Created in 1988, by the constitution of the Federative Republic of Brazil (article 159, item I, line "c" and article 34 of the Transitory Constitutional Terms Act) and legally regulated in 1989 (Law nº 7827, of 27/09/1989), The Constitutional Fund for Financing of the Northeast – FNE seek to “contribute to the economic and social development of the Northeast, through execution of finance programs for the productive sectors, in accordance with the regional development plan”.
Its funds are geared towards financing investments – that is, they are preferably invested in the long term – being used for working capital or meeting costs when these complement an increase in the region’s productive capital. Law nº 7827 defines productive sectors as being farming, mining, regional industry and agro-industry. Later, the legislation came to include tourism and, more recently (Law nº 10177, of 12/01/2001, which validated Provisional Measure 2035 and its antecedents), the service sector. Beneficiaries of the FNE may include producers, companies and production associations and cooperatives.
The aim of the Fund must be met in accordance with legal guidelines on using at least half the funds in the Semi-Arid; integrated action with federal institutions located in the Region; preferential treatment of mini and small enterprises; preservation of the environment; conjugation of credit with technical support; democratic access to credit and support for innovative activities.
These guidelines represent a considerable challenge to management of the Fund, as market laws have been incapable of providing desirable transformations for a process of sustainable development in the Region. For that purpose, the quality of public policy interventions through financing of productive activities must be evaluated by structural modifications in the economy, observing aspects such as: sustainability of jobs generated in highly competitive environments; development of capital stock in the Region, which strengthens micro and small enterprises; and preparation for entry into international trade, with emphasis on improving quality of products in the enterprising culture.
All these transformations are being implemented by a continuous effort of activities undertaken by the public sphere and, therefore, must be considered in any analysis of effectiveness of such actions. It should be noted that, inasmuch as a new business posture is incorporated, geared mainly towards efficiency and competitiveness, there may be changes in the format of productive functions, in which the generation of income takes place to a lesser degree, or with smaller knock-on effects. This would lead to a lower multiplication effect of investment on the region, which does not mean loss of efficiency, but rather seeks adaptation to an environment of global competition.
As the main stakeholder, BNB annually submits to the Ministry of National Integration its proposed Program for the Constitutional Fund for Financing of the Northeast – FNE, for investment in the next period, which includes, amongst other data, action plans and loan conditions for resources from the said Fund.
FNE funds represent additional income for the Northeast, not being intended to substitute other financial grants from the Federal Government, from financial bodies or the Bank itself. They are also not subject, by law, to injunctions due to political situations involving credit contingencies, considering the convenience and need of ensuring continuity of investments in regional development.
FNE Program for 2008 (in Portuguese)
