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IDB will help the State of Rio Grande do Sul strengthen sustainable fiscal balance

$200 million loan to improve public revenue and water resources management reforms

The state of Rio Grande do Sul in Brazil will receive from the Inter-American Development Bank (IDB) a $200 million loan to continue its efforts to accelerate fiscal balance in a sustainable way and improve its water resources management.

This is the first operation of the policy-based loan (PBL), which provides flexible support for institutional and policy reforms by means of a fast disbursement of resources.

The project will support measures to improve information systems and the processing of tax foreclosures as well as the establishment of a new methodology for support, analysis and evaluation of public costs. These reforms will promote the integration of the information provided by taxpayers of the Tax on Circulation of Goods and Services, and greater citizen involvement in the Gaúcha invoice program, by incorporating the benefit of the discount on the Ownership of Motor Vehicles Tax. It is estimated that by 2014 the number of citizens using the Nota Fiscal Gaúchatax invoice will increase from 58,000 to 1.5 million. 

The project will contribute to the improvement of water resources management and will promote the irrigation of seasonal crops, thus contributing to the state's financial development. The average time for the concession of the use of water resources in all the river basins is expected to shorten from 360 to 120 days. 

As for irrigation, state policies will be developed including the spreading, completion and approval of the Irrigation and Multiple Uses of Water Masterplan (“Plan Director de Irrigación y Uso Múltiple de las Aguas”), and the creation and operation of the Management Council. It will also strengthen the sectoral entities’ managing ability, by means of the creation and regulation of the State Irrigation Fund. 

The IDB financing is for a 20-year term, with a 5.5 grace period and an interest rate based on LIBOR.

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