Fiscal milestones in financial strength
Updated: 2012-04-30 07:35
(China Daily)
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Since the global crisis hit world markets in 2008, making the grade for investment and moving up the rankings of rating agencies has been difficult for many national governments, let alone for regional, state and municipal authorities.
Yet Rio has been doing very well with both financiers and rating agencies.
Last year was very positive as the city of Rio was rewarded for three years of hard work. In November the municipal government received the second and last installment of a $500 million World Bank loan to pay off its debt with the Brazilian federal government.
That sort of World Bank financing had never before been granted to a city and once again shows the faith in the city of Rio. After the loans, the city has managed to save millions of dollars for the public coffers.
By the close of 2011 not only had the city concluded its World Bank loan deal, it had also received increased ratings from both Fitch and Moody's.
Moody's already awarded the city an unprecedented investment grade of Baa3 in 2010, but in December last year it upgraded risk classification to the highest possible level of Aaa.br on the local scale, valid only in Brazil.
The rating not only proved that the city had become a safe haven for business and investment, it also came only a week after Fitch also awarded the city the same investment grade as the federal government - the first Brazilian city ever receive the standing.
Also in 2011 the city organized the first annual Rio Investors Day and the event showed Rio's attractiveness by attracting a range of regional and global heavyweights.
The second event is planned for May 21 to 22 this year to be bring together the public and private sectors, and many personalities in world finance. The city also plans to use the event to showcase projects already underway.
As city mayor, Eduardo Paes publicly announced that "participants in Rio Investors Day 2012 will have the opportunity to learn about the other side of the city, which is viewed as one of the 10 metropolises that best reacted to the world financial crisis of 2008".
"The efforts of three years of recuperation in public finances and the local economy are paying off," the mayor said.
"The city of Rio was awarded investment grade ratings from Moody's and Fitch at a time when we are also undergoing a period of transformation to prepare for two of the largest international sporting events - the 2014 Soccer World Cup and 2016 Olympics."
One of the most instrumental leaders in Rio's growth and the stability of its economic development has been the city's secretary of finance, Eduarda La Rocque.
Previously a consultant for the finance department of the Brazilian Development Bank (BNDES), she was named as the city's secretary of finance in 2009.
She has managed to streamline public finances, sign the loan with the World Bank and achieve the investment ratings in only two years. She has also introduced an electronic invoicing system for the city that saved money and increased efficiency.
"We are on a path of fiscal responsibility, risk aversion and economic growth," she has explained.
Rio is one of the best examples of how state and city cooperation has come together with the governor, mayor and departmental heads working together to build a strong future for the city with sound financial foundations.
(China Daily 04/30/2012 page13)