Government makes PROEX more flexible to increase competitiveness of Brazilian exports

To enhance the competitiveness of Brazilian products abroad, the federal government has decided to make the Export Financing Program (Proex) more flexible, aligning it with the complexity of the negotiation and logistics processes involved in exports, particularly those with higher added value.

With the implementation of CMN Resolution No. 5,103 earlier this month, approval of Proex-Financing and Proex-Equalization support requests is now permitted after the export has been completed. To do so, the exporter must first obtain prior export licensing, then obtain LPCO (a certificate, license, or permission) approval in the same fiscal year as the export, have budget availability, and meet other applicable conditions in Proex operations.

The new regulation also states that in such situations, the exporter will bear any losses resulting from denied Proex support requests.

According to the Executive Secretariat of the Foreign Trade Chamber (SE-Camex), which falls under the supervision of the Ministry of Development, Industry, Trade, and Services (MDIC), this change is expected to expand the base of exporters served by this type of official support, thereby boosting national exports and strengthening Brazil’s presence in the international market.

Previous Regulation

Under the previous regulation established by CMN Resolution No. 4,897 on March 25, 2021, LPCO approval had to occur before the actual export of goods and services. Otherwise, the export could not receive Proex-Equalization or Proex-Financing support.

This meant that if there were delays in the approval of support requests, exporters were forced to postpone shipments of goods, resulting in logistical costs and possibly violations of contractual commitments with importers or the abandonment of Proex support.

This created insecurity for exporters because, even if they met the requirements for Proex access, they could suffer financial losses due to bureaucratic delays.

Foundation of Proex

Proex is an essential pillar of Brazil’s export support. It aims to align with international practical financing conditions. To achieve this, the program offers direct financing with budgetary resources (Proex-Financing) and interest rate equalization from public or private financial institutions (Proex-Equalization).

In 2022, Proex-Equalization supported $2.2 billion in Brazilian exports, focusing on the capital goods segment, while Proex-Financing facilitated a total of $140 million during the same period.

In recent years, both the values of supported exports and the number of companies benefiting from the two program modalities have decreased. To reverse this trend, the Executive Secretariat of the Foreign Trade Chamber (SE-Camex), in consultation with export and financial sectors, aimed to identify regulatory deficiencies that may have been causing the decrease. One of the conclusions was identifying a temporal mismatch between the export negotiation and logistics process and the LPCO approval module.

Sharing is caring!