Brasília, February 20, 2004 (Agência Brasil - ABr) - The World Bank (IBRD) approved the liberation of US$ 505 million to support microeconomic measures and institutional reforms in Brazil. The resources may also contribute to reducing the country's external vulnerability and expanding its net foreign reserves. The debt will be payable over 14 years, including a five year grace period.

The loan is aimed at four main areas, with short-, medium-, and long-term impacts: reducing logistic costs, improving the business atmosphere, enhancing the efficiency of the financial sector, and stimulating technological progress.

According to the World Bank, logistic expenses represent 20% of the Gross Domestic Product (GDP) and the largest single portion of firms' costs. With the loan, the government can reduce the time it takes to get merchandise through customs by 40%, cut 10% off the costs of handling containers in ports, lower highway transportation expenses by 5%, and increase alternative, non-highway transportation by 10%.

With respect to the business atmosphere, further improvements can help to promote public-private partnerships, increase internal competitiveness, reduce the time it takes to register firms, and, most of all, speed the recovery of insolvent firms, through the new Bankruptcy Law.

In the financial sector, the changes that are sought include reducing banks' operating expenses, broadening access to financial services, lowering credit risk, and stimulating expansion in the area of insurance. According to the World Bank, providing poor people greater access to bank accounts is another factor. By 2006 there will be 8 million new bank accounts, with the total growing from 95 million to 103 million.

According to the Bank, the Law of Innovation will lead to an increase of up to 20% in technology transfer contracts between universities and the private sector and up to 10% in what the private sector spends on Research and Development. The Clean Development Mechanism can generate US$ 100 million in carbon credits.

Brazil is one of the World Bank's biggest clients, with a total of US$ 30 billion in loans and US$ 8.4 billion in the pipeline. The Bank of Brazil's current project portfolio includes 53 projects in execution, representing a net commitment of around US$ 4.7 billion. (DAS)