Posted by: APO | 6 May 2008

Uganda / World Bank Approves US$200 million for Uganda’s Seventh Poverty Reduction Support Operation

World Bank Approves US$200 million for Uganda’s Seventh Poverty Reduction Support Operation


PRSC7 is the third and final annual budget support operation that supports the 3rd PEAP


WASHINGTON, May 6, 2008 – The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit* of US$200 million to finance the seventh Poverty Reduction Support Operation (PRSC7) over financial years 2007/08 and 2008/09.


PRSC7 is the third and final annual budget support operation that supports Uganda’s third Poverty Eradication Action Plan (PEAP), which covers the period

2005 to 2008. PRSC7 was developed jointly with the Government of Uganda in close cooperation with other development partners, including the African Development Bank, Germany, Ireland, the Netherlands, Norway, Sweden, and the United Kingdom.


“The number of Ugandan households living in poverty has fallen significantly from 38 per cent in 2002 to 31.5 per cent today, which can be attributed to the steady progress in implementing the PEAP as well as the recovery of the prices of Uganda’s key exports. We expect PRSC7 to support the Government in delivering better services on the ground and creating a better environment for growth and further poverty reduction. This operation is, therefore, focusing on improving the capacity of the public sector to deliver services, building public infrastructure assets, improving accountability, and facilitating the growth of the private sector through better prioritization and stronger focus on results,” explained Young Chul Kim, Senior Country Economist for Uganda and Task Team Leader for the Operation.


The PRSC7 will support four of the five pillars of the third PEAP, and can be grouped broadly into four areas: reforms to enhance productivity and competitiveness (investment climate and rural development); effective delivery of social services (health, education, water sector programs, and decentralization); public sector management (budget execution, public financial management, procurement, and anti-corruption); and gender, infant and maternal mortality, and population growth.


The credit will supplement the Government’s own resources and funding from other budget support development partners. Spread over two Ugandan fiscal years

2007/08 and 2008/09, the $200 million marks a reduction in the annual volume of the Bank’s PRSC support compared with previous years. This reduction was a response to a mixed performance in implementing the PRSC7 undertakings, including the recurring overruns in public administration and defense expenditures. In areas experiencing delays in achieving the undertakings, the Ugandan authorities have reiterated their commitment to implement the outstanding actions early in the financial year 2008/09.


“The PRSC series will continue to be a key component of the Bank’s support for Uganda as spelled out in the Uganda Joint Assistance Strategy (UJAS). In implementing the previous PRSCs, Government maintained sound macroeconomic management in spite of the ongoing power crisis, exchange rate fluctuations caused by sizable short-term capital inflows, and large spending pressures on the budget. We hope, through this new credit, to see a stronger interest in orienting the budget process for clearer results that are tied to the resources being allocated,” said Kundhavi Kadiresan, World Bank Uganda Country Manager.


The Government of Uganda is currently preparing a 5-year National Development Plan, which will succeed the third PEAP, and continue addressing systematically the capacity constraints that stand in the way of faster and better results in many areas. The next multi-year PRSC series will be designed and presented to the Board once the core elements of the new PEAP are defined by Government.


*The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent over a 40 year period of maturity which includes a 10-year grace period.



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