says Lula

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BRASÍLIA — The Export Guarantee Fund (FGE), which the Lula (PT) government wants to boost and restructure in response to the tariff hike by the President of the United States Donald Trump, has most of its resources idle and, of the part that the government spends, the money has been used to compensate the BNDES for loans made to Venezuela and Cuba in the past.

The FGE has existed since 1999 and funds the Export Credit Insurance (SCE) for companies that sell to other countries. The guarantee covers risks assumed by exporters or by financial institutions that grant credit to these companies. Finance Minister Fernando Haddad announced that the government will restructure the fund to encourage companies to export their products.

The measure was made official this Wednesday , 13th, at the Planalto Palace as part of the package that the government called Sovereign Brazil, with measures in response to the taxation imposed by the President of the United States, Donald Trump.

The FGE will be used to provide credit to exporters, with a credit line conditional on job retention. There will be insurance linked to the fund to protect companies against the risk of not receiving payments for their sales to other countries, including micro and small businesses.

In 2024, the FGE recorded a surplus of R$48 billion, according to the National Treasury. For 2025, the FGE has R$3.3 billion programmed in the Federal Budget. Of this total, R$2.4 billion—or more than 70% of the total—was allocated to a financial reserve buffer that, in practice, ensures the funds are not spent and serve solely for the government to produce fiscal results (technically, this buffer is called a contingency reserve). The remainder, a portion of R$898 million, was allocated to Export Credit Insurance payments.

Since its creation, most of the fund's resources have ended up in the contingency reserve and have not been spent, according to Federal Budget data."The fund has remained in a fossil state, and now the government must renew it, but this amount probably won't even be enough to get started and will have to be replenished with other funding sources," says economist Camillo Bassi of the Institute of Applied Economic Research (IPEA)."When the government creates a contingency reserve with the resource, it is implicitly saying that the money will not be spent."

Since January, the government has spent R$335 million from the FGE, approximately 10% of the total resources. The main beneficiary was the National Bank for Economic and Social Development (BNDES), with R$276.2 million. BNDES has lent money to other countries in the past and has defaulted on loans, including those related to projects suspected of corruption.

The federal government bore the loss and has been transferring funds from the fund to compensate the bank for unpaid payments. Among the installments compensated this year are loans to Venezuela for the purchase of Embraer aircraft and to Cuba for the contracting of Odebrecht projects.

The restructuring of the FGE was presented as part of the rescue plan for companies affected by Trump's tariff hike, which imposed a 50% tariff on the import of Brazilian products, pressuring Brazil to interfere in the trial of former president Jair Bolsonaro (PL) in the Supreme Federal Court (STF).

The restructuring of the FGE, according to Haddad, is a structural measure and will not only target exporters of products to the US, but all companies wishing to sell to other countries."We will prioritize those affected, but the Export Guarantee Fund will now operate across Brazil's entire export sector, because we cannot rely on everyone being able to solve their problems," the minister said at the Planalto Palace.

The government wants to encourage companies to export to other countries and not depend so much on the United States, which is currently the second largest destination for Brazil's foreign sales. The Ministry of Finance declined to comment when contacted.

In the government's plan, R$30 billion from the FGE will be used to grant credit at lower rates than traditional market lines. Priorities will be met based on revenue dependence on exports to the US, product type, and company size. According to the government, priority will be given to those most affected. Small and medium-sized businesses will also have access. The benefit will be conditional on maintaining the number of jobs.

The insurance linked to the fund can be presented as collateral for financing granted by BNDES and other banks to exporting companies. The government will make contributions to other funds to also boost foreign sales.

At the Ministry of Development, Industry, Commerce and Services (MDIC) , there is an ongoing program to offer insurance backed by the FGE to micro and small companies that have been exporting since July 2024.

The insurance covered by the FGE could also be used in Advance on Exchange Contract (ACC) transactions, one of the demands of the private sector affected by the tariff hike. This type of contract is used by exporting companies to gain early access to funds from a foreign sale, at a discount, and insurance would facilitate approval by financial institutions.

The National Confederation of Industry (CNI) has asked the government to extend the maximum timeframe between the signing and settlement of these contracts, which would provide relief for companies."The fund could be used to work with the advance and support exporters, mitigating the discount," says the Ipea researcher.