Brazil and the World Bank

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.[1] 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.[2]

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.[1]

Brazil has had a slow growth in the last two years with 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.[3]

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.[4] 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.[4]

As of December, 2019, Brazil has had a total of 540 projects supported by the World Bank. Of those 540, 44 are currently active as of December, 2019. The vast majority of the active projects are water resource sustainability projects and land management and development projects in urban, suburban and rural areas. Rural development is a sector that the World Bank deeply invests upon, with intentions to sustain economic growth and competitiveness for small farm owners and promote sustainability of land use and up to date irrigation systems.[11]

Brazil accounts for a large percentage of world exports in agricultural products, minerals and oil. Because of Brazil's abundant amount of fertile land and unquantifiable amount of natural resources, Brazil is one of the biggest world exporters of products such as meat. The 31.7% of Brazil's economy or revenue functions off of the agricultural industry. Although Brazil is a country that runs off the agricultural industry, that does not impede from the monopolization of the market and concentration of profit from a few privatized companies. The biggest agri-producers and exporters in Brazil are JBS S.A., Ambev and BRF.[12] All three companies dominate the market and inhibit smaller farmers and industries to thrive locally or within the country. This causes a hardship for many small family farmers that do not have the resources to produce exorbitant amounts of produce with as much exporting power as the bigger and more dominant companies. The state of Santa Catarina received a $90 million loan from the World Bank to invest in increasing the competitiveness of family farming. Resources will be redirected to small producers from a farmers' organization. Through the project, households will have access to capital, technical assistance and incentives for technological innovation, increased productivity and quality, diversification and access. The project further strengthen the provision of public services needed to increase production and make it sustainable. To this end, some infrastructure investments are also made, such as the rehabilitation of 800 miles of roads in rural areas. In addition, there is also an incentive to improve public administration in support of rural competitiveness.[13]

This project with the state of Santa Catarina is an example of the type of work the World Bank does in rural areas with sustainable land use, rural farm production and competitiveness and development. Reusable energy and technological infrastructural work for the agricultural department is something that benefits job opportunities and facilitates a boost in the industry, inevitably creating economic growth and regional development.

The Amazon is one of the world's largest sources of oxygen and intake of greenhouse gases in the world. It is the single most naturally diverse part of the planet and at the expense of agriculture and deforestation, thousands of acres are chopped down every year. Despite many NGOs pushing for policy change, conservation and federal funding for the preservation of the rain forest, the agriculture and mining industry constantly chops down the rain forest for resources such as wood or for land used for agriculture. The largest industries in agriculture that mostly contribute to the resistance to conservation are the cattle industry and products such as soy. The world bank has assisted Brazil in the funding of many projects led by governmental and non governmental agencies to help spread the conservation efforts.

The World Bank released a project in December 2017 called the Amazon Sustainable Landscape Project. This project is active and is set to last until December 2024. The purpose of this project is to facilitate the funding for preservation efforts of the rain forest, and to cultivate a sustainable infrastructure to cohabitate with the native vegetation and allow for its restoration and cultivation. This project wants to expand and protect over 60 million Hectares of preserved forest area, especially those bordering agricultural areas and cities. The World Bank invested $60,330,000 for this project. Rehabilitation and restoration of the forest is the second part most heavily invested on. The third part most invested on is on financing resources for the forestry and public landscape sectors to maintain the stability and efforts of the project.[14]

One of the most recent World Bank projects in Brazil is the Brazil Climate Finance Project, which was developed in the hopes of mitigating climate change whilst providing more access of carbon credits to the private sector. Specifically, the World Bank intends to accomplish this project by granting loans to eligible companies and establishing a system for carbon reducing plans and carbon credit through Banco do Brasil. The World Bank approved this project on December 22, 2022, with a total amount of $500 million dollars (USD) committed to the project. The project is expected to cost about 1.9 billion dollars, ending on the 30th of April, 2028.[15] This project is expected to make Carbon Credits readily available for the Brazilian Market, allowing them to purchase them to maintain a Carbon-neutral or negative status, ultimately mitigating climate change and environmental pollution.[16]

There was much progress done and aided by the World Bank that helped Brazil reach its development outcomes. From providing the health department millions of dollars to help sustain quality health services for low income neighborhood to providing resources for secondary schools across the country and helping kids all over Brazil have access to teachers, books and supplies required for providing a basic quality education, the World Bank has helped millions of Brazilians achieve a better quality of life and provided support for the local and federal government to enact their role and aiding this very complicated development. The World Bank has also investment millions of dollars in preserving the environment and contributing towards the funding for the infrastructural development for efficient and safe use of land without harming people and their access to food and resources.

Brazil being one of the largest users of the World Bank, there is a strong economic reliance on the institution and its aid in providing Brazil, with its dense population and infrastructural obstacles, the necessary help to maintain its development as economic disparity, poverty, and lack of opportunity continue to grow.

The lack in growth of productivity, government funding for public services and programs, and the structural development in the departments of social services leads to a big difficulty in achieving and optimizing the effectiveness of the programs led by the World Bank. Although these challenges are prominent and the lack of regulations and enforcement occur, the World Bank works hand in hand with the government to try to reduce the ripple of corruption and the offset challenges of deterioration of the societal infrastructure and services. Fiscal imbalance is the biggest issue in Brazil and causes a disproportionate amount of disparity of opportunity for the population especially the bottom 40%. With that, the World Bank tries to enforce its influence on policy, private investment, and reduction of corporate monopoly and gains.

Brazil’s income inequality, constant inflation, and ineffective government policies make it a difficult place for entrepreneurs to participate in the nation’s economic system, which, in turn, has been a major reason for the involvement of the World Bank in previously mentioned areas. More specifically, Brazilian unemployment is now at 8.4 % and inflation (as of April 2022) at 12.1%.[17] These persistent issues have made it rather difficult for the World Bank to solve these complications permanently. The World Bank may invest in more long term projects intended to decrease inflation, stimulate domestic economic growth (further increase GDP), and further mitigate income inequality, leading to a more productive and healthy Brazil.

• Abraham Weintraub, Brazil's current representative in the World Bank