The World Bank In Brazil

The COVID-19 pandemic exposed Brazil to an unprecedented health and economic challenge. To contain the pandemic, Brazil implemented social measures to slow the spread of the virus and contain its impact on the health system capacity, which is uneven across the country. COVID-19 hit as Brazil was still recovering from its 2014-16 recession. Economic recovery remained weak and fiscal policy space limited since the peak of the recession in 2015-2016, with GDP growth below 2 percent in the following years.

The pandemic, and the health policy response to it, resulted into a sharp decline of external and domestic demand while also constraining supply.  It has brought uncertainties to the macroeconomic policy framework, especially in the fiscal area, which translate into downside risks, thus calling for strong fiscal consolidation and the adoption of structural reforms in 2021, as soon as the spread of the disease is controlled.

To protect the most vulnerable people, the Government put forward a large, timely, targeted and time bound fiscal package focused on social assistance. The cost of this package was estimated at BRL 815.5 billion (US$156.8 billion), or 11.4 percent of GDP in 2020. The large fiscal stimulus limited the annual contraction in 2020 to 4.1 percent. Recovery momentum is expected to propel growth to 3.0 percent in 2021 but this is subject to large uncertainty, particularly on the impact of the new wave of the pandemic and the pace of vaccination.

As of March 2021, Brazil reached its highest peak yet in the COVID-19 pandemic, in stark contrast with other parts of the world’s downward trends. Brazil has the second world largest number of confirmed COVID-19 cases (12.7 million) and deaths (321,000, i.e., 149 per 100,000 people).

A combination of factors explains the situation. A new and more contagious COVID-19 variant (P.1) was discovered in Manaus in early 2021. The health system was not prepared to handle a large volume of cases:  by end of March 2021, the majority of states have experienced over 90% of ICU occupancy rate, with shortages of critical supplies such as oxygen and sedatives (needed for administering oxygen), reflecting planning challenges and coordination issues between the federal and subnational levels. Vaccination efforts continue, albeit at slow pace, and 16.9 million people (7.9 percent of the population) received their first dose so far.  Brazil secured vaccines from Coronavac and AstraZeneca/Oxford (mostly locally produced), and recently purchased 100 million doses from Pfizer and 10 million doses of Sputnik V.

The COVID-19 pandemic is also jeopardizing years of progress in poverty reduction and human capital accumulation. While the poverty rate temporarily fell to 21 percent in 2020 (from 29 percent in 2019) thanks to generous social emergency transfers (Auxilio Emergencial) to 66 million individuals and the expansion of the Bolsa Familia Conditional Cash Transfer (CCT) program but it is expected to rise again this year with the end of the temporary assistance and the weak labor market recovery due to the second wave of the pandemic.

Moreover, Brazil is among the LCR countries that suffered the longest spell of public schools’ closures to date, which is expected to raise learning poverty from 48 to 70 percent and to disproportionately affect the poor (remote learning benefited less than 50 percent of students in less developed regions, vs. 92 percent in richer parts of the country). As a result, the impact of COVID-19 is expected to reverse a decade-long of steady improvement in the Human Capital Index (which had increased from 0.52 to 0.58 between 2007 and 2019) and calls for strong remedial acceleration policies.

Striking the right balance between protecting the poor and ensuring sustainable public finances, including at subnational levels, will be a key policy challenge in 2021.

Supporting the transition to a greener and more resilient growth model also remains a key challenge. Brazil is home to more than 60 percent of the Amazon rainforest, the largest tropical forest in the world and has a high share of renewables in its energy matrix, but high exposure to climate risks and deforestation call for a strong reform agenda to address these challenges. Due to the increase in deforestation emissions, Brazil is not on track to meet its NDC targets (a reduction of GHG emissions of 37% by 2025 and 43% by 2030, relative to 2005) and has yet to develop an integrated long term national strategy to achieve its climate goals. Recent reforms in the infrastructure sector, together with the administration’s renewed interest in the climate agenda, provide sound opportunities for Brazil’s green recovery and for lifting millions of Brazilians out of poverty.

Last Updated: Apr 06, 2021

In 2016, the World Bank conducted a Systematic Country Diagnosis (Systematic Country Diagnostic / SCD) of Brazil, which sought to determine the main challenges that the country must face in its path towards inclusive and sustainable growth.

