Brazil: Ten Million Residents of Rio Grande do Sul to Benefit from $480 Million Loan

May 1, 2012

WASHINGTON, May 1st, 2012 –The World Bank Board of Directors approved today a US$480 million loan to strengthen public investment in the State of Rio Grande do Sul. Through a set of green growth-oriented initiatives, the Rio Grande do Sul Sector Wide Approach (SWAp) will support a wide array of areas including private sector development, State’s education and transport systems modernization, and environmental and disaster risk management improvements. This investment loan will benefit around 10 million people.

“Through this partnership with the World Bank, Rio Grande do Sul will take another solid step in the consolidation of a new level of economic and social development.,” said Governor of the State of Rio Grande do Sul, Tarso Genro. “We will increase the quality of education and invest and encourage the use of new technologies.”

The fourth largest economy in Brazil, the State of Rio Grande Sul recently suffered a fiscal crisis that resulted in sharp cuts in public investments and services, with a disproportionate impact on the poor. The effects of the crisis were also felt on the highway infrastructure, crucial for economic growth and market integration, and on the educational system, which has slipped from sixth to ninth in national rankings. Rio Grande do Sul also lacks a disaster risk management system, critical in a state that is increasingly affected by extreme weather patterns.

“Rio Grande do Sul has excellent prospects for overcoming its recent fiscal crisis and resuming economic growth. This partnership helps the government to realize that objective,” said Deborah L. Wetzel, World Bank Director for Brazil. “The State combines a well trained work force with a strong base of technologically sophisticated companies, which can support the goal of combining growth with efficient public service delivery and environmental sustainability.”

A Sector Wide Approach supports locally owned programs in a comprehensive and coordinated manner. A SWAp may be supported by a variety of financing instruments—such as adaptable program loans, specific investment loans, and sector investment and maintenance loans.

The Rio Grande do Sul SWAp will include technical assistance and funding to:

  • Improve the planning and prioritization of public investments and strengthen the management of public assets;
  • Strengthen private sector competitiveness;
  • Support the State paved highway rehabilitation and maintenance program (CREMA)  and strengthen infrastructure planning;
  •  Expand the use of information and communication technology in schools; support the renovation of school buildings;
  • Design and implement an environmental disaster risk coordination and monitoring system, and improve the efficiency of the State environmental licensing system.

This loan from the International Bank for Reconstruction and Development (IBRD) to the State of Rio Grande do Sul is guaranteed by the Federative Republic of Brazil and has a final maturity of 30 years with a four year grace period.



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