Poverty Reduction Support Credit (5)

closed

The Fifth Poverty Reduction Support Operation (PRSC-5) Project supports the implementation of the revised Poverty Reduction Strategy Paper (PRSP) for the period 2004-2006. The revised PRSP has four strategic pillars: a) accelerating broad-based growth; b) promoting access to social services; c) increasing employment and income-generating activities for the poor; and, d) promoting good governance. As did the previous operations in the series, PRSC-5 supports the PRSP implementation under three components consistent with these four pillars: 1) growth and employment creation; 2) human resource development; and, 3) good governance. Under the growth and employment creation component, the PRSC-5 supports reforms in the cotton, rural sector, telecommunication sector, energy sector, and the labor market. The objective is to lower factor costs, increase productivity and favor new investments. The second component includes policies in the education, health, social protection, and water sectors to build infrastructure, lower the cost of services, and improve service quality. The third component encompasses policy measures to strengthen budget formulation, execution, procurement, and control, public sector performance, decentralization, and environmental management. The proposed operation is an integral part o f the Bank's strategy presented in the 2000 CAS, and updated in the 2003 CAS progress report. However, risks for the operation arise from the country's weak institutional capacity, still fragile fiduciary progress, natural disasters (drought, locust invasions), commodity prices and currency shocks, and regional instability. The different risks are mitigated under the credit through the approval of two Bank projects to address the institutional capacity issue; the integration in the reform program of key fiduciary reforms; the approval of a project to help prevent and fight locust invasion, and Bank readiness to provide further financial support when needed; a strong track record of the government in adapting to external shocks, through adjustment of non-priority expenditure; an independent monetary policy with a strong record of low inflation; the willingness of the external community to deliver additional credit as needed; and, regional initiatives to solve the political crisis in Cote d'Ivoire.