Based on SCD findings and the feedback gathered in the dissemination phase, a new  Country Partnership Framework (CPF) for the period of 2018-2023 was produced. This strategy is based on three pillars:

1)      Fiscal sustainability and improved service delivery. This pillar focuses on fiscal adjustment support at the federal and subnational levels, including pension and social protection systems. It also addresses greater efficiency in public service delivery, especially in education and health.

2)      Productivity growth and investments by the private sector. Objectives under this pillar relate to efforts to reduce the regulatory barriers that undermine competitiveness, as well as to correct distortions in the credit market and mobilize investments in infrastructure.

3)      Inclusive and sustainable development. The objective here is to support Brazil's ambitious Nationally Defined Contribution (NDC) under the Paris Agreement by promoting global partnerships.

The upcoming Performance and Learning Review (PLR), to be delivered to the Board in 2021 (tbc), will aim to update the CPF and align WBG support with the evolving country context (including in relation to the COVID-19 pandemic) and government priorities. It will further benefit from consultations with all relevant stakeholders at subnational and national levels. 

Last Updated: Oct 01, 2020

Brazil’s project portfolio spans several areas of the economy, civil society and the environment, and has had significant positive impacts on people's lives - including, especially, the most vulnerable. See below some highlights of the World Bank's operations in Brazil, divided by the three pillars of the CPF.

Pillar 1 - Fiscal sustainability and improved service delivery

Education

Considering international standardized learning tests, the quality of education in Brazil has been improving slowly over the past 15 years. However, despite this moderate progress, learning levels remain behind countries comparable to Brazil. This challenge is illustrated by the fact that in 2019, in Brazil, 4 out of 10 youths by the age of 19 did not finish high school. Or additionally: a significant share of children up to 3 years old do not have access to early childhood education. Altogether, these facts impose key challenges to economic and social development.

In this context, the Bank has engaged consistently to mitigate the challenges through investment projects that provide not only financial support but, in parallel, augments local skills by sharing global experience and knowledge. One example is a federal project led by the Education Global Practice comprehending all 27 subnational governments, and an additional 5 multi-sector projects, in which the education component plays a key role (in multiple states and 2 municipalities). Most generally, theis program also include a rich set of analytical activities (including impact evaluations and assessments) and technical support.

Among subnational projects, the Salvador Social Multi-sector Projects I, and the recent second phase, aim at improving the efficiency of social service delivery in the Municipality of Salvador, one of the largest yet poorest urban area of Brazil, with 50% of its population below poverty line and 80% of afro-descendants, while integrating a strong COVID-19 focus in the short and longer-term. The projects support innovations to consolidate and accelerate the acquisition of basic skills and prevent dropouts, as well as the provision of emotional support to teachers, students and families.

Health

The Salvador Social Multi-sector Project has been improving delivery of public health services through the expansion of the primary health care (PHC) coverage, and the consolidation of secondary and tertiary care under municipal’s governance. These investments helped the municipality improve results in the other levels of health care, as demonstrated by the decrease in the percentage of low risk patients in the Intermediate Emergency Care Units (Unidades de Pronto Atendimento, UPAs). Notable results have also been achieved in the use of technologies to improve health care management, as evidenced by some of the Project’s indicators.

As of December 2019, the number of municipal health facilities with an operational electronic medical record system had increased from a baseline of 0 to 102 units; the number of municipal health units with health services provision available within the municipal regulation system (Sistema Vida+) had increased from 30 to 145; and the number of municipal primary care units with a management system installed had increased from 30 to 138. The Bank has approved, in September 2020, a second phase to this project, which will continue expanding coverage and strengthening the delivery of social services in the municipality, as well as help with the COVID-19 response.

To keep pace with the country's changing health profile, the World Bank has promoted health projects focused on chronic diseases, such as the Piauí Pillars of Growth and Social Inclusion Project, which has been expanding access to specialized diagnosis and treatment with five new treatment centers, covering half the state's population, and other complementary investments in clinical protocols and training of health professionals. The operation also supports the implementation of the new Intelligence Center for Tropical, Emerging and Neglected Diseases (CIATEN), a cutting-edge institution in Brazil, dedicated to research (observatory), epidemiological information, and training of health professionals. Approximately US$ 4.5 million of loan proceeds have been allocated to respond to the recent COVID-19 pandemic.

