World Bank Approves $110M Loan to Strengthen Fiscal Sustainability and Natural Resource Management in Sergipe, Brazil

Aligned with Brazil’s Country Partnership Framework (CPF), the project supports broader national goals of fostering a more productive, inclusive, and environmentally sustainable economy.

The World Bank Board of Directors has approved a US$110 million loan to support the state of Sergipe in northeastern Brazil. This initiative aims to bolster fiscal sustainability and enhance the management of natural resources, addressing the critical development challenges faced by Sergipe, the smallest state in Brazil by geographic area. The state has been grappling with one of the lowest GDP per capita rates in the country and a high level of poverty.

The project will aid Sergipe in implementing a new fiscal framework focused on curbing the growth of current expenditures, reducing public procurement costs, and improving overall fiscal management. These reforms are designed to strengthen the state's fiscal health and ensure more efficient use of public funds.

In response to pressing environmental issues, particularly water scarcity intensified by climate change, the project will also focus on improving water resource management and promoting clean energy use. Initiatives include implementing raw water fees, encouraging private investment in infrastructure, and expanding the use of solar energy to reduce dependence on hydropower. The project also aims to enhance solid waste management through increased recycling efforts.

Aligned with Brazil’s Country Partnership Framework (CPF), the project supports broader national goals of fostering a more productive, inclusive, and environmentally sustainable economy. By improving fiscal management and natural resource governance, the initiative contributes to a greener economy and greater resilience to climate shocks, with anticipated benefits such as improved water quality, increased access to sanitation, and enhanced environmental conservation.

The World Bank's involvement underscores its commitment to helping Sergipe overcome its development challenges and achieve sustainable growth. The success of this project will depend on the strengthening of local institutions and the effective implementation of these critical reforms, paving the way for a more resilient and prosperous future for Sergipe.

Governor Fábio Mitidieri of Sergipe highlighted the importance of the partnership with the World Bank, stating, “This collaboration will allow for reduced interest expenses, extended payment terms, and ensure more resources for investments and public policies, demonstrating a commitment to improving the quality of life for our population and responsible public expenditure management.”

Johannes Zutt, the World Bank’s Country Director for Brazil, expressed pride in supporting Sergipe’s efforts. “This project represents a significant step toward addressing the state’s development challenges and building resilience against climate change. By strengthening fiscal management and advancing environmental policies, Sergipe is setting a strong example of how targeted reforms can drive sustainable growth and improve the quality of life for its residents,” he said.