WB/BRAZIL: Pernambuco’s New Inclusive Growth Program will Benefit Nine Million Residents
June 25, 2013
Program Seeks More Economic Opportunities, Better Health and Education Services and Reduced Violence
WASHINGTON, June 25th, 2013 – Nine million residents of the Northeastern state of Pernambuco will benefit from the Pernambuco Equity and Inclusive Growth Development Policy Operation, a US$ 550 million loan approved today by the World Bank Board of Directors. Aligned with the State Government’s strategy All For Pernambuco, the program focuses on the promotion of private sector development and inclusive growth, skill development and employment services, public sector management, better health services, and prevention of crime and violence.
“The State of Pernambuco has undergone a great number of positive changes in the last decade, with significant improvements to our economy and social indicators," said Eduardo Campos, Governor of the State of Pernambuco. "Nonetheless, we have the consciousness that we still have challenges to be faced and we are committed to doing our best to overcome them. This new partnership is another proof of such commitment."
Despite being the second largest economy in Northeast Brazil, Pernambuco lags behind the rest of the country. In 2010, the Gross Domestic Product (GDP) per capita was US$ 5, 411, half the national average, and the share of the population below the poverty line was twice that of Brazil as a whole.
In the past decade, economic growth and expansion of social assistance programs have contributed to reductions in inequality and poverty in the state. The state has achieved fiscal consolidation, marked by rising operating balances that allowed a significant reduction in debt levels.
There are still critical challenges ahead. For instance, extreme poverty continues to be amongst the highest in Brazil and although Pernambuco has registered an increase in labor market participation, employment opportunities are still concentrated in the metropolitan area of the capital, Recife. With more than 70 percent of the state’s GDP produced in the coastal area, household per capita income in the interior of the state was half that of the Metropolitan Area of Recife in 2009. Other challenges include a high prevalence of drug related crime and violence, high rates of gender-related violence, and an increased share of mortality from non-communicable chronic diseases.
“The World Bank has been a long time partner of the government of Pernambuco,” said Debora L. Wetzel, World Bank director in Brazil. “This new program in complementary to previous partnerships and it will support the state strategy to increase the economic opportunities, jobs offers and quality of life as whole to all the Pernambuco population.”
The focus areas of the Equity and Inclusive Growth operation in Pernambuco are:
- Reduction of administrative barriers to consolidate the State of Pernambuco Industrial Infrastructure Program: These barriers constrain the growth of small enterprises by discouraging their graduation from micro-entrepreneurial status, restrict the extent of internal competition and thereby dampen an important source of productivity growth.
- Support the development of an integrated Monitoring and Evaluation (M&E) System for technical and vocational training programs: consolidated data on quality and efficiency of programs, beneficiaries’ employability and client satisfaction will enable not only analysis of efficiency and performance at the program level, but also participant outcomes related to gender, education level, location.
- Support the creation of a financing mechanism for the implementation of Pernambuco no Batente: It is a productive inclusion program targeting poor and vulnerable families registered as extremely poor (less than R$70 per capita), linked to Results Based Agreements that establish results monitoring arrangements and annual targets on service provision.
- Support the development of a legal framework for the Results Based Management (RBM) Model (Todos Por Pernambuco), and measures to increase its sustainability: One of the main characteristics of the RBM model is the integration of all stages of the public policy cycle, including planning, budgeting, monitoring, evaluation and accountability. This support will extend the model and lead to the adoption of the management and operational practices of the Pacto pela Vida in the Pacto pela Saúde and Pacto pela Educação within the next year.
- Support to the expansion of the Programa Atitude as a form of social prevention to combat drug related violence and rehabilitate drug users, as part of the State Pacto Pela Vida (PPV) Program: The program is aimed at improving citizen security and reduce crime through an integrated strategy.
- Support to the establishment a Technical Chamber on Violence against Women and the strengthening of the Monitoring and evaluation capacity of the Government of Pernambuco on issues related to Gender-based violence.
- Support the state program against communicable diseases: Through the approval of simplified clinical processes expected to help improve the organization and coordination of health services and enhance quality.
This single-tranche loan from the International Bank for Reconstruction and Development to the State of Pernambuco is guaranteed by the Federative Republic of Brazil and has a final maturity of 30 years, with a 5 year grace period.