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Brazilian state of Alagoas to develop tourism and encourage fiscal sustainability and investment with support from IDB

Loan of $250 million will also contribute to increasing access to water, sanitation and tourism routes

Alagoas, a state in the northeast of Brazil, will receive a $250 loan from the Inter-American Development Bank to increase tourism's contribution as a source of economic development and enhance fiscal sustainability

The goals of this program include promoting macroeconomic stability and supporting the consolidation of a comprehensive framework for planning, coordination among various parts of the public sector and engagement with the private sector. This will allow future investments to promote sustainable development of the state's tourism sector and thus increase its capacity for creating jobs. 

The operation involves a policy-based loan, which will provide flexible support for institutional and policy reforms through a swift disbursement of resources. 

The program will lay the foundation for an increase in public investment in Alagoas, improving its fiscal situation. The goal is to encourage a transition from the current tourism model, which depends on just a few destinations and only one kind of tourism, to development that is planned, pro-active and geared towards creating new destinations and areas of demand – ones that would be able to speed up the full utilization of tourism as an engine for sustainable growth. 

As a result of the policy measures and reforms called for in the program, a rise in revenue and a cut in current spending are expected and as a result of this, an increase in resources available for public sector investment. Another expected effect is a rise in private investment in hotel projects – from R$95 million in 2013 to nearly R$108 million in 2015. 

Located in the northeast of Brazil, with a surface area of 27,800 km2 and a population of 3.2 million people, Alagoas is the second poorest of Brazil's 26 states and the Federal District. 

This initiative will benefit not only the public sector through an increase in resources available for implementing its policies, but also the entire population by contributing to the development of tourism and the economy of Alagoas. 

The IDB loan is over 20 years, with a five-year grace period and an interest rate based on the LIBOR. The state of Alagoas will execute the loan, through its Finance Secretariat.