Knowledge Note

Rio Grande do Sul (RGS) is the fourth largest state economy in Brazil; fifth largest in population. Despite its relatively favorable social and economic position in the country, continuous fiscal deficits and excessive indebtedness were hampering the state’s ability to promote economic growth. RGS was one of the few states in Brazil with debt service exceeding the limit (15%) set by the country’s Fiscal Responsibility Law (FRL). This affected social service efficiency and reach, and RGS’s quality of life indicators were receding relative to the rest of Brazil.

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