IDB approves $115 million in loans as part of PROFISCO II program

The Brazilian states of Piauí, Pará and Maranhão will upgrade their fiscal management, tax administration and public spending oversight with loans approved by the Inter-American Development Bank as part of the program known as Profisco II.

These states taking part in Profisco II are expected to provide better service to tax-payers, boost tax revenue and improve the efficiency and effectiveness of public spending, which in turn will reduce fiscal deficits and pave the way for greater fiscal sustainability over the medium term.

The state of Piauí will receive $ 44.9 million loan to improve tax management, including oversight of public investment projects, communication with citizens and management of human resources and information technologies. The plan will also support implementation of measures to increase the efficiency of tax collection and public spending, make it simpler for people to pay their taxes and enhance fiscal discipline.

Pará state will receive an IDB loan of $ 35.1 million to enhance results-oriented tax management tools, modernize its technological infrastructure and improve relations between tax authorities and everyday citizens through greater transparency. The program will also finance measures aimed at helping the state boost its own revenues and making it easier for citizens and companies to pay their taxes. Furthermore, the plan is designed to support measures to make financial planning and execution more efficient.

Maranhão will obtain $35 million in IDB financing to also boost results-oriented tax management tools, modernize its technological infrastructure and improve ties between tax authorities and citizens. The project will strengthen the tax-collection administration and its operating capacity through measures such as improving monitoring of high-earning taxpayers and boosting the information-gathering ability of this administration. Finally, the project will support measures to boost the efficiency of financial planning and execution and the quality of the results of state spending.

These loans that are part of Profisco II are over 25 years, with a grace period of 5.5 years and an interest rate based on the LIBOR. The local contribution from the state of Piauí will be $5.1 million, while Pará and Maranhão will each chip in $3.9 million.