World Bank Approves $376M Plan to Boost Fiscal Sustainability and Growth in Piauí

World Bank Country Director for Brazil Cécile Fruman emphasized that the operation enhances public service delivery and creates conditions for sustainable, inclusive growth.

The World Bank Board of Directors has approved a significant new Development Policy Financing (DPF) operation designed to strengthen fiscal sustainability and accelerate economic development in the State of Piauí, Brazil. Valued at JPY 58,000,000,000 (US$376.6 million), the operation aims to improve public expenditure efficiency while expanding private sector participation in water and land resources management—two areas central to Piauí’s long-term growth strategy.

Boosting Fiscal Sustainability and Enabling Growth

The financing will support comprehensive fiscal reforms that expand the state’s ability to invest in critical sectors. According to Governor Rafael Fonteles, the World Bank’s support reinforces Piauí’s commitment to Brazil’s New Fiscal Regime, which features expenditure ceilings, fiscal targets, and improvements in Public Investment Management (PIM).

“This fiscal solidity will enable further progress in water resource management, infrastructure, and land regularization—boosting private investment, economic development, and job creation across the state,”said Governor Fonteles.

World Bank Country Director for Brazil Cécile Fruman emphasized that the operation enhances public service delivery and creates conditions for sustainable, inclusive growth.

“By advancing fiscal reforms and modernizing the management of water and land resources, the state is taking essential steps to improve resilience, attract private investment, and generate more and better jobs,”she noted.

Key Policy Areas Supported by the Operation

1. Fiscal Sustainability & Public Expenditure Efficiency

The DPF supports the adoption of a stronger fiscal framework to:

• Reduce current expenditures

• Modernize procurement practices

• Introduce a robust public investment management system

These measures aim to raise the current savings ratio to 8% of revenues by 2026, improving fiscal space for high-impact public investments and enhancing transparency and efficiency.

2. Water Sector Efficiency & Private Investment

Reforms in the water sector will:

• Strengthen financial and operational autonomy of the state water regulator

• Introduce modernized raw water charging to promote efficient use

• Encourage greater private sector participation in water supply and sanitation

These changes will expand service coverage—especially for women and low-income households—while ensuring sustainable water resource use amid growing climate challenges.

3. Land Regularization & Governance

To accelerate secure land tenure and unlock agricultural productivity, the operation supports:

• Digitalization of the land regularization process

• Reducing processing time from 90 days to 30 days

• Expanding legal security for smallholders

• Promoting sustainable agricultural development

Improved land governance is expected to stimulate rural investment, raise productivity, and generate rural employment.

Aligned With National and State Development Priorities

The reforms are closely aligned with Brazil’s 2024–2027 Multiannual Plan, Piauí’s long-term development strategy, and the World Bank’s Country Partnership Framework for Brazil. They also contribute to Brazil’s broader climate and sustainability agenda by:

• Improving water governance

• Reducing environmental pressures

• Promoting sustainable natural resource management

Complementing Ongoing World Bank Support

The DPF builds on complementary World Bank operations in Piauí, including:

• Progestão Piauí – strengthening public sector management

• Piauí Pillars of Growth and Social Inclusion – Phase 2 – enhancing institutions and supporting priority reforms

Together, these initiatives are reinforcing administrative capacity, modernizing public service delivery, and laying the foundation for broad-based, environmentally responsible economic development across the state.