Ceará Secures $80M IDB Loan to Modernize Fiscal Management and VAT Reform

The Brazilian state of Ceará has secured an $80 million loan from the Inter-American Development Bank (IDB) to modernize fiscal management, strengthen transparency, and support the implementation of Brazil’s new value-added tax (VAT). The loan marks the third phase of the PROFISCO Program, a nationwide initiative designed to improve fiscal sustainability, strengthen tax administration, and enhance the overall business environment in Brazilian states.

Supporting Brazil’s New VAT

Brazil is currently undergoing a historic tax reform that introduces a value-added tax (Imposto sobre Valor Agregado – IVA). States like Ceará play a critical role in ensuring that the transition is smooth, efficient, and equitable. The IDB loan will give Ceará the resources to modernize its fiscal institutions, ensuring higher compliance rates, better services for taxpayers, and more disciplined public spending.

Revenue Management Reforms

Ceará’s reforms will focus on improving tax collection and administrative efficiency. Key measures include:

• Upgraded fiscal policy systems to ensure consistency with the new VAT.

• Modernized technological infrastructure to streamline tax collection and data analysis.

• Enhanced audit, litigation, and debt management systems to reduce fiscal losses.

• Improved taxpayer services to simplify compliance for businesses and citizens.

• Restructured internal controls to strengthen accountability.

• A new tax education program aimed at building public awareness and preparing businesses and citizens for IVA implementation.

These reforms are expected to make Ceará’s tax authority more efficient while reducing bureaucracy and increasing transparency.

Expenditure and Financial Discipline

On the expenditure side, the program aims to modernize budget and financial management. Planned upgrades include:

• Integration of planning and financial systems to better align spending with priorities.

• Implementation of a data analytics platform for evidence-based fiscal decisions.

• Automation of cash flow and bank reconciliation to reduce errors and delays.

• New systems for payroll, debt monitoring, and cost control to improve fiscal discipline.

• An asset management model to optimize use of state-owned resources.

Together, these reforms will promote sustainable budgeting, reduce waste, and ensure more efficient delivery of public services.

Benefits for Businesses and Citizens

According to the IDB, businesses will benefit from simplified compliance procedures and improved taxpayer services, lowering the cost of doing business in Ceará. Citizens, meanwhile, will see gains from greater fiscal transparency and better access to public policies supported by improved quality of public spending.

The project will also strengthen the State Treasury Secretariat and build long-term institutional capacity by training civil servants and upgrading management tools.

Loan Terms and Counterpart Financing

The $80 million IDB loan was recently approved by the Bank’s Board. It has a 24.5-year maturity, a six-year grace period, and an interest rate based on the Secured Overnight Financing Rate (SOFR). Ceará will also provide $8 million in counterpart financing, bringing the total investment in fiscal modernization to $88 million.

Part of a Nationwide Effort

The PROFISCO Program has already supported other Brazilian states in modernizing their tax and fiscal systems. By entering its third phase, the initiative is ensuring that Brazil’s long-awaited tax reform is successfully implemented across all regions. For Ceará, this investment positions the state as a leader in modern fiscal management, setting an example for how digitalization, transparency, and efficiency can go hand-in-hand with social development.