Brazil’s Ceará State to Advance Fiscal Reform with $80 Million IDB Loan

WASHINGTON — The Brazilian state of Ceará will strengthen the management of revenue and expenditures with an $80 million loan from the Inter-American Development Bank (IDB).

The loan is part of the third phase of the IDB-backed PROFISCO Program aimed at modernizing the fiscal management of Brazilian states to support the implementation of Brazil’s new value-added tax (VAT).  The program is expected to increase tax compliance and enhance fiscal sustainability of states and the business environment.

Ceará will enhance its management tools and modernize its technological infrastructure. These improvements will strengthen the tax authority’s ability to efficiently collect and manage revenues while promoting greater transparency and accountability to society. 

Key upgrades will focus on systems related to fiscal policy, tax administration, litigation, debt management, audits, taxpayer services, and tax collection. Additionally, the state will restructure its internal control mechanisms and the citizen services unit and launch a new tax education program to support the implementation of the IVA tax reform.

On the expenditure side, the state will modernize budget and financial management to enhance fiscal discipline. Planned measures include the implementation of a data analytics platform and an asset management model. The state also plans to integrate planning and financial management systems, automate cash flow and bank reconciliation as well as upgrade systems for improved cost control, payroll administration and debt monitoring.

The project is expected to strengthen the state’s treasury secretariat and build capacity of civil servants. Taxpayers, particularly businesses, will benefit from improved services, making it easier to comply with tax obligations. The population of Ceará is expected to gain from increased transparency of public accounts and enhanced access to public policies driven by higher improved quality of public spending.

The IDB loan, which was approved by the IDB's board, has a maturity of 24.5 years, a six-year grace period and an interest rate based on the Secured Overnight Financing Rate (SOFR).  Counterpart financing from Ceará totals $8 million.