The Rio Grande do Norte Regional Development and Governance Project  has been improving health services aimed at women and children by increasing the number of maternity wards and functional beds for newborns. It also supports increased emergency health units in the state and improved capacities to cope with cancer and to diagnose various diseases in two new laboratories. The project has allocated about US$5 million to respond to the COVID-19 pandemic through the acquisition of medical and personal protective equipment.

Pillar 2 - Productivity growth and investments by the private sector

Agriculture

The Bank's programs in agriculture and rural development support the states in promoting and / or strengthening productive economic activities that help increase the quality of life and income of family farmers and the access to technical assistance and technological innovations aimed at the adoption of environmentally-sustainable practices and techniques and improved productivity. Innovative projects empower local communities in poor regions of the Northeast, as well as in other parts of the country (North, South-East and South), to invest in improving the quality of products and thereby increase access to institutional and private markets - mainly through collective channels, such as producer associations and cooperatives.

The projects also invest in complementary infrastructure to support agricultural activities, such as: agro-logistics, alternative energy sources, water supply and basic sanitation. One such example, the Productive Bahia Project has supported strategic investments in the various links of identified value chains, as well as in the formation of productive alliances between producers and private companies to enable the necessary investments to meet market requirements - both in terms of quality and quantity - while favoring experience above all else. This is the case of organic cocoa producers in southern Bahia. Potential buyers and visitors to the region can experience a day in the countryside and purchase almonds and several cocoa products (chocolate, nibs, etc.) when they visit production areas. This approach also benefits the recovery of the Atlantic Forest, by adopting agroforestry practices and systems and several other practices that increase production and strengthen climatic resilience. 

Inclusive, resilient and sustainable cities

The World Bank recognizes the importance of Brazilian cities. Concentrating more than 85% of the country's population, they are engines of economic growth and development. However, these cities also present high concentration of poverty, as well as drastic socio-spatial inequalities, all exacerbated by the rising frequency and intensity of extreme climate-related events, which affect the poor and vulnerable in a disproportionate manner.

The World Bank's support for promoting inclusive, resilient and sustainable cities comes in different ways. There is the traditional one-on-one engagement with municipalities to address their specific and multidimensional challenges related to planning, formulation and implementation of public policies, including the provision and maintenance of infrastructure and services at the local level. In Fortaleza, for example, a project under implementation benefits more than 300 thousand people through a set of urban and environmental improvements, with expected results on the transformation of the entire western (and less favored) portion of the city. This project comprises of the implementation of a 10 km long linear urban park; the reduction of point-source pollution along the coastline; and the increase in the municipality’s own source revenue capacity.

But the World Bank has also been investing in innovative ways of providing municipalities with financing to support integrated projects for urban resilience. A recently approved operation granted access to a World Bank loan, through which the Regional Development Bank for the Far South (Banco Regional de Desenvolvimento do Extremo Sul - BRDE) will be able to act as a financial intermediary and lend to small and medium-sized municipalities in southern Brazil interested in promoting the resilience agenda. This project comprises of a specific credit line to finance disaster risk management and mitigation projects (addressing events, such as floods, landslides and coastal erosion).

Gender                         

The active promotion of gender equality is an essential component of the World Bank's strategy in Brazil and has expanded considerably since 2010. In 14 states, World Bank Group projects incorporate gender components by requiring meaningful gender-sensitive consultations; supporting and developing guidances towards combating harassment in public spaces and public transport and against domestic violence; improving response services; promoting economic inclusion, and improving health services and / or reducing of teen pregnancy. 

In the municipality of Salvador, the Bank is supporting the strengthening of the institutional and technical capacity of the municipal social assistance system to address and prevent GBV, through a grant, by promoting a series of trainings and workshops targeted both at professionals and users of the social assistance network. Complementary actions will be taken in the framework of the Salvador II Project: the development of intersectoral protocol, continuous training workshops targeted at public agents involved in the provision of services to survivors, and communication strategies targeted at GBV prevention and studies on the social and economic impacts of GBV in the municipality.

