Third Lao PDR Poverty Reduction Support Operation Grant

closed

The Third Poverty Reduction Support Operation (PRS03) supports the implementation of Lao PDR's Poverty Reduction Strategy called National Growth and Poverty Eradication Strategy (NGPES). The financial support provided through PRS03 will help finance the costs of implementing key elements of these strategies, together with other domestic and external financing available to Government. The last in a program of three PRSOs, PRS03 focuses on three broad policy areas consistent with the goals and strategies identified by Government in its Poverty Reduction Strategy, and reflected in IDA'S Country Assistance Strategy:(i) public resource management; (ii) public expenditure policy; and (iii) sustainable growth. The Program has 3 components: Component 1, Better public resource management, focuses on continued progress with implementation of the public expenditure management strengthening program; improved public policy analysis and stronger mechanisms to improve alignment of budget allocations to NGPES priorities; the drafting of a new revised Budget Law, Prime Ministerial Decree on Ministry of Finance functions and draft roles and responsibilities of the centralized National Treasury; the revision of the government chart of accounts, realignment of the Budget Nomenclature, and development of a functional classification of the budget that is consistent with the IMF Government Finance Statistics; the development of quarterly budget execution report formats; increasing the efficiency of public procurement; strengthened monitoring of state owned companies including commercial banks; and implementation of further phases of the power sector action plan; Component 2, Public expenditure policy reforms, will consolidate progress in the timeliness o f payment of salaries to teachers and health workers; further increases in the fuel levy to fund road maintenance; and finalization of public expenditure tracking survey (PETS) and public expenditure review (PER) that lay out the analytical background for future improvements in prioritization of social spending and better execution of public expenditures program consistent with Government priorities enshrined in the PRS; and component 3, More sustainable growth and enhanced revenue generation, will make progress with implementation of the new Enterprise Law based on international best practice in business regulation, and the revised Customs Law; further progress towards WTO accession and staying on track with Asian Free Trade Area (AFTA) commitments; and preparation of a forest industry restructuring plan to rationalize industrial capacity and resource supply.