LS -2ND POVERTY REDUCTION SUPPORT CREDIT

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The Second Poverty Reduction Support Credit and Grant Program (PRSC-2) for Lesotho is the second in a series of three annual development policy operations (DPO), envisaged in the FY 2006-09 Country Assistance Strategy (CAS). The operation will support the Government of Lesotho's development program that underpins its Interim National Development Framework (INDF) and the growth strategy. The operation amount is US$25 million equivalent. The operation comes at a time when the Government of Lesotho has to cope with the adverse impact of the global recession while retaining focus on longer-term reforms to achieve faster growth, address the HIV/AIDS pandemic, to tackle significant human development challenges in health and education, and to improve public financial management. The amount includes US$10 million equivalent from the Crisis Response Window (CRW), of which US$5 million equivalent is a grant. The Government of Lesotho (GOL) is seeking the support of its development partners as it responds to cushion the decline in aggregate demand and shelter the vulnerable segments of the population. The PRSC-2 will support and help protect the Government's long term reform program, essential for the country's sustained development, as it seeks to mitigate the impact of the economic crisis while facing a shrinking resource base. The fiscal space, analytical support, and policy dialogue that will go with the operation will help guide the Government's focus on key reform areas. It will also play a catalytic role to furthering the policy dialogue on major reform areas such as public financial management, education, and health.