The World Bank Approves Grant For Poverty Reduction Program

The aim of the Third Poverty Reduction Support Grant (PRSG III) is to promote macroeconomic stability and sustained economic growth, improve delivery of basic services by local governments, deepen public expenditure management reform, and foster good governance, with an emphasis on transparency and accountability notably through citizen participation.

It will build on the successes of Rwanda's first and second poverty reduction support grants (PRSG I & II). Within this context, PRSG III is expected to expand decentralized service delivery, particularly in education, health, water, agriculture and energy. PRSG III would also continue to help the Government of Rwanda maintain a stable macroeconomic framework, creating the basis for private sector-led economic growth, driven by agricultural transformation, export promotion, financial sector deepening, and information communications technology (ICT).

Rwanda's real GDP growth accelerated from 4 percent in 2004 to 6 percent in 2005 thanks to agricultural production and buoyant activity in secondary and tertiary sectors, notably manufacturing, financial services, and communications. The operation will focus on improving the capacity of local governments to improve delivery and equitable access to basic services (health, education, water, energy) by the very poor.

"One of the successes of PRSG II that the third PRSG will continue to promote is decentralization, particularly through the transfer of capitation grants in education, the performance-based contracting of high-impact health services via local health centers, and the expansion of access to clean water in the rural areas of Rwanda," said Agnes Soucat, the World Bank's Task Team Leader for the project.
PRSG III would also help the Government of Rwanda to further strengthen the linkages between strategic planning, its Medium-Term Expenditure Framework (MTEF), and budgeting. It will promote governance and transparency through further improvements to the fiduciary framework and empowerment of local communities through Rwanda's decentralization program, which was accelerated in 2006 with the swift passage and implementation of a territorial reform law.

By completion, the project is expected to help deliver a marked increase in the number of children attending or completing primary school in Rwanda. It is expected to lower the prevalence of communicable diseases by doubling the use of bed nets to 60 percent from 30 percent in 2005; to improve access to clean water to 55 percent of the population from 50 percent in 2005 and to expand to 12 percent the GDP ratio of exports of goods and services, compared to 10.3 percent in 2005.

PRSG III is supportive of Rwanda's objective to continue to improve human development outcomes and achieve Millennium Development Goals. In 2005, education in the country was given the largest allocation (12.3 percent) of the recurrent budget representing 30 percent of priority spending. Net primary school enrollment reached 92 percent in 2004 and 2005, exceeding the PRSP target for 2008. Health, with 4.1 percent of overall recurrent expenditures and 9 percent of priority expenditures, took up the second largest share after education.

By World Bank