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Rio De Janeiro City Receives Us$ 1 Billion for Growth, Education and Health

July 1, 2010

WASHINGTON, July 1st, 2010 — The World Bank approved today a US$ 1.045 billion loan, in two tranches, for the City of Rio de Janeiro, Brazil. The Rio de Janeiro Municipality Fiscal Consolidation for Efficiency and Growth Development Program Lending loan supports initiatives aimed at bolstering economic growth in the Municipality and improving the quality and coverage of social services, especially in low income areas. This is the first World Bank loan for the City of Rio de Janeiro and is the biggest loan to date provided by the institution directly to a municipality around the world.

“Rio has been nurturing the foundations for sustainable growth, one that responds to its unique urban and social challenges, and taking into account the 2014 World Cup and the 2016 Olympic Games,” said the Mayor of Rio, Eduardo Paes. “This program with the World Bank, the first one if its kind with a municipality, is a giant step in that direction, supporting the City’s investment program and bringing with it the knowledge and best practices from abroad.” 

The loan seeks to bolster economic growth by supporting the City’s fiscal policy, freeing up space for investments, improving the quality of health and education services, simplifying the business start-up process, and modernizing municipal public management.

  • In the fiscal area, the project will help create additional resources for public investment through improvements in revenues and greater efficiency in social security expenditures;
  • In public services, the project will expand access to family health and emergency care services, and will improve the quality of child and basic education through the “Escolas do Amanhã (Schools of Tomorrow)” and “Espaços de Desenvolvimento Infantil (Child Development Areas)” programs in low income and high violence areas. It will also promote systemic improvements in learning results in general. On top of that, the project supports reforms to the business start-up process, such as the “Alvará Já (License Now)” program, seeking greater efficiency to stimulate entrepreneurship and job creation.
  • With regards to public service management, it will promote spending plan and medium-term results-based management mechanisms, as well as the creation of an institutional framework for public-private partnerships (PPP) in infrastructure and service provision.

“Through this operation, the World Bank recognizes the importance of the work carried out by the City in areas of public expenditure efficiency and medium and long term strategic planning,” said the World Bank Country Director for Brazil, Makhtar Diop. “Furthermore, this loan will help the municipality coordinate policies with the State and the Union, increasing the impact and the results of its policies and investments.”

Some of the goals supported by this loan include: doubling the coverage of family health programs to 12% by December 2011; annual reductions in school dropout rates and increases in IDEB and IDE results; increase child and preschool education enrollment by at least 3,000 licenses per year in low income communities; reducing the number of days needed to open a business from 20 to 12.5; and measures to make the Municipality’s retirement system more sustainable.

The first tranche of this loan, worth US$ 545 million, will be disbursed after the operation is signed and made affective in the next months. The second tranche, of US$ 500 million, should be disbursed by June 2012 and is linked to the obtention of fiscal and social indicators agreed with the Municipal Government.

According to Yaye Seynabou Sakho, World Bank Project Manager, “the reforms backed by this loan will also aid in the creation of institutional capacity and greater government coordination, exactly at the moment when they are most needed, during the build up to the World Cup and the Olympics.” According to her, along with social improvements in underprivileged communities, the improvements to administrative efficiency will become a long-lasting legacy to the City.

Including the loan approved today, the World Bank has already financed projects worth more than US$ 3.2 billion for Rio de Janeiro State since 1952. This IBRD flexible loan, linked to commitments and with a variable spread, is denominated in US dollars and is payable in 30 years through monthly customized payments, with all conversion options.

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