Brazilian Town Shatters Precedent : Village Does Unthinkable, Rejects World Bank Loan

This fishing village on Brazil’s northeast coast raised eyebrows and gained national attention recently by turning down a $150,000 foreign loan.

So far as anybody knows, no village, town or city had ever done that before in this era of development in Brazil, which now owes foreign banks and creditors $103 billion, the highest foreign debt in the Third World.

But Itapissuma shattered the precedent by a show of hands at a village meeting. The villagers decided that their local officials did not need the modern-management training the money was intended for, and that if they did take the loan, they might not be able to pay it back.

The Brazilian official in charge of disbursing the World Bank loan money called Itapissuma “a strange case” and said its people were stubborn.

‘Thought We Were Crazy’

“Everybody thought we were crazy to turn down the dollars,” said Maria da Conceicao Albuquerque, Itapissuma’s education secretary and the ranking authority on duty when a reporter visited the palm-fringed village of 17,000 people, 1,580 miles northeast of Rio de Janeiro.

“But here in Itapissuma, we prefer to get by with our own resources.”

The $150,000 was part of a World Bank-backed $347-million loan package for street construction, slum improvement, basic sanitation and overall development in this northeastern area where abject poverty exists alongside modern progress.

Of the total package, $4 million was allocated in the area for “training of municipal officials in modern management principles.” Itapissuma was offered the $150,000 by the regional foundation for that purpose.

Must Consider Consequences

“Taking those dollars might have sounded like a good idea at first, but you’ve got to consider the consequences,” Albuquerque said. “In Brazil, nobody ever thinks of the consequences.

“If you take a loan you really don’t need, you assume debt for no good reason. You have to pay the money back with interest. That means higher taxes. We didn’t want that.”

Albuquerque is the wife of the village’s mayor, Yves Ribeiro Albuquerque, who was one of the leaders of the no-loan campaign.

Oswaldo Vieira, the Brazilian who is the head of the regional foundation in charge of disbursing the money, said: “Itapissuma is a strange case. Those people are very stubborn. We offered a five-year grace period and repayment at less than the domestic rate of inflation, but they wouldn’t take it.”

Someone Will Take It

He added that the village, in view of the usually unquestioned acceptance of foreign loans in Brazil, was “going the wrong way down a one-way street.” If Itapissuma insisted on saying no to the $150,000, Vieira said, the foundation would offer the money elsewhere and some neighboring town certainly would snap it up.

The official said he asked Itapissuma’s officials for assurances that the villagers were not “misinformed” about the loan.

“We talked to all sorts of different local groups,” Albuquerque said, “fishermen, laborers, teachers, priests, expectant mothers at our pregnancy center and even members of the opposition political party.

“We explained about the loan. We held a town meeting in the central plaza and asked for a show of hands. Everybody voted no.”

Magazine Marvels

The national news magazine Afinal marveled at the villagers’ decision: “Dollars? No, sir. Itapissuma decides it doesn’t need the World Bank.”

Albuquerque pointed to a sign near the local fishing pier, which proclaimed in Portuguese: “Itapissuma City Government. Works carried out with municipal resources backed by the people of Itapissuma.”

She said that since the community’s incorporation in 1982 it had built, on its own, a city hall, a library, a police station, a pregnancy center and two schools.

“We used local building materials, and the people pitched in with volunteer labor,” she said. “There was no reason for us to get mixed up with other people’s money--and all those obligations.”