Second Development Policy Loan

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This program document describes the Second Development Policy Loan Program in a program of three possible Development Policy Loans (DPL) to Romania. The first DPL (DPL1) disbursed Euro 300 million in September 2009. This second DPL (DPL2) is also for Euro 300 million. A third DPL (DPL3) for Euro 400 million is tentatively targeted for CY2011. This DPL program supports the Government's structural reforms in three key areas: a) improving fiscal sustainability and management of public finances, including at sectoral level in health and education; b) enhancing social protection systems to address the immediate needs of the poor and vulnerable while ensuring more sustainable social protection over the longer-term; and c) strengthening contingency planning in, and the resilience of, the financial sector. The Bank operation reinforces and complements existing programs by the International Monetary Fund (IMF) and the European Commission (EC). The DPL series is central to the Bank's engagement in Romania as described in the Country Partnership Strategy (CPS) that was presented to the Board on July 16, 2009, together with DPL1. While financing a relatively small share of the Euro 20 billion package agreed by the Government with the IMF and the EC, the DPL targets structural reforms which will considerably improve Romania's medium to long term outlook for sustainable development.