The Brazilian state of Alagoas to modernize its fiscal management with IDB financing

The Brazilian state of Alagoas will modernize its fiscal management to strengthen fiscal sustainability, competitiveness, and transparency with a $36 million loan from the Inter-American Development Bank (IDB).

The financing is part of the $900 million PROFISCO II program, which was approved in 2017 to support the digital transformation and modernization of fiscal management in Brazil's states and the Federal District. The project supports the IDB's Vision 2025 strategy, which seeks to strengthen good governance of institutions and digitization to accelerate post-pandemic recovery and promote sustainable and inclusive growth in Bank member countries.

The objective of the project approved for Alagoas is to modernize tax management and improve tax administration and public spending management. The measures supported by the project include the strengthening of institutional governance and the state treasury secretariat’s adoption of better risk management and human resources models. The project will also finance the digitization of services and processes, as well as the modernization of the ministry's technological infrastructure.

In terms of tax administration, the project will finance measures and leverage the use of digital technologies to increase the efficiency of tax collection, increase revenue, and simplify tax compliance for businesses and citizens. For the management of public spending, the project will finance actions to increase the efficiency of planning and financial implementation, as well as improve the quality of state spending.

The IDB loan has a repayment period of 25 years, a grace period of 5.5 years, and an interest rate based on the LIBOR.