Urban development financing

ABSTRACT This paper deals with a controversial aspect of the Brazilian public policies: the way urban investment and the provision of urban services are financed. The failure of pat solutions, based on a highly centralized decision-making process of channeling budgetary resources and forced savings to state and local governments, led to a situation in which financial difficulties became one of the main reasons of the deteriorating urban infrastructure and urban services in most of the major Brazilian cities. Against this background the paper argues for a through revision of the way and means of urban development financing, based on recommendations of pooling available resources, implementing professional management and moving toward better intergovernmental coordination of urban policies. Confidence in the newer rules, and in its maintenance over time, is also emphasized as an important requisite for attracting private capital to important areas, such as sanitation, transportation and housing.