Reforming the Revenue-Sharing Fund for the States (FPE)

This paper focuses on options for reforming the Brazilian Revenue-Sharing scheme for the States, the so-called Fundo de Participação dos Estados or FPE, which constitutes one of the main intergovernmental transfers in Brazil. This focus is justified by the fact that such a reform has become an urgent policy priority, following a decision of the country's Supreme Court to declare the current formula for horizontal distribution of the FPE unconstitutional and require the enactment of a new formula by the beginning of 2013.