The Brazilian state of Mato Grosso will modernize its fiscal management with a $56.3 million loan from the Inter-American Development Bank (IDB). The initiative will strengthen fiscal sustainability, improve the efficiency of public spending, and increase fiscal transparency.

The loan is part of the $900 million PROFISCO II program, rolled out in 2017 to support the digital transformation and modernization of fiscal management in Brazilian states and the Federal District. The initiative is in line with the IDB’s Vision 2025 strategy to strengthen good governance of institutions and digitization to accelerate post-pandemic recovery and promote sustainable and inclusive growth in Bank member countries.

The project aims to modernize fiscal management, taxation, and public expenditure in Mato Grosso. Plans supported by the program will enhance the state finance department’s institutional governance, human resource management, and public procurement processes. The IDB loan will also finance the modernization of Mato Grosso’s technological infrastructure and measures to increase the state treasury’s public transparency, including the creation of web tools to improve communication with society and a transparency portal.

The loan will finance improvements to tax administration, including leveraging digital technologies and data analytics to increase the efficiency of tax collection, increasing revenues, and simplifying tax compliance. It will also fund mechanisms to manage and evaluate the impact of tax policies, as well as the adoption of a risk-based management model and the digitization of administrative processes related to tax litigation management. In addition, the initiative will finance improvements to taxpayer services as well as tax registry, revenue, control, and collection systems.

Finally, the loan will fund measures to increase the efficiency of financial planning and execution, as well as the quality of expenditures. These include adopting a results-oriented budget planning model and modernizing public debt systems along with the management of liabilities, assets, and fiscal risks, and planning and management of budgets, finances, accounting, contracts, and assets.

The IDB loan has a repayment period of 25 years, a grace period of 5.5 years, and an interest rate based on the LIBOR.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.