World Bank Extends US$450m Aid to 20 Million People in State of Minas Gerais

Steven Bobson, Europe & Americas Editor
July 27, 2012 /

The World Bank Board of Directors approved a US$ 450 million Development Policy Loan (DPL) for the State of Minas Gerais. The Third Minas Gerais Development Partnership DPL goal is to consolidate the fiscal and service delivery management reforms started by the State Government in 2003, which have allowed the government to improve outcomes in all areas of service delivery.

“In recent years, Minas Gerais has experienced a modernization process, which became a model for other states in Brazil. Through it, the State balanced public accounts and could recoup its investment capacity and re-claim support from multilateral development organizations. The partnership with the World Bank has been crucial in this process. The group of actions about to begin will be the instrument to enhance innovation in the public sector, providing the population with increasingly efficient services and further improving the investment climate, responsible for generating employment and income, which are the main objectives of this government,” said Antonio Anastasia, Governor of the State of Minas Gerais.

As the third largest economy in Brazil, Minas Gerais is home to 19.5 million people, representing 10% of the country’s population. Although the state has a GDP per capita slightly lower than the national average (US$ 7.749 compared to US$ 8.706), it still faces social challenges such as reducing extreme poverty in its northern region and dealing with intermittent droughts.

“The program, started in 2003, has restructured public policies and management in Minas Gerais, and has been the catalyst to significant improvements in service delivery and results. Supporting this third phase is essential to guarantee the consolidation of this pioneering model and to strengthen the participation of citizens in the development of public policy and to leverage the private sector,” said Deborah L. Wetzel, World Bank Country Director for Brazil.

The project’s areas of focus are: consolidated public sector and budget management; increased citizen participation in definition of regional priorities; reduced poverty in extremely poor areas; improved quality of education; increased capacity to manage environmental challenges; and strengthened governance of the metropolitan region of Belo Horizonte (the capital of the state).

This one tranche loan from the International Bank for Reconstruction and Development (IBRD) to the State of Minas Gerais, is guaranteed by the Federative Republic of Brazil and has a final maturity of 30 years, with a 5 year grace period.

 

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