Wednesday, March 16, 2011

Brazil: Better and Safer Housing for 2 Million People

Source: The World Bank Group

Press Release No:2011/373/LAC

WASHINGTON, March 15, 2011 –Some 2 million poor people who live in informal low income settlements (favelas) in the Rio de Janeiro Metropolitan Region, Brazil, will be benefiting from a US$ 485 million development policy loan for the Metropolitan Urban and Housing Project approved today by the Board of Executive Directors of the World Bank.

Local population will benefit from policies that will improve social service delivery through innovative programs that expand urban and social services such as health and education to the favelas. The loan will improve the State's capacity regularize land tenure, map risk areas, formalize ownership of homes where possible and provide incentives for investment or resettlement where needed.

The new financing follows the record January flooding that killed over 800 in the State of Rio de Janeiro and will help to better manage disaster risks and improve planning and territorial growth management in the Rio Metro Region, which houses almost 12 million people.

"This loan, that does not require counterpart funds, is fundamental for the numerous urban initiatives currently underway in Rio, such as the Morar Seguro Program, that aim to improve housing quality, safety and availability, as well as public transportation to our entire population," said Sérgio Cabral, Governor of the State of Rio de Janeiro "With the partnership of the World Bank and the Federal Government, we are further expanding social services into the pacified favelas, creating safe and affordable alternatives for people in risk areas, extending integrated inter-municipal single fare transport and coordinating work across the state and municipalities."

The government's policies supported by the loan will reduce settlement pressures on risk areas, decreasing the likelihood of disasters. In the last four years, climatic events displaced more than 100,000 families in the state, and contributed to the lack of adequate housing, especially for the poor. Disaster risks have yet to be clearly identified and mapped in many areas of the Metro Region, and environmental degradation, irregular urban occupation, and disaster risk affect poor residents most heavily.

"This loan responds to requests by President Dilma Rousseff and Governor Cabral," said Makhtar Diop, World Bank Director for Brazil. "The President asked that the Bank deepen its support to Brazil on urban issues, with an especial focus on managing disaster risks. Several other projects in Brazil are already being negotiated or restructured with this purpose."

He added that the World Bank's new partnership strategy with Brazil will have natural disaster mitigation and preparedness as one of its central themes.

The Rio loan will be disbursed in two-tranches. The first, of $290 million, once the loan is signed and goes into effect. The second, of $195 million, after the government's completes an additional agreed set of actions, including strengthening urban governance mechanisms in several areas and improving the capacity to deliver key social services.

This IBRD Flexible Loan with variable spread, has level repayments, a 5.5 year grace period and 30 year final maturity. Front End Fee to be financed from own resources. Since 1952, the World Bank has invested approximately US$ 3.7 billion in the State and City of Rio de Janeiro, including today's loan.