Uganda
Ugandan reforms rewarded with new poverty reduction credit

afrol News, 3 June  - Uganda has become the first country to benefit from a Poverty Reduction Support Credit (PRSC), a new approach to World Bank lending designed to help low-income countries with strong policy and institutional reform programs carry out their poverty reduction strategies. The credit is aimed at supporting Kampala's reform programme. 

With the 31 May World Bank decision, Uganda will receive a US $150 million credit to support the implementation of the government's poverty reduction strategy, which aims to improve the delivery of basic services to the population. 

- Uganda's economic performance in the past decade has been impressive. Yet despite the dramatic fall in poverty in the 1990s, 35 percent of the population remains in acute poverty, said Jim Adams, World Bank's Country Director for Uganda. "To tackle this development challenge and other constraints, the government prepared a comprehensive Poverty Eradication Action Plan (PEAP). This credit will support their reforms as elaborated in their poverty action plan, especially in the area of improving basic service delivery."

In a major program launched in December 1999, Poverty Reduction Strategy Papers (PRSPs), produced by countries, are becoming the basis for debt relief and concessional lending from the Bank and the IMF. Uganda is one of four low-income countries that has drawn up a full PRSP; another 32 countries have produced interim papers. Updated every three years with annual progress reports, PRSPs describe the country's macroeconomic, structural and social policies and programs to promote broad-based growth and reduce poverty, as well as associated external financing needs and major sources of financing. 

The Uganda PRSC will support the government's reform program to improve public service delivery through: 

· Efficient and equitable use of public resources, which is essential for improving public resource allocation and raising the productivity and cost-efficiency of public investment and other expenditures;
· Improved governance through cross-cutting public sector reforms, such as the reform of public service and pay, public procurement, financial management, monitoring and evaluation, and measures to increase transparency and participation, and fight corruption;
· Improved access to and quality of education, health care and, water and sanitation services which will improve the quality of life of the poor.

- This PRSC supports policy measures detailed in the government's Poverty Eradication Action Plan in a selective manner, said Ritva Reinikka, World Bank Team Leader. "The participatory process used to develop their action plan broadened the country's ownership of the reforms and a large number of partners are ready to support their implementation. The credit will provide support to areas where the Bank has a comparative advantage and to policy and institutional reform measures which have the highest poverty impact."

The PEAP's objectives are fully consistent with those of the Poverty Reduction Strategy process, and a summary of the PEAP was used as a basis for Uganda's PRSP presented to the Board of the World Bank in May 2000. The government's strategy for economic transformation and poverty eradication are based on four pillars: a framework for economic growth and transformation; ensuring good governance and security; directly increasing the ability of the poor to raise their incomes; and directly increasing the quality of life of the poor.

The Poverty Reduction Support Credit is the first of a planned series of three World Bank operations to support Uganda's medium-term development and reform program. It will be financed by a US$ 150 million equivalent credit from the International Development Association (IDA), the Bank's lending arm for the poorest countries. The IDA credit is on standard terms of 40 years maturity, including 10 years grace.

Source: Based on World Bank

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