Local Governance and Services Improvement Program

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The development objective of the Local Governance and Services Improvement Program for Result Project for West Bank and Gaza is to strengthen the local government financing system and improve local service delivery in program villages. The program introduces the allocation of transparent and predictable fiscal transfers to VCs to finance implementation of participatory investment plans. The Program also intends to provide further incentives for local accountability by allocating fiscal transfers directly to large VCs, making JSCs responsible to plan for service cost recovery in the medium-to-long term, and supporting LG sector consolidation. Hence, the program will strengthen institutional systems and capacities of larger VCs so that they can be categorized as municipalities in the near future or evolve to become the center of a village cluster. For the small and low capacity VCs, the program will support strengthening the role of JSCs as an execution and service delivery entity to generate economies of scale and ensure long-term financial sustainability. At the same time, strong governance arrangements would ensure clear accountability between the JSC, member VCs and citizens. Hence, LGSIP would be selective and will apply minimum criteria that VCs and JSCs will need to meet to become eligible. The program will address results areas that are critical to improve local government financing and service delivery. These include improving the transparency and predictability of annual capital grant transfers, strengthening local governance institutions, and financing investments in local infrastructure and services. Progress towards the PDO will be measured through a set of simple and measurable indicators, the majority of which will be linked to disbursements.