The Inter-American Development Bank (IDB) has approved a $300 million policy reform loan to support the State of Pará, Brazil, as it strives to reach net zero greenhouse gas emissions by 2050. The operation is the IDB’s first to assist a specific state within Brazil as it implements economic, environmental, social and climate policies in order to foster sustainable development in the Amazon.

Since 2017, the IDB has been partnering with the State of Pará, whose capital Belem will host COP30, as it seeks out cross-cutting and comprehensive solutions to the complex problem of ending illegal deforestation. The program involves a total of ten government institutions and five sectoral divisions of the bank, underscoring the commitment to decarbonizing Pará.

The loan, which was approved by the IDB's Board of Executive Directors, will enhance Pará’s technical capabilities and technology for implementing environmental and climate policies, promoting efficiency in public management. The program highlights the importance of supporting efforts to digitalize the state, modernize public services and drive innovation.

The operation also plans to leverage nature-based solutions for enhanced management of protected areas, as well as for comprehensive coastal and blue economy management and to reclaim vegetation in degraded areas. Another goal is to promote low-carbon practices in farming and the development of the bioeconomy, which will contribute significantly to sustainable land use.

The loan provides for the creation of fiscal and financial instruments to support Pará's decarbonization. State tax benefits will be aligned with low-carbon projects and commodity monitoring will be strengthened to limit trade in products from illegally deforested lands.

Pará is rich in natural capital but accounts for 40% of the deforestation of the Brazil’s Legal Amazon region. Despite its significant effort on paper to protect almost 50% of its territory, 10% of the state's deforestation occurs within protected areas. Four out of every 10 inhabitants of Pará live below the poverty line, so the state needs a productive paradigm shift to pivot toward a decarbonized economy in an inclusive manner.

All policies supported by this program will promote gender equality, development for Indigenous peoples that respects their identities, and the inclusion of vulnerable groups. They will also harness the potential of these population groups to boost socioeconomic growth in the Amazon.

The policy reforms implemented through this operation will save approximately 10 million hectares of forest by 2050 and slash net CO2 emissions by 6 billion tons. The IEEM, a tool developed by the IDB to measure the economic and environmental impact of public policies, has made it possible to calculate the reduction of deforested areas, the savings in carbon emissions as a result of this program, and where these effects will occur.

During COP28, in Dubai, the President of the Inter-American Development Bank, Ilan Goldfajn, and the Governor of the Brazilian State of Pará, Helder Barbalho, signed a letter of intent to advance a comprehensive decarbonization agenda in the State, including technical cooperation support in addition to the program. Since 2017, the IDB and Pará have signed a series of technical and financial support agreements on issues such as carbon credit, education, fiscal, and sustainability. Now, with this new document, the idea is to expand joint work even further, on topics such as low-carbon agriculture, sustainable development of the açaí chain, and technical or financial support for COP30 in Belém.

About the IDB
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