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Inter-American Development Bank SIMULTANEOUS DISCLOSURE DOCUMENT OF THE INTER-AMERICAN DEVELOPMENT BANK BRAZIL NATIONAL TOURISM DEVELOPMENT PROGRAM IN BAHIA (PRODETUR NACIONAL-BAHIA) (BR-L1300) LOAN PROPOSAL This document was prepared by the project team consisting of: Adela Moreda (INE/RND) and Annette Killmer (RND/CBR), Project Team Co-leaders; Joseph Milewski (RND/CBR); Leonardo Corral (SPD/SDV); Andrés Consuegra (LEG/SGO); Fernando Glasman (FMP/CBR); Carlos Lago (FMP/CBR); Suzanne Casolaro (VPS/ESG); Denise Levy (VPS/ESG); Matias Bendersky (ORP/ORP); Fernanda Soares (ORP/ORP); and Rosario Gaggero (INE/RND). This document is being released to the public and distributed to the Bank’s Board of Executive Directors simultaneously. The Board may or may not approve the document, or may approve it with modifications. If the document is subsequently updated, the updated document will be made publicly available in accordance with the Bank’s Access to Information Policy. CONTENTS PROJECT SUMMARY I. DESCRIPTION AND RESULTS MONITORING ..................................................................... 1 A. Background, problems to be addressed, and rationale ......................................... 1 B. Objectives, components, and cost ......................................................................... 8 C. Key results indicators ............................................................................................ 9 II. FINANCING STRUCTURE AND MAIN RISKS ....................................................................10 A. Financing instruments .........................................................................................10 B. Economic viability ..............................................................................................10 C. Environmental and social safeguard risks ..........................................................11 D. Fiduciary and other risks .....................................................................................11 III. IMPLEMENTATION AND MANAGEMENT PLAN ...............................................................13 A. Program execution and administration ..............................................................13 B. Monitoring and evaluation arrangements ...........................................................14 - ii - ANNEXES Annex I Development Effectiveness Matrix (DEM) – Summary Annex II Results Matrix Annex III Fiduciary Agreements and Requirements ELECTRONIC LINKS REQUIRED 1. Annual work plan (AWP) http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36929692 2. Monitoring and evaluation plan http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36907949 3. Procurement plan http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36919043 4. Environmental and social management report (ESMR) http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36929269 OPTIONAL 1. Institutional capacity analysis http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36913834 2. Program economic analysis http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36913927 3. Investment matrix http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36914851 4. Financial analysis of the state http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36913850 5. PMR http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=36929685 - iii - ABBREVIATIONS CAS Centro Antigo de Salvador [Old Town of Salvador] CHS Centro Histórico de Salvador [Historic City Center of Salvador] CONDER Companhia de Desenvolvimento Urbano do Estado [State Urban Development Company] EPA Environmental protection area ESMP Environmental and social management plan ESMR Environmental and social management report GDP Gross domestic product FIPE Fundação Instituto de Pesquisas Econômicas [Foundation of the Economic Research Institute] IBGE Instituto Brasileiro de Geografia e Estatística [Brazilian Geography and Statistics Institute] ICAS Institutional Capacity Assessment System IFDM FIRJAN Municipal Development Index IPAC Instituto do Patrimônio Artístico Cultural da Bahia [Bahia Institute of Artistic and Cultural Heritage] IPEA Instituto de Pesquisas Econômicas Aplicadas [Institute of Applied Economic Research] MTUR Ministry of Tourism OC Ordinary Capital PCU Program coordination unit PDITS Integrated Sustainable Tourism Development Plan PEP Program execution plan PMU Program management unit PRM Project risk management R$ Brazilian reais SEMA Secretaría do Meio Ambiente [Environment Department of the State of Bahia] SETUR Secretaría do Turismo [Tourism Department of the State of Bahia] SIET Sistema de Informações e Estatísticas Turísticas [Tourism Information and Statistics System] TCE Tribunal de Contas do Estado da Bahia [State Audit Court of Bahia] TSB Todos os Santos Bay [Baía de Todos os