By Álvaro Marcelino Nunes (PPGE/UFPA)
Reconciling the expansion of productive activities with environmental conservation is the greatest macroeconomic challenge facing the contemporary Amazon. In Brazil’s Northern region, the main public instrument for mitigating regional disparities is the Constitutional Financing Fund of the North (Fundo Constitucional de Financiamento do Norte – FNO), established by the 1988 Federal Constitution and regulated by Law No. 7,827/1989. Under the guidelines of the Ministry of Integration and Regional Development (MIDR) and Sudam, the Fund’s exclusive financial operating agent is Banco da Amazônia S.A. (Basa).
However, the implementation of the FNO reveals a chronic structural misalignment: the disconnection between the logic of credit allocation guided by the national monetary authority and the urgent needs of the forest’s ecological transition. The analysis of empirical data on the Fund’s operations (2017–2024), combined with prudential indicators and the balance sheet structure of the banking operator, demonstrates how financial regulation acts as an institutional constraint on the socio-environmental effectiveness of credit in the periphery of national capitalism.
The Kaleckian Inversion, Endogenous Money, and the Structure of Basa’s Balance Sheet
To understand the central role of the FNO, it is necessary to draw on post-Keynesian and Kaleckian monetary macroeconomics. Unlike the traditional neoclassical perspective, which views banks as mere intermediaries of previously accumulated savings, endogenous money theory demonstrates that bank financing precedes and determines current investment (Lavoie, 2014). Credit generates income, which subsequently becomes the savings necessary to settle the initial debt commitment (Kalecki, 1983). See Equation 1 applied to the FNO according to heterodox economic guidelines.
(1)
The equation demonstrates that aggregate income (Y) is generated endogenously from economic expenditures, where productive investment (ϕ) and capitalist consumption (Cₖ) are multiplied by the inverse of the propensity to save (sₚ). Consistent with the heterodox approach, investment does not depend on prior savings but is directly driven by the initial credit provided by the FNO (F₍FNO₎) and constrained by financing costs and risks (ρ), formalizing the idea that credit expansion precedes and determines income creation in the region.
Schumpeter (1997) defined the banker as the “epifor” of development: by exercising discretion over which projects and sectors receive liquidity, financial authorities shape the trajectory of a society’s technological modernization. In the Amazon, where private capital markets are underdeveloped and the maturation periods of the socio-biodiversity economy are long, state-led credit inducement is indispensable.
The scale and relevance of this mechanism are clearly reflected in Basa’s consolidated balance sheet in September 2024. The bank reported total assets of R$52.6 billion, supported by R$14.1 billion in funding sources and R$6.8 billion in shareholders’ equity. The operational core of this structure is its Classified Credit Portfolio of R$30.1 billion, which represents more than 57% of the bank’s total assets. This accounting magnitude reinforces the Kaleckian theoretical argument: regional economic dynamics are deeply dependent on Basa’s ability to inject liquidity into the system, as total contracted FNO disbursements increased from R$2.90 billion in 2017 to a record R$13.50 billion in 2024.
The Prudential Constraint: Basel, Fixed Assets, and Liquidity Preference
The core of the problem lies in the fact that the financial operator is strictly subordinated to the hierarchy of the Brazilian Financial System (Sistema Financeiro Nacional – SFN), under the regulation of the National Monetary Council (Conselho Monetário Nacional – CMN) and the supervision of the Central Bank of Brazil (Banco Central do Brasil – BCB). Financial institutions operate under the constraints of Basel III, which requires a minimum Basel Ratio (own capital relative to risk-weighted assets) to prevent insolvency, as well as limits on the Fixed Asset Ratio (equity allocated to low-liquidity assets).
Basa’s balance sheet data reveal significant regulatory pressure and a strategy of balance sheet protection throughout the recent period. Between March 2020 and September 2024, the bank’s Basel Ratio increased from 12.2% to 14.6% (a level comfortably above the 11% minimum required by the BCB), supported by Risk-Weighted Assets (RWA) reference equity of R$6.7 billion. During the same period, the Fixed Asset Ratio declined from 5.5% to only 3.2% (a substantial margin below the BCB’s 50% limit).
Although these indicators demonstrate strong financial health and a net profit of R$319.4 million in the third quarter of 2024, they reveal, from a macroeconomic perspective, the dominance of the Keynesian liquidity preference principle. In order to maintain a protected and flexible balance sheet, with low levels of fixed assets in the face of the region’s structural risks, banking channels become highly risk-averse regarding socio-environmental projects. By requiring strong collateral and highly liquid guarantees to approve loans, banking bureaucracy penalizes agro-extractive cooperatives and standing-forest producers, whose intangible and territorial assets do not fit within Basel regulatory frameworks.
The Concentration of Green Credit and Conservatism in Risk Ratings
To respond to the climate agenda and ESG practices, the FNO Green Credit Lines evolved from broad sustainability programs (2017–2020) into more segmented initiatives (Amazônia Rural Verde, Empresarial Verde, and Infraestrutura Verde between 2021–2022), followed by sectoral consolidation focused on PRONAF and irrigation (2023–2024). In nominal terms, these resources increased from R$2.78 billion in 2017 to R$7.57 billion in 2024. However, the distribution of these resources reveals significant geographical inequality and a clear capture of the Fund by agricultural frontier economies.
