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IDB approves $500 million for poverty reduction and building human capital in Brazil

The Inter-American Development Bank today approved a $500 million sector loan to Brazil to support four programs aimed at building human capital in the least advantaged sectors of society and enhancing the incomes of the poor.

The national programs that will be strengthened are as follows:

  • Bolsa Escola, which provides cash incentives for students to remain in school.
  • Bolsa Alimentação, which provides resources and incentives for improving nutrition.
  • Agente Jovem, which provides youth development activities.
  • PETI, or Programa de Erradicação do Trabalho Infantil (Program to Eradicate Child Labor), which not only provides financing to replace lost income, but also offers after-school activities.

These programs offer income-based transfer payments and are designed to break the cycle of poverty by providing the poor with opportunities and incentives.

As part of the IDB-funded sector loan activities, Brazil will undertake a series of measures to expand and fine-tune the four programs.

In order to make the programs more effective, the government will improve targeting mechanisms that ensure that resources are distributed to the neediest.

Evaluation systems will be put in place to track the effectiveness and efficiency of the transfer payments and allow for program adjustments to achieve maximum impact.

Steps will be taken to establish the necessary legal, administrative, organizational, financial, and operational mechanisms to consolidate the institutional frameworks of the four programs and thereby make them more sustainable.

Strategic plans and policies will be formulated and carried out that will improve management and coordination among the federal government, states, and municipalities. Permanent information systems will be established for project monitoring and performance measuring; and instruments will be adopted to provide equal access to eligible beneficiaries.

The sector loan program coincides with two strategic areas of IDB loan operations in Brazil: reduction of social inequalities and poverty and reform and modernization of the state.

The loan is for a 20-year term, with a five-year grace period, at the variable annual interest rate, now 6.97 percent. The Ministry of Planning and Budget and Ministry of Finance will carry out the program.

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