...To Finance Poverty Reduction Support Project

Tunis, 22 October 2003 – The Board of Directors of the African Development Fund (ADF) has approved a loan of 34.58 million Units of account (UA)*, equivalent to US$ 49.4 million, to finance a Poverty Reduction Support Project (PRSL) in Ghana.

The loan will assist the Government of Ghana implement its Poverty Reduction Strategy (GPRS), for the period 2003 to 2005. The GPRS was finalised in February 2003 and is now the guiding framework for government policies, external support from donors and for the use of resources under the enhanced HIPC initiative.

The GPRS is a comprehensive set of policies, strategies, programmes and projects to support growth and poverty reduction over a three-year period 2003-2005. It sets out a broad array of structural measures to address the underlying causes of poverty, and establishes future spending priority. Within the framework for a multi-donor budget support programme (MDBS), the Poverty Reduction Support Loan will provide budget support to the Government of Ghana and will focus on the governance and public sector management aspects, which are essential for implementing the GPRS.

The loan will help support an improved framework for public sector management with respect to: public finance management, translation of the GPRS into the budget, public sector reform, decentralization, and economic governance. These are expected to lead to the following results: resources will be more efficiently used leading to improved financial management, a more effective management through the budgetary operationalization of the GPRS, an improved local government-service delivery that will promote broad based community participation in economic activity, and an enhanced public sector accountability and transparency through good political and economic governance especially the improvement of the public sector procurement system. The measures supported by the loan will provide an improved environment for economic growth, social and human development and poverty reduction.

The MDBS programme is expected to provide support to the government of Ghana over the next three years 2003-2005. The ADF’s loan, the Bank’s first budget support loan to Ghana, will be released in two instalments. The first one will be disbursed in 2003 and the second one in 2004. In order to meet the resource needs of the 2003 financial year and in recognition of the significant efforts the government has made in implementing the reform measures, the first instalment will be 70 percent of the loan amount or UA 24.20 million, equivalent to US$ 34.6 million, and the second one 30 percent or UA 10.37 million equivalent to US$14.83 million.

This loan is in line with the Bank Group’s Country Strategy Paper (CSP) for Ghana 2002-2004, which was approved by the Boards of Directors in May 2003. Ghana’s other development partners under the Multi Donor Budget Support programme (MDBS) are: Canada, Denmark, European Union, Germany, Netherlands, Switzerland, the United Kingdom and the World Bank.

Bank Group operations started in Ghana in 1973. To date, the total commitment of the Bank Group in the country is equivalent to US$ 1.024 billion for 66 operations. Total disbursements stand at US$ 715.77 million.