Brazil, which will host the next soccer World Cup and the 2016 Summer Olympic Games, will boost its tourism industry in the states of Rio de Janeiro and Pernambuco with two loans, totaling $187 million, that were approved by the Inter-American Development Bank.
A $112 million credit for Rio de Janeiro and a $75 million loan for Pernambuco will support the National Tourism Development Program’s (Prodetur) efforts to increase employment, revenue, and foreign exchange generated by the sector by consolidating and diversifying the supply of services to visitors.
Tourism is crucial for these two states, which are famed for their seaside resorts. Toursim generates 38 percent of state gross domestic product in Rio de Janeiro and nearly 7 percent in Pernambuco. The 2014 World Cup and the Olympic Games two years later are expected to attract hundreds of thousands of additional visitors.
But these events will pose significant structural challenges for Rio de Janeiro, while Pernambuco needs to diversify a sector that is overly concentrated in terms of both demand and destination. At present 92 percent of tourist arrivals and activity from the domestic are focused along Pernambuco’s coast, in particular the more established destinations of the south.
Rio de Janeiro
The IDB loan for Rio de Janeiro will help to ensure that the expansion opportunities provided by these events are fully exploited, thereby strengthening a strategic view of tourism development in the state.
The loan will promote convergence between public-sector investments and cultural tourism organizers through thematic threads that will make it possible to prioritize investment in new tourism offerings. In Rio’s metropolitan region, for example, priority has been given to two Brazilian international icons, Bossa Nova music and the work of architect Oscar Niemeyer, to guide the strategy of urban upgrading and refurbishment of run-down spaces, and to generate new investment opportunities and attract culture tourists and more affluent visitors.
In addition, the loan will finance civil works to improve access Visconde de Mauá, tourist service centers at Búzios, Mangaratiba and Angra dos Reis, and sanitation and drainage systems at the historical center in Paraty, Vila de Abraão-Ilha Grande - Angra dos Reis.
Funds will be used to help upgrade and diversify services in coastal zones and spread tourist activities towards inland mountain areas; create new thematic circuits and museums; establish cultural and visitor centers and exhibition halls; restore historical points of interest; and update the state’s Tourism Master Plan.
Additionally, the loan will fund a marketing campaign and help launch a communication strategy designed to remind visitors that all tourists, not just sports fans, will be welcome during the upcoming events, and to deal with the perception of saturation and rising prices at destinations. It will also contribute to regularizing informal activities, training personnel, and devising the legal framework for a new tourism management model.
The loan will set aside $12.6 million to finance environmental impact assessments and socio-environmental supervision of selected works ; plans for conservation and management of vulnerable natural and cultural points of interest; studies of the load-bearing capacity of the most fragile attractions; and restoration of degraded areas.
The loan to Pernambuco will promote investments to increase average spending by visitors to the popular coastal resort of Costa dos Arrecifes and to generate tourism activity in destinations in the interior such as Agreste and Vale São Francisco. It will also finance restoration and development of historical and cultural attractions and support service quality and professional training programs.
In Costa dos Arrecifes funds will contribute to the construction of an Afro-Brazilian cultural center; restoration and development of two historic bazaars and a colonial fort; and development of the Recife/Olinda historical and cultural enclave.
The loan will finance a plan for selected tourism hubs and the development of online promotion channels. It will also help build Pernambuco’s capacity to plan and manage tourism development and generate mechanisms for interagency coordination at state and municipal level.
In addition, it will boost accessibility to priority destinations, promote tourism circuits, and help improve public services at selected points.
The IDB loan will also finance land-use planning and management systems for conservation units to be used for tourism and restoration of degraded areas. It will underwrite as actions to strengthen local environmental management capacity in target areas, including strategic environmental assessments and impact studies, socio-environmental audits and environmental monitoring of the main attractions.
The loan for Rio de Janeiro is for a 25 year term, with a four-year grace period and a variable interest rate based on Libor. The state will provide an additional $75 million in local counterpart funding. The credit for Pernambuco is also for a 25 year term, with a five-year grace period, a Libor-based interest rate and $50 million in local counterpart funds.
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