Poverty Reduction Support Credit II

closed

The Second Poverty Reduction Support Credit (PRSC-2) Project will continue to support the implementation of Cape Verde's Growth and Poverty Reduction Strategy (GPRSP). This one-tranche operation would be the second of a planned series of three annual PRSCs. The financial support provided through the PRSC-2 will further narrow the gap between the cost of implementing key elements of the GPRSP and resources, available from Government's own domestic revenues and other donor support. A policy dialogue and results-based framework under PRSC-2 will focus on the following pillars of the GPRSP: 1) promotion of good governance; 2) development of human capital in the areas of education and health; and, 3) improvement in the effectiveness and sustainability of the social protection system. In terms of benefits, the value added of the PRSC lies in both the nature of the instrument, and the results that are expected from improved functioning of national budget systems, from reduced transaction costs, and distortions due to international assistance, from better linkages between sectors and cross-cutting issues, from improved service delivery for the poor, and, from an improved wellbeing of the population. Notwithstanding, main risks associated include macroeconomic shocks that could undermine stability and growth, and, an accumulation of contingent liabilities and mandatory expenditure programs that could bring about fiscal slippages, and stall implementation of the more sensitive policy reforms, and possibly, delays in the Government implementation strategy.