The relationship between Brazil and the World Bank has been successful for many years, despite numerous challenges.
Background and history According to the World Bank, Brazil is labeled as an upper middle income country with a current GDP of $1.869 Trillion as of the year of 2018. Brazil is the largest country in the LAC region (8.52 million square kilometers), with a GNI per capita of US$14,810 and with a population of 207 million (2016). A favorable external environment, credit-fueled consumption, an expanding labor force and an expansion of social programs contributed to fast economic and social progress between 2001 and 2015.
During 2012–2015, Brazil was one of the largest borrowers of the World Bank Group, with a total of US$17.5 billion invested during these four years. After 2015, with the onset of the economic crisis and given limited fiscal space for new investments, IBRD lending has declined to around US$500 million per year and the program has shifted instead on building the knowledge foundations for supporting an adjustment in Brazil's growth model and in the World Bank's engagement to support it. IFC has continued to invest around US$1.5 billion per year, although with a shifting profile of clients.
Between 2017 and 2018 Brazil had a small 1.1% growth in GDP in 2017 and 1.3% growth in 2018. This small recovery has slowed down the economy significantly and caused much loss in consumer trust, and outside investment. In 2019, the Brazilian economy experienced minimal growth similar to the previous two years, with GDP increasing by only 1.1%. This performance was below expectations despite changes in government and the introduction of new economic policies advocating for pro-market structural reforms. External factors, such as the Argentine crisis and unexpected events like the Brumadinho disaster, along with a slow legislative process for reform adoption, hindered investment stimulation and labor market and consumption growth. Before the onset of the COVID-19 pandemic in 2020, the Brazilian economy had already shown signs of stagnation in the first quarter. GDP decreased by 0.3% compared to the previous quarter, or by 1.5% when adjusted for seasonal variations. This decline was accompanied by significant decreases in sectors like manufacturing and minerals, as well as in household demand and consumption.
Following the pandemic, Brazil experienced a 2.9 percent expansion in real GDP in 2023, propelled by vigorous private consumption buoyed by a robust labor market and fiscal support for social transfers. Favorable external conditions also contributed to growth through increased exports. However, in 2024, GDP growth is projected to slow to 1.7 percent due to the delayed impacts of monetary policy tightening and a reduced carry-over effect from the previous year.
Brazil became a member of the World Bank on January 14, 1946, with its first project starting in the late 1940s. The majority of projects that are funded or assisted by the World Bank involve public infrastructure or land management. Land Management projects usually involve direct correlation with the agriculture, sanitation, and urban planning departments. The very first project that the world bank assisted on in Brazil was started on January 7, 1949. The project was called Power and Telephone Project. The Power and Telephone Project has the joint objectives of developing hydroelectric power generation and telephone services, including long-distance services, in the highly industrialized and populated areas of Brazil. This project services light and hydroelectric management to provide sustainable lighting and energy in more rural and impoverished areas. Throughout the rest of the 20th century, the majority of projects have been over sustainability of infrastructure in poor and rural areas. Most projects have been oriented towards clean water, sustainable energy and efficient land restoration and use. As climate change, deforestation and other more recent alarming world events have taken place over the past 50 years, more and more projects are oriented towards conservation and renewable energy efforts.
World Bank involvement and focal areas Fiscal consolidation and government effectiveness for sustainable, inclusive and efficient service delivery
COVID-19 aid and relief Brazil was greatly affected by the COVID-19 outbreak; by September 20, 2020, the nation had the third highest number of recorded cases (4.5 million) along with upwards of 136,000 deaths. The Government of Brazil requested aid from the World Bank, and on October 29, 2020, The World Bank approved a US$1 billion loan to the republic of Brazil with the intent of mitigating the negative impacts of the COVID-19 virus on poor families. COVID-19 hit Brazil as they were recovering from their 2014-2016 crisis, leaving millions of Brazilians unemployed and (9.3 million) below the extreme poverty line. According to the World Bank, this COVID-19 relief project yielded "satisfactory" results, among them being 6 million Brazilian families being held above extreme poverty, which was about 5 times more than the 1.2 million families projected to receive aid.
