Thamara Belinatti and Heloísa Nogueira
In late July 2024, President Luiz Inácio Lula da Silva sanctioned Law No. 14.937; the latest focus for Brazilian investors is now the *Letra de Crédito de Desenvolvimento* (Development Credit Note), or LCD. This new instrument is a fixed-income security that is exempt from income tax for individual investors, while for corporate entities, the benefit takes the form of a 15% reduction in the applicable tax rate.
The law's objective is clear: to provide the industrial sector with cheaper financing. The funds raised will be used to facilitate infrastructure projects and support industries—as well as micro, small, and medium-sized enterprises. In the words of Geraldo Alckmin, the Minister of Development, Industry, Trade, and Services: "The LCD will make credit cheaper for the industry; it is market money, not public money."
It is worth noting that LCDs will resemble existing instruments such as Real Estate Credit Bills (LCIs)—used to boost that specific market—and Agribusiness Credit Bills (LCAs), which finance agricultural activities. The main difference lies in the issuance method: Development Credit Bills (LCDs) will be issued exclusively by the National Bank for Economic and Social Development (BNDES) and state development banks, whereas LCIs and LCAs can be issued by various financial institutions.
In conclusion, the underlying premise is that investment via LCDs will foster growth in the country's industrial sector. According to estimates by the Brazilian Development Association (ABDE), the new mechanism is expected to raise approximately R$18 billion in its first year of operation. This move reflects Brazil's aim to strengthen its industrial sector and evolve its economy beyond mere commodity exports, building a powerhouse capable of supplying high-value products—thereby aligning itself with today's major global powers.
