Rio de Janeiro Municipality Fiscal Consolidation for Efficiency and Growth DPL

closed

The objective of the Fiscal Consolidation for Efficiency and Growth Development Policy Loan Program is to assist the municipality of Rio de Janeiro in creating fiscal space which will be used for investments to improve the quality and efficiency of public service delivery, especially in poor areas, through innovative programs in health, education, and private sector development. Other investments will strengthen the institutional framework for efficient service delivery through the implementation of a medium term expenditures framework, results-based management with the public sector, and Public-Private Partnership (PPP) with the private sector. The operation is subject to three main risks: a) the main implementation risk of the operation is related to the fact that the city's administration is relatively new and may overestimate the pace of reforms or may not have sufficient support from civil servants with longer experience in the public sector; b) the main political risk is related to the presidential and state elections in November 2010; and c) the main risk in implementing the PPP program relates to the city's weak institutional capacity to manage an incipient PPP program as well as contingent liabilities that may result from PPP.