PROPERTIES FINANCED with public subsidies by Banco do Nordeste, a federal government-controlled bank, had areas embargoed and were fined by Ibama (Brazil’s Institute for the Environment and Renewable Natural Resources) for deforestation involving the use of fire, according to an investigation by Repórter Brasil.
The data were obtained by cross-referencing environmental violation records, information from Sicor (the Rural Credit Operations System) and the Rural Credit Monitor, a platform developed by the MapBiomas organization.
One of the financing contracts identified by the investigation, intended for agricultural activities on a farm in the Cerrado biome in Maranhão state, remains active at a time when the Brazilian government itself is warning of the risk of extreme droughts and increased wildfires associated with the “Super El Niño” phenomenon. The climate event – whose effects are intensified by deforestation, according to experts – is expected to reduce rainfall and raise temperatures in the North, Northeast and parts of the Center-West regions in Brazil.
Since January 2025, Brazil’s Central Bank has required contracts involving public rural credit resources to include the possibility of loan disqualification if, during the financing period, environmental obligations related to the rural property are found to have been breached.
Such violations include the existence of environmental embargoes on financed properties registered on Ibama’s public list. An embargo is an administrative sanction that prohibits productive activities harmful to the environment and, in many cases, aims to ensure the restoration of native vegetation in illegally deforested areas.
With loan disqualification, farmers lose subsidies and other benefits associated with rural credit, increasing the interest rates charged on the financing. However, it is up to the financial institutions that provide the loans to carry out this monitoring.
According to Priscila Souza, senior public policy evaluation manager at the Climate Policy Initiative, the current regulations do not yet establish a rule requiring banks to periodically review Ibama’s embargo list during the term of an already contracted loan, except for financing modalities in which funds are released gradually.
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