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Brazil, World Bank Step Up Fight Against Extreme Poverty

June 2, 2011

  • Brazil and the World Bank reinforce partnership to overcome extreme poverty currently affecting 16 million Brazilians
  • The Bank will double funding to Brazil next year to the tune of US$6 billion
  • Financing will support Brazil's social and economic agenda, especially in less-developed Northeast

BRASILIA, June 2, 2011 - A renewed Brazil - World Bank partnership hopes to overcome Brazil's extreme poverty, an issue that has disadvantaged more than 16 million Brazilians by denying them opportunities to advance and prosper.

World Bank President Robert B. Zoellick joined Brazil's campaign against poverty by announcing new financing for the next fiscal year to the tune of US$6 billion –almost double its current commitment- to support development programs and continued economic growth, especially in Brazil's less-developed Northeastern region.

The new Bank financing fits in well with President Dilma Rousseff's newly launched 'Brasil sem Miséria' plan to overcome extreme poverty by boosting poor families' income, improving their access to basic services and economic opportunities. Around 16.2 million Brazilians- 40 percent of them kids- will benefit from this program, Brazilian officials say.

In addition to helping Brazil's most vulnerable, the new financial resources will help consolidate the country's global economic role.

"Bringing equitable financing initiatives to countries like Brazil is important to maintain a recent global growth trend in which nearly half of all growth has been produced in developing countries," Zoellick said, adding that the new financing could see final approval as early as July, pending talks with government officials. The World Bank currently has US$13.3 billion in outstanding disbursed loans to Brazil, for projects in 19 of the country's 27 states.

Zoellick gained first-hand knowledge of Rousseff’s antipoverty initiative at the plan’s launch in Palacio de Planalto, which he attended as the President’s guest of honor, along with congressmen, ministers and political and business leaders. “Perhaps the greatest merit of our plan is that it sets the tone of our collective commitment to fight every day so that there is no poverty in Brazil,” said Rousseff. 

Support for Brazil's Northeast

Almost half of the Bank new funding will go towards keeping the growth momentum in Brazil's Northeast, the country's less developed but also fastest-growing region. A vast majority of Brazil's 16 million extreme poor –or 60 percent of them- live in the Northeast, according to authorities. About 40 percent of them are younger than 14.

It is no surprise, then, that most of the new financial resources will support education programs and critical social and infrastructure projects, World Bank officials said. In addition, these initiatives should stimulate greater market development and more competition in the region, they added.

"We are hoping to take advantage of a virtuous cycle in the Northeast to keep encouraging development there. For the first time ever the region is growing at a faster pace than the rest of the country, so we need to help reinforce this trend," said Brazil's country director Mahktar Diop.

In the grand scheme of things, the Bank hopes to see Brazil consolidate its regional role as a 21st century growth engine that not only relies on commodity windfalls but also on value-added production –like most developed economies do.

"Brazil has done very well recently with commodities, but commodity booms tend not to last forever," Zoellick noted. "It will be very important for Brazil to develop other sectors such as services and manufacturing."

Zoellick is on an official 4-day visit to Brazil to expand the Bank's strategic partnership with the region's economic powerhouse. His agenda includes meetings with Brazilian top public officials, private sector leaders and project beneficiaries, such as Rio de Janeiro's 'favela' residents currently on a Bank-supported plan to provide security and risk management to poor communities. Zoellick also played a high-profile role at the C40 Cities Mayors Summit in Sao Paulo.

A Greener Agenda

At the top-notch environmental gathering, Zoellick announced a new partnership with the world's largest metropolis, which –he said- will help cities accelerate current actions to reduce carbon emissions and become more resilient to climate change.

Contrary to popular imagery the ravages of climate change are not only limited to melting glaciers, rising oceans and dramatic shifts in weather patterns, Zoellick said. As a matter of fact, large cities will also pay a high price for climate change mitigation. According to Bank estimates, cities around the world –which produce 80 percent of GHG emissions -will end up paying about US$60 billion-US$80 billion a year through 2050 to mitigate climate change in critical sectors such as water supply, coastal zones and infrastructure.

"This partnership with C40 is a natural extension of our relationship with individual C40 cities. To simplify our ability to better serve all of you we will initiate a one-window access for cities, so you can get a better sense in one place of the Bank's capacity building, technical assistance and available funding programs," said Zoellick, addressing a large audience of city authorities and global leaders, including former president Bill Clinton and New York mayor and C40 chair Michael Bloomberg.

Signing the agreement on behalf of the C40, Bloomberg stressed that "this unique partnership with the World Bank will help solve many of the problems that cities face in obtaining financing for climate-related projects, both from the Bank and other lenders. It will also make it easier for C40 cities to access the resources of the World Bank."

Zoellick added that the agreement, sealed in a memorandum of understanding between the parties, will focus on two critical areas for addressing climate change: 1) development of city climate action plans and strategies, where the Bank will help prepare standardized low-carbon strategies, mitigation and adaptation strategies 2) develop standardized reporting of city greenhouse emissions, using common international metrics.

The World Bank has already invested more than US$15 billion in C40 cities, including Brazil, Mexico and Argentina. In partnership with the UN Environmental Program and UN Habitat, the Bank has developed an international standard for reporting GHG emissions, using common international metrics that will enable cities to track progress against targets and, more importantly, facilitate access to private finance for climate mitigation and adaptation. For example, in Rio de Janeiro the World Bank is developing support for a 'green city' assistance program that includes emissions reading and support on city metrics and capacity.

The Bank- managed Clean Technology Fund has helped finance efficient mass transit systems in Mexico City and Bogota, providing services to the poor while reducing green house emissions, Zoellick said.