The World Bank Board of Directors has approved a new operation to strengthen fiscal sustainability and promote economic development in the State of Piauí, Brazil. This Development Policy Financing (DPF) aims to support reforms that enhance the quality of public expenditure and expand private sector participation in water and land resources management, key sectors for the state’s long-term growth.
The financing package totals JPY 58,000,000,000 (approximately US$376.6 million), designed to expand fiscal space, improve regulatory conditions, generate jobs, stimulate private investment, and bolster economic opportunities, particularly in agriculture and natural resource management.
Piauí Governor Rafael Fonteles highlighted that the operation endorses the New Fiscal Regime, which introduces expenditure ceilings, fiscal targets, and improvements in Public Investment Management (PIM). These measures are expected to preserve the state’s credit conditions and enable progress in water resource management, infrastructure development, and land regularization, ultimately boosting private investment, economic development, and job creation across the state.
World Bank Country Director for Brazil, Cécile Fruman, emphasized that the operation strengthens Piauí’s ability to deliver better public services while advancing sustainable and inclusive growth. By modernizing water and land resource management and implementing fiscal reforms, the state is expected to improve resilience, attract private investment, and create more and better employment opportunities for its population.
The operation focuses on key policy areas including fiscal sustainability and public expenditure efficiency, aiming to reduce current spending, modernize procurement, and introduce a new public investment management system. These initiatives are expected to raise the current savings ratio to 8 percent of revenues by 2026 and enhance the quality of public investment projects.
Reforms in the water sector aim to strengthen the financial autonomy of the state water regulator, modernize raw water charging, and encourage private sector investment in water supply and sanitation, improving services for low-income households and women. Land regularization measures will digitalize processes, reducing processing times from 90 to 30 days, expanding legal security for small landholders, and supporting sustainable agricultural development, which is expected to boost rural productivity, investment, and employment.
These reforms align with Brazil’s 2024-2027 Multiannual Plan, the state’s long-term development strategy, and the World Bank’s Country Partnership Framework for Brazil. They also contribute to Brazil’s climate and sustainability agenda by enhancing water governance, reducing environmental pressures, and promoting the sustainable use of natural resources.
The DPF complements ongoing World Bank support through the Progestão Piauí and Piauí Pillars of Growth and Social Inclusion – Phase 2 projects, reinforcing institutional capacity and the implementation of priority reforms.