Santos, “All Saints Bay”] TTA Typical tourism activities UNWTO World Tourism Organization WAL Weighted average life PROJECT SUMMARY BRAZIL NATIONAL TOURISM DEVELOPMENT PROGRAM IN BAHIA (PRODETUR NACIONAL-BAHIA) (BR-L1300) Financial Terms and Conditions Borrower: State of Bahia Flexible Financing Facility* Guarantor: Federative Republic of Brazil Amortization period: 25 years Executing agency: The borrower, acting through the Tourism Department of Original WAL 15.25 years the State of Bahia (SETUR) Disbursement period: 5 years Grace period: 66 months Source Amount (US$) % Interest rate: LIBOR-based IDB (OC) 50,822,905 60% Inspection and supervision fee: ** Local 33,881,936 40% Credit fee: ** Total 84,704,841 100% Currency: U.S. dollars from the Bank’s Ordinary Capital Program at a Glance Program objective: The general objective of the program is to help generate formal employment in Todos os Santos Bay (All Saints Bay, or TSB) through tourism activity. The specific objective is to use investments in cultural and nautical tourism segments to increase tourism spending in TSB. The program has five components: (i) tourism product strategy; (ii) tourism marketing strategy; (iii) institution- strengthening; (iv) basic services; and (v) socioenvironmental management. Special contractual conditions precedent to the first disbursement: SETUR will provide the following, on the terms previously agreed upon with the Bank: (i) the technical specifications of the Integrated Project Management System (see paragraph 2.4); (ii) evidence of formal establishment of the program coordination unit (PCU), and appointment of its general coordinator and other coordinators (see paragraph 3.1); (iii) the draft program Operations Manual (see paragraph 3.4); and (iv) evidence of publication of the expression of interest for selection of the management firm to support the PCU (see paragraph 3.2). Special execution conditions: On the terms previously agreed upon with the Bank: (i) prior to the first procurement process for goods, works, and nonconsulting services (a) award of the contract to the management firm to support the PCU (see paragraph 3.2); (b) issuance of the service order for adaptation of the Integrated Project Management System to the program (see paragraph 2.4); and (c) entry into force of the final version of the program Operations Manual, following the guidelines of the environmental and social planning and management manual and environmental and social management report (see paragraph 3.4); and (ii) prior to competitive bidding for the corresponding investments/works: (a) entry into force of the cooperation agreements between the borrower/SETUR and the relevant sector administration (see paragraph 3.3); and (b) entry into force of the cooperation agreements between the borrower/SETUR and the participating município (see paragraph 3.3). Exceptions to Bank policies: None. Project consistent with country strategy: Yes [X] No [ ] Project qualifies as: SEQ [X] PTI [X] Sector [ ] Geographic [X] Headcount [ ] * Under the Flexible Financing Facility (document FN-655-1), the borrower has the option of requesting changes to the amortization schedule, as well as conversions of currency and interest rate, subject in all cases to the final repayment date and the original weighted average life (WAL). The Bank will take market conditions and operational and risk management considerations into account when reviewing such requests. ** The credit fee and inspection and supervision fee will be established periodically by the Board of Executive Directors as part of its review of the Bank’s lending charges, in accordance with the applicable policies. I. DESCRIPTION AND RESULTS MONITORING A. Background, problems to be addressed, and rationale 1.1 Bahia, one of the nine states of Northeastern Brazil, recorded a significant increase in per capita income (46%) in 2004-2009, as well as a substantial improvement in its inequality indexes (poverty and extreme poverty rates fell by nearly 17 percentage points).1 Yet despite this, Bahia had the seventh highest poverty rate among Brazilian states in 2009, with twice the national average of extreme poverty2 (10.2% compared to 5.2%). In addition, the unemployment rate is above the national average (10.9% compared to a national rate of 7.6% in 2010).3 In this context, tourism is one of the economic options that the state is using to continue promoting income generation and job creation. 1.2 Opportunities. Bahia is already one of Brazil’s major tourism destinations. In 2011 the state received 11 million tourists, representing 11.6% of the country’s international tourist flows and 8.3% of domestic tourism. These figures put the state in fifth and fourth place, respectively, on the ranking of Brazil’s states in terms of tourist arrivals. These
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