Of the R$7.57 billion allocated to Green Credit Lines in 2024, three states absorbed the largest share: Pará received R$2.52 billion, Tocantins obtained R$2.33 billion, and Rondônia received R$2.01 billion. Together, these three territories accounted for 85.4% of the North region’s green liquidity. In contrast, states with the largest areas of preserved native forest—where substantial investments would be required to consolidate the ecological transition—received only marginal shares: Amazonas obtained R$125.7 million (1.6% of the total) and Amapá received R$44.3 million (0.5%).
This geographical asymmetry becomes clearer when analyzing the composition of Basa’s Credit Portfolio by Risk Level (Ratings AA to H). In order to expand credit supply as required by the federal government without deteriorating the Basel Ratio (14.6%), the bank implemented a strong migration toward lower-risk ratings:
- The combined share of AA and A-rated operations (credit granted to borrowers with excellent cash flows, highly liquid guarantees, and strong credit histories) increased from 55.9% in December 2020 (R$984.9 million in AA and R$1.9 billion in A) to an impressive 74.7% in September 2024 (reaching R$8.2 billion in AA and R$14.3 billion in A).
- Conversely, more dispersed operations with higher regulatory risk were progressively reduced. Level H, which represents the highest provisioning risk, although increasing nominally to R$603.8 million (2.0%) in 2024, reflects the tightening of credit allocation criteria.
Therefore, the financial system operates under a selection bias: credit classified as “green” is predominantly directed toward corporate clients with AA and A ratings located in consolidated agribusiness hubs in Pará, Tocantins, and Rondônia, where credit risk can be mitigated through traditional collateral mechanisms.
Evidence of the Ecological-Economic Disconnect
The cross-analysis of accounting data with environmental indicators from PRODES/INPE and SEEG demonstrates that institutional credit has primarily financed the technological modernization of the traditional agricultural frontier (such as degraded pasture recovery), rather than fostering the endogenous development of a standing-forest bioeconomy.
Carbon asymmetry: In 2024, carbon asymmetry in the Northern region became evident through the profound quantitative and structural contrast between emission and carbon capture profiles. While Pará and Rondônia maintained significant levels of net greenhouse gas emissions—driven, respectively, by deforestation associated with Land Use Change and by the multiplier effect of Agriculture through the GWP-AR5 metric—Amazonas consolidated its position as a crucial net carbon sink due to its preserved forest areas (SEEG, 2024). However, this dynamic reveals a severe economic distortion, as the current development model penalizes conservation by leaving the state of Amazonas on the margins of financial liquidity and the generation of high credit ratings (AA/A), while prioritizing market structures associated with higher traditional agricultural GDP over the environmental and technological assets of the regional bioeconomy.
- Deforestation and financing: Annual deforestation in Pará reached its recent peak in 2021, with 5,238 km², coinciding precisely with the year of the largest historical nominal expansion of the FNO Green Credit Lines, which reached R$9.12 billion across Brazil’s Northern region.
- Heat sources: In 2024, the Northern region recorded an all-time record of 125,542 fire hotspots. The increase in these environmental degradation indicators during the same period in which green credit lines were consolidated and the operating bank’s Basel ratios strengthened suggests that the accounting soundness of the banking balance sheet coexists with ecological pressure in areas with high credit concentration.
Final Considerations: The Role of the SFN in the Ecological Transition
The governance of credit operated through the FNO demonstrates that monetary regulatory standards established by the National Monetary Council (CMN) and the Central Bank of Brazil (BCB) create significant barriers to sustainability in the Northern region. By prioritizing microprudential stability and balance sheet conservatism—reflected in the pursuit of high Basel ratios (14.6%), low fixed asset ratios (3.2%), and the hyper-concentration of the R$30.1 billion credit portfolio among elite risk ratings (AA and A)—over broader macro-environmental effectiveness, the Brazilian Financial System (SFN) weakens the transformative role of the public constitutional fund.
A genuine ecological transition requires monetary authorities to rethink the regulatory architecture applied to the Legal Amazon. This requires greater flexibility in provisioning requirements and collateral rules for community-based bioeconomy initiatives, while incorporating the concept of “positive climate risk” generated by conservation-oriented states. Without reforming the prudential rules governing financial intermediation and shaping bank balance sheets, the label of “green credit” will continue to function as a merely cosmetic accounting arrangement, incapable of addressing the structural forces driving degradation of the Amazon biome.
References
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BANCO DA AMAZÔNIA S.A. (BASA). Relatório de Resultados e Impactos do Fundo Constitucional de Financiamento do Norte (FNO): exercícios de 2017 a 2024. Belém: BASA, 2018–2025. Available at: https://www.bancoamazonia.com.br. Accessed: May 2026.
INSTITUTO NACIONAL DE PESQUISAS ESPACIAIS (INPE). TerraBrasilis. Available at: https://terrabrasilis.dpi.inpe.br/. Accessed: May 30, 2026.
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SCHUMPETER, J. A. Teoria do desenvolvimento econômico: uma investigação sobre lucros, capital, crédito, juro e o ciclo econômico. Translation by Maria Sílvia Possas. São Paulo: Nova Cultural, 1997. (Coleção Os Economistas).
