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CAIXA AND THE FINANCING OF URBAN DEVELOPMENT

CAIXA AND THE FINANCING OF URBAN DEVELOPMENT. Second Conference on Financing Municipalities & Sub-National Governments. ASER CORTINES Caixa Econômica Federal Vice-President for Urban Development and Government. Washington, September 30, 2004. Brazil - overview Caixa

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CAIXA AND THE FINANCING OF URBAN DEVELOPMENT

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  1. CAIXA AND THE FINANCING OF URBAN DEVELOPMENT Second Conference on Financing Municipalities & Sub-National Governments ASER CORTINES Caixa Econômica Federal Vice-President for Urban Development and Government Washington, September 30, 2004

  2. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  3. BRAZIL North Northeast CentralWest Southeast GDP US$493 billion - in 2003 per capita income US$ 2,789 South Source: Brazil Central Bank and IBGE

  4. São Luís/MA São Paulo/SP 26 states and 1 Federal District 5,560Municipalities 4,023 have up to 20 thousand inhabitants - 18.8% of the population 14 have more than 1 million inhabitants - 20.7% of the population Source: IBGE, municipal resident population estimates for 2003

  5. municipal human development index - 1991 all municipalities in Brazil Source: Brazil Human Development Atlas, PNUD/IPEA/FJP, 2003

  6. municipal human development index - 2000 all municipalities in Brazil Source: Brazil Human Development Atlas, PNUD/IPEA/FJP, 2003

  7. structural aspects of Brazilian municipalities - Constitution of 1988 - the Statute of the City, approved on July 10, 2001

  8. aspects of public credit concession • limit of 45% of the net equity of financial institutions • limit to the amount of credit available to the public sector • Fiscal Responsibility Law

  9. technological solutions for sustainable municipal development Caixa supports government programs in science and technology - partnership with the academic and private sectors Objective: to provide technological solutions to the municipalities in environmental sanitation and housing

  10. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  11. Caixa a public company with private status in existence for 143 years, with an active presence in the entire national territory Caixa is known for fulfilling its vocation as a company which is committed to citizenship and social and environmental responsibility, fostering deeds to benefit society

  12. the three dimensions of Caixa COMMERCIAL BANK 29.4 million clients 80.1% have income of up to 6 minimum salaries (USD$ 520) Caixa is present in the 5,560 Brazilian municipalities TRANSFER OF BENEFITS in 2003 - 329 million benefits paid until June 2004 - 135.7 million benefits paid URBAN DEVELOPMENT - contracts 1995 to June 2004 housing: 2.8 million units - US$ 12.7 billion sanitation and infrastructure: US$ 3.3 billion administration: US$ 234.8 million

  13. Caixa - urban development Caixa is the main federal government bank in charge of the implementation of urban policy financing and disbursing federal budget resources and rendering technical assistance in the following sectors: • housing • environmental sanitation • urban infrastructure • municipal administration

  14. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  15. Caixa provides inputs tomunicipalitieswhich permit the development of a new context for planning and public administration Caixa offers products and services that helpmunicipalitiesmodernize the administration process and the provision of environmental sanitation services

  16. support for modernizing public administration restructuring, making fiscal adjustments and modernizing management in state and municipal administrations credit for state and municipalities - tools for urban and territorial administration and planning PNAFM (municipalities)- US$ 1.1 billion (BID) PNAFE (states) - US$ 449.3 million (BID)

  17. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  18. Brazil – sanitation policy in the 70’s 1960’s (end)- 35% of the Brazilian urban population had access to running water 1971 - national plan for basic sanitation - PLANASA the principles of PLANASA where: • extension of services to all urban centers and to the population at all income levels; • selection of the states as geographic, political and administrative bases; • self-sustainability of services through tariff revenues and cross-subsidies

  19. Brazil – sanitation policy in the 70’s • 1970 - water supplies: 11.9 million people sewage systems: 6.1 million people • 1984 - water supplies: 63.4 million people sewage systems: 22.4 million people • 1984 - the system had reached 71% of Brazilian municipalities • in the 1980s - the collapse of PLANASA

  20. Brazil - deficit in water, sewage and waste - 2002 permanent private homes: 40.7 million 80% deficit: water sewage waste 4.3 million 18.9 million 1.7 million 10.7% 46.4% 4.1% 68% 55% water supply sewage systems waste collection Source: IBGE, PNAD 2002. 19% 16% 16% 12% 10% 9% 5% 5% 2% 1% 1% 1% up to 3 ms more than 3 - 5 ms more than 5 - 10 ms more than 10 ms undeclared

  21. resources to provide universal coverage of water, sewage and waste services provide urban and rural populations with water (distribution + production) and sewage (collection + treatment), taking into account expansion and replacement investment of US$ 59.5 billion until 2020* meet the needs of the population in the urban waste sector investment of US$ 1.9 billion in 10 years** * Source: Study carried out by the JNS/ACQUA-PLAN Consortium for the Program for the Modernization of the Sanitation Sector - PMSS II, May 2003. ** Source: Ministry of the Environment

  22. investments in sanitation and infrastructure contracted values in 2003 and 2004 Value in US$ Million contracts Total Investment Loan (CAIXA) states municipalities state sanitation companies private concessions (*) total 444.00 200.00 450.66 31.33 1,125.99 702.33 242.00 538.66 38.99 1,521.98 175 93 163 14 445 (*) new contracts till Dec/2004: US$ 40 Million

  23. establishing the regulatory and legal benchmark • Public - Private Partnership (PPP) – under discussion in Congress • National Policy of Environmental Sanitation – bill under discussion

  24. project financing in urban development structural projects models private and public partnership securitization of receivables • special purpose companies - SPC • asset leasing • property credits for sanitation assets • credits for supply contracts • receivable funds securitization of receivables makes reliable financing the investment payback

  25. assets leasing FGTS agent a - bidding for future assets by CSB b - project implemented by winning bid through SPC c - project financed by the agent through the project finance model, using FGTS resources d - upon conclusion of the project, SPC leases it to CSB e - payment of the lease through selected consumer accounts f - contracting of a trustee to control and monitor SPC and the administrator reports rating consumers loan cash (c) (e) trustee link escrow account services accounts monitoring payment (f) (d) reports CSB SPC asset leasing works (a) (b) control administrator cash winning bid trust

  26. investment project CSB Q - quotas credit rights R - resources receivable fund FGTS Q Q Q R R R R institutional investors treasury corporate; retail receivable funds

  27. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  28. the role of Caixa’s urban development administration offices in cities several strategic actions have been carried out to support municipal districts 58 support units for urban development in the capitals and principal cities increased capacity for planning, implementation and administration of municipal power implementation of technological alternatives which take local characteristics into account while reducing costs sharing of best practices for local administration

  29. Caixa Program for Best Practices in Local Leadership comprised of actions based on the participation of public power and the community the program adheres to the rules of the Best Practices and Local Leadership Programme 1999 – Program launched 2000 – 1st award cycle - 114 submissions 2001 – 2nd award cycle - 133 submissions 2003 – 3rd award cycle - 259 submissions the implemented practices support the establishment of new practices, thus contributing, in a continuous and evolving process, to the construction of a new reality in the country. http://melhorespraticas.caixa.gov.br/

  30. Brazil - overview Caixa modernizing municipal administration sanitation and infrastructure supporting municipalities message

  31. Caixa’s goal is to ensure universal access to housing and basic sanitation in order to meet the country’s goals for the millenium partnership is a means by which one can guarantee public interest and social control

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