Public finance The Brazilian economy has seen much halt and stop due to the deterioration in the structure of public finance. In order to support the strengthening of the fiscal management at all levels of government, it is important to sustain the structure of the institutional and legal systems that control the public finance sector. The World Bank will assist the government in improving the fiscal sustainability and fairness of the social security system. And it will work with federal and sub national governments to increase effectiveness of services delivery in education and in health. Underlying all the World Bank's objectives is the aim to ensure that the ongoing fiscal adjustment is of high quality and does not fall disproportionately on the poor and bottom 40%, whilst laying the necessary foundation for a sustainable recovery.
The Bank will work with the federal government to achieve implementation of the expenditure rule as a means to achieve fiscal adjustment and restore fiscal sustainability at the federal level, through a reduction in federal government primary expenditures in real terms. To achieve this indicator the Bank will support the federal government to rationalize public expenditures and to strengthen fiscal management, including through the programmatic Brazil Expenditure Review and Strengthening Governance in Infrastructure, and will also support the government to restore the financial sustainability of the social security system.
Safety net programs The social safety net programs existent in Brazil lack much governmental funding and support thus increasing the vulnerability of those that depend on it for care packages and housing. Many of the people on the list to receive these program benefits are large family households who don't have enough jobs to support the whole family, and a large portion of them are single mother households. The bank aims to support funding for these programs such as the Bolsa Familia that helps provide care package food and housing for people in need. That allocation of resources to these programs help them become more agile and efficient in effectively covering the most people in need and provide them the basic resources to live well and safe conditioned lives for them and their families.
Education To lower the high rate of drop outs in the public education in secondary school, the World Bank wants to provide support in the development of the educational department in Brazil's ministry of education to facilitate the growth in opportunities for children in low income areas. Their investment will continue to support selected sub national governments in the introduction of new methods of public sector management to improve education outcomes which are expected to improve average learning scores for math and Portuguese.
Health The World Bank will work to improve the effectiveness of health services delivery through ongoing interventions at the sub national level which will contribute to reduce premature mortality rate from the main Non-Transmissible Chronic Diseases in selected states and will contribute to improve system efficiency by reducing the percentage of hospitalization for ambulatory care sensitive conditions in selected states. In parallel, the World Bank will support the private provision of private healthcare services such as hospitals and private clinics to complement services provided by the SUS (the Brazilian publicly funded health care system), also targeting low- and middle-income populations
Private sector investment and production growth
Employment opportunities and business investment Achieving the World Bank goals requires sustaining high rates of investment to create well-remunerated and sustainable employment. This has proved to be the principle mechanism for poverty reduction and shared prosperity in Brazil. Accelerating growth and jobs creation in Brazil is both critical in itself and highly complementary to the needed fiscal adjustment. Restoring the sustainability of public finances is a prerequisite for improved confidence and increased investment in Brazil. At the same time, accelerating growth would facilitate the return to fiscal sustainability by boosting revenue collection. The World Bank will provide financial investment and technical assistance to the federal government to support the implementation of a wide-ranging program of reforms to improve the business environment and to sub national governments as part of ongoing operations. It will commence new infrastructure bonds with an objective to raise significant private sector financing for infrastructure projects.
Inclusive and sustainable development
Land use The World Bank has an integrated approach to building resilience of communities, ecosystems and production systems, which recognizes issues of sustainability and social inclusion as closely related. Brazil many different sets of challenges for an inclusive and sustainable development. The World Bank works to support the government in fostering more equitable economic growth, social inclusion, and efficient use of resources, focusing on interventions related to land tenure and territorial development (at national, regional and city level), management of natural resources and biodiversity, climate change mitigation and adaptation, deforestation, land degradation, and water scarcity issues.
The World Bank also supports management of natural resources in a sustainable way, combining conservation with the promotion of local and regional economic development, as well as to work with the federal and state governments to sustain the low carbon emissions trajectory in agriculture and land use to which Brazil has committed to by supporting farm holdings in the adoption of landscape management and/or sustainable agricultural practices.
In Brazil, the World Bank works with the preservation of the Amazon Rain forest and the sustainable cohabitation of those that use its vegetation and land. The land already used for farming and agricultural practice is also an area invested on for development, sustainability, and expansion prevention into already protected areas.
Water and sanitation