The Inter-American Development Bank (IDB), a source of long-term financing for economic, social and institutional development in Latin America and the Caribbean, says it has approved a US$100 million loan to Brazil's federal government to improve digital connectivity and expand fixed broadband coverage in the country.
The Credit Expansion Programme for Investments in Telecommunications Networks, approved by the IDB's executive board, will be executed by Brazil's Ministry of Communications (MCOM).
The IDB says the programme will benefit some 2.5 million people by enabling the expansion of digital connectivity coverage in small municipalities and advancing Brazil's digital transformation.
The financing will leverage Brazil’s Fund for the Universalisation of Telecommunications Services (FUST) resources through the fund’s financial agents, contracted by the MCOM-led FUST Management Council. FUST was established by law with the aim of allocating public resources to the fixed telephony service.
The programme is structured around two components. The first component will facilitate access to credit for small internet service providers (ISPs) that invest in fixed broadband infrastructure in municipalities under 30,000 inhabitants, including the deployment of fibre optic cables and the installation of telecommunications equipment with energy-saving functions along existing infrastructure and rights-of-way, among others.
The second component will help reduce information asymmetries between small internet service providers and financial credit institutions through the implementation of an information technology system. This system will complement the credit rating mechanisms currently employed by financial institutions.
The IDB says that this is the sixth operation under the Conditional Credit Line for Investment Projects (CCLIP) for the Brazil More Digital programme, a credit line of up to US$1 billion to help Brazil push forward its digital transformation agenda. It was approved in April 2021.