GH: PRSC II

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The Poverty Reduction Support Credit and Grant Project (PRSC) builds on recent reforms carried out by the Government of Ghana and support the implementation of the Ghana Poverty Reduction Strategy (GPRS). The proposed PRSC-2 will support the policies and reforms aimed at improving the living conditions of the population by promoting growth, incomes and employment, accelerating human resource development, and strengthening governance and public sector management as spelled out in the country's GPRS. The second PRSC would lay the ground for helping the country to attack poverty in a comprehensive manner. It is envisaged that there will be a further single- tranche PRSC in FY05. The PRSC-2 is expected to provide a series of benefits. The main and ultimate benefit is the human progress towards the Millennium Development Goals expected from the growth and service delivery outcomes when this project is implemented. In addition, there are two intermediate benefits. The first is helping maintain macroeconomic stability by contributing to the closing of the external financing gap. The second is enabling the Government to generate the funds required to execute GPRS policies and programs. There are four risks to the success of the program: (1) the government is unable to sustain its current fiscal stance in the run up to the December 2004 elections; (2) the macro-financial context may deteriorate and make program implementation difficult as a result of exogenous shocks such as adverse terms of trade or increasing regional instability; (3) fiduciary weaknesses may limit the impact of the program; and (4) capacity limitations may lead to . only partial implementation.