Challenge
Brazil’s economy recovered relatively quickly from the global economic crisis, but damaging effects lingered. In the state of Rio de Janeiro, revenue collection deteriorated while expenditures on infrastructure increased, limiting the state’s ability to implement planned investments and other expenditures—and especially to improve the efficiency and effectiveness of public services.
Outcomes in education and health were well below the national average. In education, secondary school completion rates were 44.5 percent, compared to the national average of 50.9 percent. In health, only 27.7 percent of the state’s population was covered by basic health care programs, compared to the regional and national averages of 40.5 percent and 58.1 percent, respectively.
Solution
The Development Policy Loan (DPL) was designed to help with projected 2010 financing needs, giving special attention to such lagging sectors such as education and health. To strengthen and support the continuity of the state of Rio de Janeiro’s public service improvement plans, the loan focused on four priority policy areas:
- Strengthening fiscal consolidation,
- Improving the business environment,
- Increasing the quality and efficiency of the basic education system, and
- Increasing access to and the efficiency of health services, especially for urgent and emergency health care in disadvantaged areas and for low-income populations.
Some specific supported programs included the state pension plan (RioPrevidência), a system to streamline the business registration process (Cadastro Fácil), an accelerated learning program for basic education, (Projeto Autonomia) and a system of performance-based state financial transfers to municipal hospitals (Programa de Apoio aos Hospitais do Interior – PAHI).
Results
This loan helped to improve the efficiency and effectiveness of state public services by strengthening policies in fiscal management, the business environment, basic education, and urgent and emergency health services:
- Fiscal consolidation was strengthened through a reduction of long-term fiscal risk, improved efficiency of tax administration and collection, and strengthened budget procedures. Between 2008 and December 2010, the state’s net financial position increased by 91 percent, and RioPrevidência’s net asset position increased by 235 percent.
- The quality and efficiency of the business registration process was improved. Between 2008 and April 2011, the average number of days to register a firm was reduced from 63 to 31, a reduction of 103 percent.
- The quality and efficiency of the public secondary education system was increased. Overall, all students enrolled in the state’s public secondary system (approximately 470,000 in 2001) are expected to benefit of the reforms. By April 2011, 2,030 teachers were trained for Projeto Autonomia; 42,743 students were estimated to be enrolled in the program.
- Access to and efficiency of health services, especially for urgent and emergency health care in disadvantaged areas and for low-income populations, was increased. Most of the population living in the metropolitan region of the municipality of Rio de Janeiro that do not have access to basic public health services and do not have private health insurance (approximately 5.5 million in 2011) will benefit from the health reforms supported by this operation. Most of this population belongs to the poorest two quintiles of the population. From 2008 to December 2010, 64 out of 69 municipalities had signed PAHI performance agreements, and the number of services at 24-Hour Rapid Service Units (Unidades de Pronto Atendimento) increased 381 percent.
