Minas Gerais Partnership for Development

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The Minas Gerais Partnership for Development Project for Brazil reinforces the Fiscal Responsibility Law and Brazil's system of fiscal federal checks and balances. Second, within the state itself, the fiscal adjustment combined with improved economic performance will lead to poverty reduction both through higher incomes and through increased spending available for direct poverty-reducing spending. Third, improving the quality of public management in Minas will bring better service delivery to the poor. The proposed operation would be a two-tranche development policy loan, with the first tranche to be disbursed upon effectiveness and the second tranche on completion of preset conditions described in the loan agreement. The operation supports three pillars - fiscal management, public sector management, and private sector development - in two stages, with the initial disbursement made conditional on progress to date at the time of negotiations, and the second disbursement tied to clearly defined future goals in each area.