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Brazil: Better and Safer Housing for 2 Million People

March 15, 2011

WASHINGTON, March 15,2011 –Some 2 million poorpeople who live in informal low income settlements (favelas) in the Riode Janeiro Metropolitan Region, Brazil, will be benefiting from  a US$ 485 million development policy loan forthe Metropolitan Urban and Housing Project approved today by the Board of ExecutiveDirectors of the World Bank.

Local population willbenefit from policies that will improve social service delivery throughinnovative programs that expand urban and social services such as health andeducation to the favelas. The loan will improve the State’s capacity regularizeland tenure, map risk areas, formalize ownership of homes where possible andprovide incentives for investment or resettlement where needed.

The new financingfollows the record January flooding that killed over 800 in the State of Rio deJaneiro and will help to better manage disaster risks and improve planning andterritorial growth management in the Rio Metro Region, which houses almost 12million people.

“This loan, that doesnot require counterpart funds, is fundamental for the numerous urbaninitiatives currently underway in Rio, such as the Morar Seguro Program, that aim to improve housing quality, safetyand availability, as well as public transportation to our entire population,” said Sérgio Cabral, Governor of the State of Rio de Janeiro “With the partnership of the World Bankand the Federal Government, we are further expanding social services into thepacified favelas, creating safe and affordable alternatives for people in riskareas, extending integrated inter-municipal single fare transport andcoordinating work across the state and municipalities.”

The government’spolicies supported by the loan will reduce settlement pressures on risk areas,decreasing the likelihood of disasters. In the last four years, climatic eventsdisplaced more than 100,000 families in the state, and contributed to the lackof adequate housing, especially for the poor. Disaster risks have yet to beclearly identified and mapped in many areas of the Metro Region, andenvironmental degradation, irregular urban occupation, and disaster risk affectpoor residents most heavily.

This loan respondsto requests by President Dilma Rousseff and Governor Cabral,” said Makhtar Diop, World Bank Director for Brazil. “The President asked that the Bank deepenits support to Brazil on urban issues, with an especial focus on managingdisaster risks. Several other projects in Brazil are already being negotiatedor restructured with this purpose.”

He added that the WorldBank’s new partnership strategy with Brazil will have natural disastermitigation and preparedness as one of its central themes.

The Rio loan will bedisbursed in two-tranches. The first, of $290 million, once the loan is signedand goes into effect. The second, of $195 million, after the government’scompletes an additional agreed set of actions, including strengthening urbangovernance mechanisms in several areas and improving the capacity to deliverkey social services.

This IBRD Flexible Loanwith variable spread, has level repayments, a 5.5 year grace period and 30 yearfinal maturity. Front End Fee to be financed from own resources.Since 1952, the World Bank has invested approximately US$ 3.7 billion in theState and City of Rio de Janeiro, including today’s loan.

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