Guarantees Granted by International Organizations
Another measure aimed to foster infrastructure projects in Brazil, basically due to the reduction in financing costs deriving thereof, is the inclusion by the Brazilian Central Bank (“Bacen”) of a new chapter (Chapter 4 into Title 3) in the Foreign Exchange Market and International Capital Regulation (“RMCCI”), setting out the rules governing guarantees granted by international organizations (of which Brazil is a member) in the context of internal credit operations through Circular Bacen No. 3,299 (“Circular 3,299) dated November 18, 2005.
Circular 3,299 amends National Monetary Council Resolution No. 3,218 of June 30, 2004, which authorized the registration of such guarantees in the ROF module (register of financial operations) of Bacen’s electronic system, making it now mandatory.
The aforementioned guarantees (including conditions and terms thereof) shall be registered by the debtor of the underlying internal credit operation upon execution of the guarantee agreement. The beneficiary of the funds remitted to Brazil under the guarantee shall be the creditor of the underlying internal credit operation identified in the ROF on the date of remittance of funds by the foreign guarantor into Brazil.
The registration of the funds entering Brazil for purposes of honoring the guarantee shall be effected in the currency remitted from abroad. On the other hand, the amounts in foreign currency that may be remitted abroad shall correspond to the amounts (in local currency) owed to the guarantor as a result of the sub-rogation by the latter in the credit of the internal creditor.
The registration set forth by Circular 3,299 aims at stimulating the granting of foreign guarantees by international organizations of which Brazil is a party (such as the World Bank and the Inter-American Development Bank) in connection with internal credit operations and shall contribute towards reducing financing costs of internal credit operations. The granting of such guarantees was not usual to date in Brazil due to the impossibility of registering the same with the Central Bank.
Further information may be obtained directly from Thiago V. Flores at thiagoflores@felsberg.com.br |
