Treasury Releases Report with Indicative Resource Allocation for Sovereign Sustainable Bonds

In the context of the launch of Brazil’s Sovereign Sustainable Bond Framework, a reference document for the issuance of sovereign debt securities aimed at promoting the country's sustainable development, the Brazilian government today, on October 11, 2023, releases the Pre-Issuance Report with the Indicative Resource Allocation. The purpose of this report is to indicate the main budgetary allocations that will be prioritized as backing for the inaugural issuance of the sovereign sustainable bond by the Federative Republic of Brazil. The Indicative Resource Allocation was defined by the Sovereign Sustainable Finance Committee (CFSS) and was approved at its last meeting held on October 4, 2023.

The release of a pre-issuance report by Brazil is innovative and contributes to reinforcing best international practices, aiming to provide the necessary information for the issuance of sustainable public bonds. While the Framework defines a broad range of eligible expenditures across 17 areas relevant to sustainable development, for each issuance of sovereign sustainable bonds, the allocation of resources will focus on a specific subset of budgetary allocations. Therefore, to ensure the necessary transparency, the disclosure of a report indicating eligible expenditures for resource use will be a practice adopted by the Brazilian government prior to each issuance of this kind.

The budgetary allocations listed in the document consider the scope of the list of eligible expenditures from the Framework, published on September 5, 2023. Furthermore, the report presents the indicative composition for the allocation of resources between social and environmental expenditures, along with the respective ranges for the categories of expenditures selected by the CFSS. The proposed portfolio for the inaugural issuance is predominantly environmental, emphasizing efforts that will be crucial to continue reversing the course of deforestation and remain critical for the preservation of Brazil's native biomes. In terms of social categories, the focus is on poverty alleviation programs such as Bolsa Família, combating hunger, and promoting food security and sustainable food systems.

In addition to the Report, the National Treasury has prepared a Question and Answer section to provide insights into the Brazilian Framework for Sovereign Sustainable Bonds and related topics, based on queries raised by investors. This section is also being launched today and will undergo regular updates over time.