In the state of Piauí, the Bank is supporting the strengthening and capacity building of the state’s policy bodies for women. Furthermore, in the state’s capital, Teresina, the Bank has supported the development of a diagnostic on the GBV situation in the municipality and has promoted a series of training aiming at strengthening the services offered to victims and survivors.

In 2020, the Bank also established a partnership with the National Ministry of Women, Family and Human Rights in the development of a series of knowledge exchange activities and analytical and advisory work to strengthen protection systems for survivors of domestic violence, especially during the COVID-19 pandemic. One of these efforts resulted in the publication of a technical note on Addressing Violence against Women (VAW) under COVID-19 in Brazil.

Transport

The Brazilian transport portfolio has provided support to mobilize greater investment in infrastructure to improve services, including through PPPs and various activities such as: i) supporting the concession of more than 2,000km of federal roads to the private sector, improving the efficiency of road maintenance for passenger and cargo trucks and reducing logistics costs; ii) supporting the concession of Lines 8 and 9 of the suburban rail in São Paulo, the concession of the federal passenger railway network privatization process in Belo Horizonte, and that of a new Bus Rapid Transit Systems in the Itajaí River Bed Region. The transport projects also support the implementation of the public investments in three major passenger rail PPPs, the São Paulo Metro Line 4, São Paulo Metro Line 5 and the Suburban Rail in Rio de Janeiro, Supervia.

These projects were pioneers in the field and allowed for strong private participation in sectors previously only invested in by the public sector. With these investments, high quality transport services are being provided with private financing, improving people’s accessibility to jobs, health and leisure, reducing travel times, and deeply impacting more than 3 million people a day, mostly poor, who were previously subject to “super commutes”.

Pillar 3 - Inclusive and sustainable development

Environment

Few countries have ecosystems as rich, diverse and critical to the well-being of their populations as Brazil. The country is home to one-third of the world’s tropical rain forests, twenty percent of the world’s freshwater supply and the Cerrado region - a tropical savannah with the world’s highest rate of biodiversity. A significant part of Brazil’s economy relies on the use of natural resources. Brazilian forests are also huge reservoirs of carbon and an important asset for maintaining the global climate balance.

In recent years, Brazil has improved its environmental laws and implemented several initiatives to combat climate change, with significant reductions in emissions. The Amazon Region Protected Areas (ARPA) program covers 60 million hectares of protected areas. It is estimated that the impact of ARPA alone will be enough to avoid the emission of 430 million tons of carbon by 2030. Another example is the Marine Protected Areas Program, a pioneering initiative set to triple the amount of marine protected areas in the coastal regions of Brazil. The Amazon Sustainable Landscapes Program (begun in June 2018) combines biodiversity protection with the recovery of degraded areas to ensure the connectivity of Amazonian ecosystems and to support the sustainable development of the region.

In Brazil, the World Bank is supporting the government in better managing and conserving the Cerrado , the second largest biome in South America, which is being deforested twice as quickly as the Amazon, due to land clearing for agriculture and cattle ranching. The Cerrado is a driver of economic growth and is essential for food security, biodiversity conservation, water regulation and carbon sequestration. Investments underway are addressing drivers of deforestation by making agricultural production more sustainable, providing monitoring and information, and building capacity to detect, prevent and fight forest fires. Results to date include:

• 20,025 farmers have been trained in low carbon emission agricultural practices: 9,227 producers have enrolled in training/technical assistance + 1,908 additional people have received technical assistance on properties + 8,644 people participated in technological reference units days + 246 trained technicians.
• 93,844 hectares increase of areas under low carbon emission agricultural practices (sum of 42,588 ha for training group and 51,256 ha for training + technical assistance group).
• The indirect effect, computed as area under indirect interventions in harrowing and seeding as well as other interventions, is 151,204 ha for the CAP group and 133,464 ha for training and technical assistance.
• 190,072 landholding, totalizing about 35.5 million hectares have been enrolled in the National Rural Environmental cadaster system (SICAR) and, as a result, are adopting sustainable land management practices.
• Thirty-two Traditional Communities’ Territories, encompassing a total area of 94,897 hectares, were georeferenced, and 2,506 families there gained Agricultural Environmental Cadastre (CAR) registries, a majority of which, granted to women.
• DGM Brazil is supporting sixty-four subprojects, in which 36 involve indigenous communities; 12 comprises quilombolas; 12 are in traditional communities; and four are institutional subprojects.
• 20 Cerrado biome’s Indigenous People and Traditional Communities representatives supported in conservation and other REDD+ related processes at regional, national and global level.
• 11 states (Tocantins, Bahia, Piaui, Sao Paulo, Paraná, Mato Grosso, Mato Grosso do Sul, Distrito Federal, Goiás, Minas Gerais, Maranhão), and the Ministry of Environment  being supported with improved environmental and land planning management systems.
• Biennial deforestation ratings, available for the period of 2000-2012 and annual deforestation ratings, available for 2013, 2014, 2015, 2016, 2017, 2018, and 2019, were made public. The data is available at: fttp://www.obt.inpe.br/cerrado/ or http://terrabrasilis.dpi.inpe.br/app/dashboard/deforestation/biomes/cerrado/increments

