BRASILIA (Reuters) - The government of President Luiz Inácio Lula da Silva expects to raise $2 billion in financing for sustainable projects through a new auction to be announced on Monday as part of the Eco Invest Brazil program, focusing on initiatives to recover degraded pastures.

According to Brazil Treasury Secretary Rogério Ceron, the country has the capacity to implement the world's largest land-restoration program.

"It has a huge environmental impact, enormous international appeal, and many people are seeking us. We aim, in the best-case scenario, to recover around 1 million hectares. It's quite aggressive," said Ceron, who spoke to Reuters before the announcement.

The new auction is part of the "blended finance" line of the Eco Invest program, which combines public and private capital to reduce financing costs and stimulate sustainable initiatives in the private sector, while also reducing the risk of exposure to exchange rates.

The official announcement of the auction will be made on Monday by the ministries of Finance, Agriculture and Environment.

A decree to regulate the auction will be published this week, and the deadline for banks to submit proposals will be 45 days.

Although the exact value cannot be disclosed in order not to hinder competition among financial institutions, the auction is expected to provide around $1 billion in catalytic capital from the Climate Fund, with a requirement for leverage of at least one and a half times, the secretary said.

The financial institutions offering the highest leverage in private capital will win the auction. So if the auction is successful, at least $500 million in private resources will be added to the $1 billion from the Climate Fund, a total that can increase depending on the competition.

Ceron believes there is an appetite for leveraging that would allow financing to include $1 billion in public capital and $1 billion in private resources.

According to the Treasury secretary, at least 60% of the leveraged capital will have to come from foreign fundraising, with the remaining 40% possibly coming from domestic resources.

The new auction is part of the government's ecological transformation plan and can boost the National Program for the Conversion of Degraded Pastures, which was launched in 2023 with a focus on recovering lands with low productivity, and expanding food production areas without increasing deforestation.