Brazilian Banks, Forbidden to Give Loans to Illegal Loggers


(Picture: a clearcut in the Amazon. Credit: Getty Images.) Thanks to a new disposition by the National Monetary Council, private and public banks in Brazil will have to follow environmental criteria before conceding a loan to producers in 550 cities located in the states of Acre, Amapá, Amazonas, Pará, Rondônia, Roraima, Mato Grosso, Tocantins and Maranhão. The measure seeks to prevent loans from getting to illegal deforestation projects.

According to Folha newspaper, middle and large producers applying for loans will have to present an environmental license for the area where their project will take place, along with a declaration that states there is no prohibition in the use of that land. These rules also apply for partners and providers relating to the project. Banks who don't follow the rules could face fines.

With this disposition, the Brazilian government hopes to stop around 2,6 billion Reais a year (about 1,3 billion US dollars) in financing to illegal deforestation projects.

Read more details in the extended. ::Via Tierramerica. Additional info via Folha de Sao Paulo.The amount of credit banks will be allowed to concede will be compatible with the available land the producer is allowed to work with. If the land is in restoration process, its potential use will be determined by its State's environmental agency.

Brazilian Environment Ministry stated in a note that the restrictions were adopted due to the accelerated growth of the farming sector during the last years, in order to warrant that the development takes place within a sustainable use of natural resources.

More importantly, the measure is one of the many necessary to stop deforestation in Brazil, which has grown during 2007. According to the National Institute for Special Investigations, 639 square kilometers (about 247 thousand square miles) of the Amazon were deforested last January.

According to Greenpeace, between 60 and 80 percent of all logging in the Brazilian Amazon is estimated to be illegal. The goal for these loggers is to provide corporations with tropical timber products: "Huge majestic trees like the Samauma, also known as the 'Queen of the Forest', are being exploited to make cheap plywood for construction industries in the US, Japan and Europe," says the organization's website.

Read more about the Amazon situation at out many posts about this region and our many stories about deforestation.

Sources (all in Portuguese):
::Folha story on bank measure ::Folha follow up on the measure ::Folha on deforestation in the Amazon

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