Pernambuco secures an additional US$400 million from the IDB.
The Inter-American Development Bank (IDB) has approved a loan agreement of R$ 400 million for the Government of Pernambuco; the funds are intended to expand sustainable investments and state revenue; however, the loan must still be approved by the Senate and the Federal Government before it can be finalized.
PE247 - The Inter-American Development Bank (IDB) has approved a loan agreement for R$400 million for the Government of Pernambuco. The funds are intended to expand sustainable investments and state revenue. However, the loan still needs to be approved by the Senate and the Federal Government before it can be released.
In a statement published online, the IDB reported that the agreement is part of its policy lending program, which offers, among other benefits, flexible support to reduce the time it takes to issue expropriation decrees and environmental licenses associated with priority investments. The loan also aims to accelerate political-private partnerships. For Pernambuco, the bank expects the loan to consolidate the state's fiscal balance and expand investments in a sustainable manner.
If approved by the Senate and the Federal Government, the R$ 400 million will be paid in two equal installments, with the first due in December 2013. “We are not afraid that the contract will not be approved. This should happen by the end of this month or the beginning of November,” stated the Executive Secretary of Planning, Budget and Fundraising of the Secretariat of Planning and Management (Seplag), Edilberto Xavier, to the newspaper Folha de Pernambuco. The second installment should be released between February and March of next year.
The loan is to be repaid within 20 years, with a five-year grace period. Interest will be based on LIBOR (calculated from the variation of the dollar, with an additional 2,5% interest per year). Following the loan, the bank expects an increase in public investments from 29% to 35%, and a 0,2% increase in tax revenue as a percentage of Gross Domestic Product (GDP) between 2012 (9,3%) and 2014 (9,5%).