ALAGOAS FISCAL AND PUBLIC MANAGEMENT REFORM

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The Alagoas Fiscal and Public Sector Reform Loan Program for Brazil will support significant and sustainable reforms in key areas of public administration. These reforms will expand fiscal space for public investments. They will also allow the state to use more effectively its own resources and those transferred by the federal Government to undertake a program of targeted capital investments and improve its management capability. Such improvements are a necessary condition for eventually meeting the high order objectives of reducing poverty levels and achieving levels of economic growth comparable to those of other states in the region. In addition, the loan will help the state to comply with the Federal Fiscal Responsibility Law (FRL), a purpose shared by Brazil's federal authorities. The operation is fully consistent with and closely linked to the objectives of the Brazil Country Partnership Strategy (CPS), 2008-2011. Sound macroeconomic management, fiscal reform, efficient public sector management, and good governance are key pillars of the CPS strategy for achieving inclusive economic growth in Brazil. The CPS also identifies support for the states (under results-oriented public sector reforms) and improvement in fiscal management as two of the most important areas of Bank engagement. The loan will support reforms in key areas of public administration, namely: a) fiscal adjustment; b) human resource management; c) social security system for civil servants; and d) public sector management.