Water Resources Management

Brazil has suffered from increasingly frequent extreme weather events, such as floods and droughts. They increase the country's vulnerability to natural disasters and represent a disproportionately high threat to the livelihoods of the poor. Specifically in the water sector - where climate events have a major impact - the Bank has been working to improve the country's capacity to better manage climate-related risks, by means of improved monitoring, analysis, planning, preparation, mitigation and response capacities. This support occurs at the national and subnational levels, and leverages many of the World Bank's financing, technical assistance and analytical studies.

Ongoing projects in the water sector incorporate these elements – including in the states of Pernambuco, Espírito Santo, São Paulo (including the Metropolitan region), Paraíba, and Ceará. The World Bank has also provided technical assistance in the creation of the country's first Drought Monitor, a tool that enables the nine Brazilian semi-arid states to manage the phenomenon and mitigate the social and economic impacts of droughts.

The World Bank's support of sustainable development in Brazil aims to improve quality of life through integrated approaches to rural development, better local services in urban and rural areas and contributions to the efficient management of the country's natural resources.

As part of its commitment to helping improve the quality of life of poor rural populations, the World Bank's rural development projects include water resources management components, including the Pernambuco Water Sustainability Project, which targets populations of the Capibaribe river and the metropolitan region of Recife. The World Bank has also provided technical assistance in the formulation of the country's first Drought Monitor, a tool that enables the nine Brazilian semi-arid states to manage the phenomenon and mitigate the social and economic impacts of droughts.

Transport

One of the main priorities of Brazil, an 85 percent urbanized country, is to provide more inclusive and sustainable urban services, as well as to promote socio economic development to small rural producers and vulnerable groups. Brazil still suffers from low logistics performance, with stagnant road infrastructure since the 90’s. In addition to that, the transport sector is a large contributor of GHG emissions, coming particularly from roads (86% from transport emissions come from roads). Moreover, Brazil’s numbers of road deaths are among the worsts in LAC (23 deaths/100k inhabitants per year) and road accidents cost around 4% of its GDP.

Besides the rail projects cited above (under Pillar 2), the World Bank promotes the development of inclusive, green and technological BRT corridors in the cities of São Paulo, Belo Horizonte and Itajaí River Bed region, improving urban mobility with a focus on reducing GHG emissions, improving road safety, and increasing accessibility of the poor to jobs . Public transport, besides being the main mean of travel of the poor and women, offer 100% climate co-benefits, and might significantly reduce air pollution. At the federal level, the WB is supporting the technological transition to electric mobility by enhancing city’s structuring capacity in bus services PPPs with business models that improve sector competition and formalization.

In the roads project in Bahia, the WB is contributing to the improvement of the State’s transport and logistics efficiency and safety, while enhancing the Borrower’s capacity in environmental and disaster risk management. In Tocantins, for instance, the WB is fostering effectiveness of road transport and enhanced efficiency of selected public services in support of the Borrower's integrating development to social agenda in gender by addressing gender-based violence in the project areas.

In the State of São Paulo, the WB is enhancing road resilience, while improving rural accessibility. These three projects improve and rehabilitate roads used to transport commodities and agriculture products for export from rural areas; strengthen road safety; provide connectivity to indigenous communities and rural areas (throughout all-seasons), and bring a proactive gender agenda, whereby the projects amplify results by promoting gender empowerment and preparing communities to repel issues surrounding sexual exploitation and prostitution of minors.

Last Updated: Nov 17, 2020