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IDB approves $800 million lending facility to Brazil to finance Procidades Program for Municipal Development

The Inter-American Development Bank today announced the approval of an $800 million lending facility  to Brazil for the Procidades Program, designed to address growing demand for integrated municipal development projects targeting specific areas of each city.

The program will concentrate IDB support at the municipal level in Brazil and will streamline procedures for project preparation and approval by decentralizing operations. The projects will be part of a municipal development plan that takes into account general priorities and focuses on sectors with high social and economic impact, mainly targeting low-income populations.

Procidades will finance investments in integrated urban development aimed at improving city services and infrastructure and boosting the efficiency, performance and capacity of municipal governments. Individual operations under the program will be for up to $50 million and may be financed using local currency.

“Brazil currently has 5,564 municipalities, of which 14 have over one million inhabitants, which represents 21 per cent of the country’s total population,” said IDB Team Leader Riccardo Rietti. “Another 648 municípios have between 50,000 and one million inhabitants, or 44 per cent of the total population.”

“The rapid growth of cities during the last few decades has created a critical shortage of basic services and urban infrastructure with higher levels of poverty,” added Rietti. “Due to the complexity of problems faced by the cities, comprehensive and integrated solutions are more effective than strictly sectoral approaches.”

Municipal governments hold the main responsibility for public investment in primary health care, basic education, urban infrastructure, housing and sanitation. They are also directly responsible for local public services of collection and disposal of solid waste, public lighting and urban regulation, and fulfill complementary duties in areas such as transportation, infrastructure, environmental management and public safety.

“Over a short period of time, Brazil has undergone an abrupt shift in demand for IDB resources from the federal and state levels to the municípios, particularly the medium-sized ones,” explained Rietti. “The Procidades lending facility is being created to galvanize IDB activities in Brazil at this level.”

The program will finance investments with a multisector approach, geographically targeted and coordinated in three modalities: neighborhood improvements, urban rehabilitation and renewal and urban consolidation.

Procidades will also finance sector interventions, such as transportation and road systems, sanitation, urban services, environmental management and social development, in the context of a municipal development plan. It includes activities to strengthen municipal performance in terms of financial and tax administration, internal management, services, urban planning and actions to promote local economic development.

The lending facility will have $800 million in available funds, renewable with prior authorization of the IDB Board of Executive Directors when 75 per cent of the funds have been committed.

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