March 9, 2002

IDB AND BRAZIL SIGN MEMORANDUM OF INTENT FOR $240 MILLION FOR SECOND STAGE OF SUSTAINABLE TOURISM PROGRAM IN BRAZIL'S NORTHEAST Total IDB tourism investments in low-income region will rise to $640 million

FORTALEZA, Brazil - The Inter-American Development Bank President Enrique V. Iglesias and the Banco do Nordeste President Byron Costa de Quiroz signed today a memorandum of intent for a $240 million loan to Brazil to finance sustainable development of the tourism sector in the Northeast, a low-income region now in the process of economic diversification.

The Planning Minister of Brazil Martus Tavares also participated in the ceremony and signed the documents. The resources directly benefit a low-income population of $1.3 million persons in 11 states and bring IDB investments in that sector in the Northeast to $640 million.

In 1994 the IDB approved a $400 million loan for the first stage of tourism development in that region. This program attracted an additional $4 billion in private investment to the Northeast while the number of tourists doubled between 1994 and 2000.

The new program will apply lessons learned from the previous project and will promote the development of innovative "tourism poles," groups of contiguous municipalities with similar or complementary tourism attractions and a shared commitment to developing the local capacity for managing tourism flows in a sustainable manner.

The tourism poles will create efficiencies and allow municipalities to capture economic and social benefits that might otherwise have been lost if they had acted in an isolated manner. The program will emphasize and help finance an integrated and participatory planning process and the establishment of adequate environmental, administrative and fiscal management capacity at the local level prior to any infrastructure investment. Private investments flows will continue to be encouraged. In addition, the IDB resources will be used to improve potable water and sanitation; roads, airports and other transportation facilities; employment training and skills development; and protection of natural and cultural heritage assets.

"The use of the development poles concept and integrated, participatory planning will help ensure long-run benefits to the permanent population of the region," commented Raul Tauzon, the IDB team leader.

The program is consistent with the IDB's strategy for Brazil of promoting reform of the state, competitivness, social equity and environmental protection. The government has made tourism development in the Northeast a priority to achieve economic diversification and a faster rate of growth.

The program will be carried out by the Banco do Nordeste do Brasil with the participation of the Ministry of Sports and Tourism and executing units at the state and local levels. Existing Tourism Councils at the local level will be strengthened and new ones, where needed, will be established to ensure the participation of citizens and civil society in the planning and tourism development process.