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Brazil: US$ 485 Million Loan to improve Education, Health and, Fiscal Management in Rio de Janeiro

February 3, 2010

WASHINGTON, February 3, 2010 – The World Bank Board of Directors approved a US$ 485 million loan to the State of Rio de Janeiro, for the Fiscal Sustainability, Human Development and Competitiveness Development Policy Project.  The project will support Rio’s efforts to improve education, health, fiscal management and the investment climate, helping offset the impact of the global slowdown on the State.

“This project, which does not require counterpart funding, signals the recognition by the World Bank of the State’s results-based management model. The Bank is an important partner for the development of Rio de Janeiro’s high potential and for the consolidation of opportunities and achievements in the next few years, especially the 2014 World Cup and the 2016 Olympics Games,” said Sérgio Cabral, Governor of Rio de Janeiro.

Although Rio is among Brazil’s most developed states in several economic and social areas, it has been impacted by the sharp reduction in State revenues during the global financial crisis. Informality, both in labor and in urban dwellings, is a major concern.  Nearly 44% of the existing employment opportunities in the State are informal. Within the capital city, the population of favelas (urban slums) has increased at a rate three times higher than the growth rate of the city’s population. Violence and criminality are key obstacles to economic and social development. Access to basic education is not universal, and public health issues remain a critical challenge.

“Rio’s problems are complex and call for innovative solutions,” said Makhtar Diop, World Bank Country Director. “The project helps the Rio State Government to protect priority expenditures, reinforce fiscal discipline, strengthen the education and health programs to produce better services and improve the competitiveness and growth of the state economy through a more dynamic business environment.”

The loan supports:

  • Improved fiscal management, tax administration, and control of public expenditures in state operations;
  • A more streamlined and efficient business registration process;
  • Better results in the  basic education system; and
  • More access to and better results of health services, especially for low-income populations.

According to Michele Gragnolati, World Bank Human Development Sector Leader for Brazil and Project Manager, “the financing will support sectors with significant impact on public services and those with large spending programs, such as health and education, in which improving the use and allocation of resources, innovation in management and improved monitoring and evaluation can result in large gains.” 

The World Bank has been a partner of Rio de Janeiro since 1952 and has invested over US$ 2.2 billion for projects in the State.  Currently, there are six active projects, including the one approved today, in areas such as urban transport, rural development, environment and carbon finance, totaling approximately US$ 740 million.

This Development Policy Loan (DPL) will be disbursed upon effectiveness.  The loan has a total repayment period of 30 years, with a customized debt amortization profile to respond to the State’s financial needs.

Media Contacts
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Mauro Azeredo
Tel : (+55 61) 3329-1059
In Washington
Gabriela Aguilar
Tel : (+1 202) 473-6768