CAIXA AND THE FINANCING OF URBAN DEVELOPMENT
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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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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


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

BRAZIL

North

Northeast

CentralWest

Southeast

GDP US$493 billion - in 2003

per capita income US$ 2,789

South

Source: Brazil Central Bank and IBGE


Caixa and the financing of urban development

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


Caixa and the financing of urban development

municipal human development index - 1991

all municipalities in Brazil

Source: Brazil Human Development Atlas, PNUD/IPEA/FJP, 2003


Caixa and the financing of urban development

municipal human development index - 2000

all municipalities in Brazil

Source: Brazil Human Development Atlas, PNUD/IPEA/FJP, 2003


Caixa and the financing of urban development

structural aspects of Brazilian municipalities

- Constitution of 1988

- the Statute of the City, approved on July 10, 2001


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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)


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

establishing the regulatory and legal benchmark

  • Public - Private Partnership (PPP) – under discussion in Congress

  • National Policy of Environmental Sanitation – bill under discussion


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

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


Caixa and the financing of urban development

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/


Caixa and the financing of urban development

Brazil - overview

Caixa

modernizing municipal administration

sanitation and infrastructure

supporting municipalities

message


Caixa and the financing of urban development

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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