Second Poverty Reduction Strategy Credit

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The Second Poverty Reduction Support Grant Project (PRSG II) is designed to assist the Government of Rwanda in implementing key policy actions outlined in its July 2002 Poverty Reduction Strategy Paper (PRSP). The PRSP focuses on (a) creating a favorable private sector investment climate to promote macroeconomic stability and sustained economic growth; (b) improving quality, coverage, and equity of basic service delivery through improved expenditure efficiency; and (c) supporting overall improvement of public expenditure management and governance, with an emphasis on transparency and accountability to citizens' voice and participation. In line with this agenda, the project continues and deepens support to the Government as it implements the next steps in its reform program supported by PRSC I. This includes (a) maintaining a stable macroeconomic framework, creating a strong basis for private sector-led economic growth, driven by agricultural transformation, promotion of exports, and deepening of the financial sector; (b) strengthening the results orientation of its Medium-Term Expenditure Framework (MTEF) and associated sectoral MTEFs, particularly in education, health, water, and energy; strengthening the linkages between MTEF priorities and the budget; and expanding performance-based contracting of services; and (c) continued strengthening of governance and transparency, by improving the fiduciary framework and empowering local communities. At the Government's request, policy dialogue in the transport sector has been added under PRSG II, though this sector will also continue to benefit from investment support. The single tranche will be disbursed upon effectiveness.