Lao PDR Ninth Poverty Reduction Support Operation

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The objective of the Ninth Poverty Reduction Support Operation (PRSO 9) Project for Lao People's Democratic Republic is to support policies and institutional reforms that enable the sustainable management of increasing revenues from the natural resource sectors to deliver improved public services. Five areas of priority, or policy areas, have been identified. First, better fiscal and financial management will enable policymakers to maximize benefits accruing from increased revenues from natural resources. Second, the revenue management framework in the hydropower and mining sectors should also be clearly defined to maximize revenues accruing over time to the government for development purposes while attracting good quality investment in the sector. Third, diversification of economic growth sources through a competitive private sector outside the resource sector is critical to ensure the sustainability of growth. As the natural resource sector is capital intensive, it does not provide abundant job opportunities, as opposed to manufacturing, agribusiness or services. Diversified sources of growth are also important to reduce vulnerability to developments and exogenous shocks in narrow set of sectors. Finally, the fourth and fifth priorities for translating increased revenues from the natural sectors into improved public service delivery are a strong public sector capable of managing these revenues effectively coupled with the establishment of sustainable financing mechanisms for schools and health facilities. PRSO 9 supports the establishment of a mining revenue committee and its reporting on fiscal regime policy issues and options in the sector. In education, PRSO 9 supports making available for dissemination school based expenditure reports, to monitor spending in general and the school block grant scheme in particular.