New Country Partnership Strategy (CPS) for Brazil with World Bank
The World Bank Group approved new Country Partnership Strategy (CPS) for Brazil, which will guide the Group’s overall program in the country for 2008-2011. The World Bank Board expressed strong support for the new engagement approach, which seeks to respond to the evolving needs of this sophisticated middle-income country. Bank Group support will focus primarily on long-run, path-setting challenges where Brazil has not yet devised solutions and where international experience can be of particular value. In response to Brazil’s changing needs, the Bank will provide less financing and more knowledge services to the Federal Government, and will focus the majority of its funding on State programs, complying in all cases with the spirit and letter of Brazil’s remarkable Law of Fiscal Responsibility.
The new Bank strategy outlines a carefully selective program of approximately US$ 7 billion of new financing from the International Bank for Reconstruction and Development (IBRD) for Brazil over the next four years, an enhanced program of support from the International Finance Corporation (IFC) to the private sector and a deeper integration of IBRD and IFC programs in Brazil.
The IBRD program continues a results-based approach anchored on the country’s goals and priorities defined by the Government in programs such as the Growth Acceleration Plan (PAC). The CPS sets out development targets toward which the Bank Group can contribute substantially by 2011, including improving the quality of public expenditures, especially in infrastructure; decreasing the GDP per capita gap between the Northeast and Brazil; and halving the rate of deforestation in the Amazon.
The IFC program will focus primarily on tier 2 companies, with investments in front run companies limited to when such financing has a major demonstration effect on corporate governance and social and environmental performance.
“This partnership strategy represents the latest step in a long and deep relationship between Brazil and the World Bank Group,” said John Briscoe, World Bank Director for Brazil. “The strategy identifies many areas where Brazil no longer needs assistance from the World Bank Group, and identifies areas where the combination of knowledge, financing and seal of approval of the World Bank can make major contributions to the country’s development. The partnership also identifies new ways in which other developing countries can benefit from Brazil’s world-leading expertise in areas including fiscal federalism, biofuels, clean energy, AIDS and conditional cash transfers.”
Recognizing Brazil’s level of technical sophistication and public policy planning capacity, the Bank Group will also place greater emphasis on supporting the country’s progress on the current agenda of Government priorities, instead of contributing to the identification of new priorities. This stronger focus on the “how,” as opposed as the “what” will result in much closer integration between lending, studies and other activities.
“Brazil is very pleased with the partnership with the World Bank,” said Rogério Studart, Executive Director for Brazil at the World Bank Board. “John Briscoe, the institution’s director for Brazil, appreciates well what President Lula’s Administration expects from this collaboration. Brazil does not need just plain project financing any more, but rather it seeks the Bank’s knowledge of years of achievements as well as mistakes. Brazil also has much to contribute to the Bank, for example in collaborating with other countries for development. Yesterday, Brazil reached investment grade, and this is good news. However, what fills me with pride is to represent a Government that was able to lift millions out of poverty. This is what institutions such as the World Bank must work for.”
Brazil’s needs have evolved remarkably since the previous partnership strategy, with a much-improved macroeconomic situation and reduced vulnerability, and the focus of lending also will be considerably different. Instead of large Federal loans in support of the balance of payments, most of the Federal program will consist on technical assistance programs of ambitious scope but modest financial size, focusing Brazil’s top challenges. The states will be the main recipients of most (70%) of the Bank financing, based on their development priorities and in compliance with the Fiscal Responsibility Law.
To maximize results, the new strategy will not engage in areas where the country’s knowledge and capacity are well developed, and will rather seek to contribute its expertise in areas such as infrastructure development, long-term fiscal stability, quality of basic and secondary education, and reconciling growth and development with the conservation and sustainable use of sensitive biomes.
The strategy includes a framework for involvement with both the public sector (IBRD) and private sector (IFC)in the Amazon Region. The Amazon Partnership Framework derives directly from the Government of Brazil’s Programa Amazônia Sustantável (PAS). It provides an integrated approach for reconciling: the needs for local economic and social development for the 24 million people who live in the Amazon; the small and large infrastructure needed for local, regional and national development; and conservation of the region’s unique natural assets and local, national and global environmental services.
Source: World Bank
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