Rio de Janeiro Adjustment and Sustainable Development Policy Loan

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The development objectives of the Rio de Janeiro Adjustment and Sustainable Development Policy Loan in Brazil are to support the Municipality of Rio de Janeiro (MRJ) in: (i) strengthening fiscal management to improve medium-term fiscal sustainability; and (ii) accelerating the transition towards a low-carbon, resilient and inclusive urban development. This first pillar strengthens the fiscal sustainability of MRJ through its adherence to a federal program that requires the implementation of fiscal adjustment reforms. It supports complementary fiscal reforms, including: (i) the adoption of a law that triggers fiscal adjustment measures in case of fiscal distress; (ii) a legislative reform to simplify the tax on services and improve collection from tax evaders; and (iii) a legislative pension reform that increases the contribution rate for civil servants, pensioners, and beneficiaries of special pensions. It also supports reforms to improve fiscal accountability through the adoption of the international public sector accounting standards and improved internal audit capacity. The city is introducing reforms to increase the reliance on sustainable mobility modes and reduce GHG emissions, along with the city’s strategy to improve building energy efficiency, waste management, low-carbon and resilient infrastructure, and disaster risk management solutions to strengthen its climate resilience. Actions in this pillar support: (i) critical legislation to improve the operational efficiency, multimodal integration, and safety for women in the Bus Rapid Transit system to attract passengers to public transport; (ii) measures to promote low-carbon transport through regulations that expand the cycling network and make the urban environment more conducive to walking and cycling; (iii) the approval of legislation that promotes climate mitigation and adaptation practices in urban mobility, energy, green infrastructure, and waste management; and (iv) the adoption of a municipal sustainable development and climate action plan, including measures to advance e-mobility, and climate risk prevention and preparedness measures such as contingency plans for coastal management and extreme heat events.