Rio Grande do Sul Gets WBank Loan

The World Bank has approved its biggest ever loan to a sub-national, a $1.1bn loan for the Brazilian state of Rio Grande do Sul. The 30-year development policy loan starts with a $650m tranche and disburses an extra $450m on completion of certain conditions in the agreement, expected by 2009. The World Bank declines to state the rate. Proceeds will be used to restructure part of the state’s debt and smooth out its debt servicing profile, as part of a fiscal sustainability program. Rio Grande do Sul suffers one of the worst fiscal and debt profiles in Brazil, in which debt is 2x revenue, according to the lender.