Brazil

The development objectives of the Second Minas Gerais Development Partnership Project for Brazil are to: (i) to help the State of Minas Gerais improve the efficiency... Show More + and effectiveness of public resource use and allocation for economic and social development; (ii) to support the adoption of innovations in public management by the State; and (iii) to support the state in strengthening its results-based management system of monitoring and evaluation of results. The extension is necessary for the project to be fully and successfully completed. Additional time is needed to complete technical assistance activities of strategic importance to the borrower, related to the new institutional arrangements introduced for the management of the Metropolitan Region of Belo Horizonte (MRBH), the state capital. The activities seek to support the development of master plans to guide urban and economic development in key areas of the metropolitan region. This initiative could have potential demonstration effects for other metropolitan areas in Brazil. The contract with the consulting company was signed in early December 2012.This will be the third extension of the project. Show Less -

Over the past decade, credit markets in Brazil have markedly deepened. Credit as a share of Gross Domestic Product (GDP) almost doubled-from 28 percent of GDP in 2000... Show More + to 49 percent in December 2011, bank spreads almost halved, and access to credit has increased sharply for almost all market segments. This report reviews the performance of Brazilian credit markets over the past decade, which saw macro stabilization and microeconomic reforms with marked effects on credit market outcomes. The report tries to distill the impact of those structural reforms and identify the remaining structural challenges. To address these issues, the report focuses on three main enduring paradoxes of Brazilian credit markets. First, how has the transmission of monetary policy to loan prices and volumes improved over the decade? Second, why have Brazil's interest rate spreads remained so high despite macro stabilization and micro reforms? Third, why did access to credit for consumers expand so much while firms' access did not? Brazil's resilience to the 2008 global financial crisis and so far to the unfolding Euro zone crisis demonstrates that the country's credits markets have come a long way over the past decade; however, much remain to be done to increase resilience, lower prices, enhance competition, and expand access across the board for consumers and firms. This report hopes to provide some insights on those challenges. Show Less -