The city of Rio de Janeiro took out a loan in the amount of US$ 135.2 million (approximately R$ 700 million) to support fiscal and green reforms in the state capital. The amount was approved on Thursday (16) by the World Bank’s Board of Directors, with the aim of improving fiscal sustainability in the medium term and accelerating the transition towards inclusive, low-carbon urban development.
According to Mayor Eduardo Paes, the municipality has been promoting fiscal reforms since 2021. “We signed a commitment to rebalance the accounts within the scope of the Federal Government’s Fiscal Balance Promotion Plan (PEF). The fiscal reform package supported by the World Bank will allow the municipality to regain access to reforms to promote investments towards Rio’s environmental, social and economic objectives.”
Finance and Planning Secretary Andrea Senko said that the financial conditions agreed with the World Bank are extremely advantageous compared to the Brazilian credit market. “The payment term will be 21.5 years, with a grace period of one year. and variable interest rate of about 2.82% per year.”
The funds will give the municipality “financial breath” to face relevant and urgent expenses, such as the public transport area during the process of recovery and economic growth in Rio de Janeiro, said the secretary.
public finances
According to municipal authorities, Rio de Janeiro went into fiscal stress before the pandemic due to an increase in mandatory expenditures without an increase in municipal revenues. Covid-19 has worsened the situation of the municipality’s public finances.
Like the rest of the country, in 2020, Rio de Janeiro faced increased spending to fight the pandemic, including an increase of R$ 850 million to the health budget. This further compromised the municipality’s ability to invest in its environmental, social and economic objectives, including resilient, inclusive and low-carbon urban development.
