Document of
                                   The World Bank

                           FOR OFFICIAL USE ONLY

                                                                   Report No: 32368-BR




                           PROJECT COMPLETION NOTE

                                           ON A

                                          LOAN

                       IN THE AMOUNT OF US$44 MILLION

                                         TO THE

                       FEDERATIVE REPUBLIC OF BRAZIL

                                         FOR AN

            ANIMAL AND PLANT HEALTH PROTECTION PROJECT
                                    (LOAN 4480-BR)

                                      May 17, 2005




Latin America and Caribbean Region
Brazil Country Management Unit
Environmentally and Socially Sustainable Development Sector Management Unit

This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
World Bank authorization.

    CURRENCY EQUIVALENTS

 (Exchange Rate Effective: May 17, 2005)


    Currency Unit = Brazilian Real (R$)
           Real 1 = US$0.4038
            US$ 1 = R$2.4764




            FISCAL YEAR
       January 1   ­    December 31




 ABBREVIATIONS AND ACRONYMS


CAS          - Country Assistance Strategy
MAS          - Ministry of Agriculture and Supply
SDA          - Secretariat of Agricultural Health Protection




   Vice President:     Pamela Cox
 Country Director:     Vinod Thomas
   Sector Director:    John Redwood
Task Team Leader:      Luis O. Coirolo

                           PROJECT COMPLETION NOTE

                                         BRAZIL

            ANIMAL AND PLANT HEALTH PROTECTION PROJECT

                          (Loan 4480-BR; Project ID: P055388)




1.      The objective of the project was to increase Brazil's competitiveness and
productivity in its agricultural and livestock sectors by: (a) eliminating or significantly
controlling the incidence of animal and plant diseases which constitute trade barriers; (b)
strengthening the Borrower's sanitary and phytosanitary monitoring and surveillance
systems; (c) reorienting the public sector role to a regulatory, certification and inspection
function and strengthening its coordinating and facilitating functions in animal and plant
health protection; and (d) increasing the private sector participation in the design and
delivery of animal and plant health protection services.          The project would have
supported the Country Assistance Strategy (CAS) objective of state modernization via
decentralized state services by aiding the Secretariat of Agricultural Health Protection
(SDA) to transfer day-to-day execution of agricultural health protection to the state and
local levels, while maintaining a primarily coordinating role at the Federal level.

2.      The proposed project was identified by the Government and the Bank in February
1998, and was prepared at the Government's request. It was appraised in June 1998, and
negotiations for the proposed loan took place in August 1998.         A Specific Investment
Loan for US$44 million was approved by the Board on May 27, 1999.

3.      The expected effectiveness date of the loan, as agreed in the Project Appraisal
Document, was August 31, 1999, and the project was to have been implemented over a
period of 48 months, with an expected Closing Date of December 31, 2003. The project
technical unit, the SDA, within the federal Ministry of Agriculture and Supply (MAS),
prepared the project operational manual, the approval of which by the Federal
Government was a condition of Loan effectiveness.

4.      The signing of a Loan Agreement between the Federative Government of Brazil
and the Bank requires, inter alia, approval from the Brazilian Senate. Following Board
Approval in May 1999, loan signing was delayed as a result of the fiscal crisis in Brazil.
At the same time, the MAS was restructured, ushering in a new cadre of personnel, most
importantly those attached to the SDA. The Brazilian Senate approved the Loan on
November 10, 1999 (Resolution 58/99). On December 1, 2000, the Borrower informed
the Bank that all conditions of Loan effectiveness had been met. Subsequently, on
January 17, 2001, the Ministry of Finance issued its authorization to proceed with the
Loan signing. By this time, the Borrower also had signed participation agreements with
three of the intended fourteen states (Paraná, Piauí, Rio Grande do Sul) in which the
project was expected to be implemented.

5.     On April 17, 2001, with the Loan Agreement still unsigned, the Bank formally
notified the MAS that, given 23 months had elapsed since Board approval of the Loan,
the Bank would establish April 30, 2001, as the final date for which Loan signing could
take place. In the absence of Loan signing by this date, the Bank would cancel the
operation and withdraw the Loan. Subsequent communication from the Ministry of
Finance requested an additional brief period before signing could take place; as such the
Bank extended this final date for Loan signing to July 31, 2001.

6.     On August 1, 2001, the Bank formally notified the Government of Brazil that the
Loan was canceled.