IDB approves $900 million conditional credit line for the PROFISCO II program
Ceará will be the first Brazilian state to benefit, with $70 million loan
The Inter-American Development Bank (IDB) has approved a $900 million credit line to support Brazilian states’ efforts to modernize their fiscal management and improve tax administration and public spending management.
The financing, a conditional credit line for investment projects (CCLIP), will uphold fiscal modernization moves within the Profisco II program. The credit will fund individual projects carried out by state governments with backing from the federal government, which will provide sovereign guarantee to the program’s loans. Ceara will be the first state to benefit from the program, with a $70 million IDB-approved loan.
Profisco II was launched to deepen and consolidate the achievements of the first edition of Profisco, first implemented in 2008. Profisco I's goal was to promote the integration of the fiscal systems from different states and to modernize the fiscal, financial and asset management of beneficiaries. The new edition seeks to also strengthen the states' revenue collection in a context where the country's low economic growth is having a negative impact on the states' fiscal performance.
In Ceará, the program will finance improvements in the Finance Secretariat's management tools through the modernization of technological infrastructure, automation of processes related to personnel and procurement management, and upgrading of the three main programs of communication with taxpayers and citizens at large.
In addition, it will fund moves to strengthen the tax administration, such as updating tax legislation, streamlining tax preparation, modernizing surveillance and fiscal intelligence, and improving and automating taxpayer's and revenues' service procedures. The program will also support moves to improve budgetary and financial planning and public debt management and to modernize the state’s accounting information system.
The credit line loans are for 25-years terms, with 5.5-year grace periods and LIBOR-based interest rate. The Ceará loan will have $7 million in local counterpart funds.
About the IDB
The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.