Background

The Poverty Reduction Fund (PRF) shows the commitment of the Lao Government in its endeavours towards social and economic development of the country, in particular to reduce poverty, including poverty among ethnic minorities living in remote areas. The PRF is part of the Lao Government's National Growth and Poverty Eradication Strategy (NGPES). The PRF is vigorously supported by the World Bank in the form of a low-cost loan, repayable over a forty-year term. The consented credit (15.3 million SDRs) amounts to approximately US$ 19,345,000, with a counterpart contribution from the Lao government totaling up to US$ 1,330,000. The total PRF fund amounts to some US$ 21,700,000.

The PRF was established by a decree of the Prime Minister (PM/073) on May 31, 2002 (English version and Lao version). It is hoped that if the PRF proves to be successful, other donors will be attracted to contribute to the Fund. The way the Fund is set up foresees and allows this possibility.

Funding will be given to communities as grant assistance for approved sub-projects. All sub-projects must conform to the PRF objectives in order to be eligible activities under the terms of the World Bank credit. In accordance with the Credit Agreement, 75% of the total funding will be spent directly for the benefit of villagers.

The PRF was inaugurated on February 4, 2003 for an initial period of five years in the three provinces of Huaphanh (north east Laos), Savannakhet (central Laos) and Champasack (southern Laos). In subsequent years, its activities will be expanded to cover five provinces and a total of 24 districts, or 2,700 villages. Actual expansion will depend on the Lao Government’s directives and project capacity.

The objectives of the PRF

The three main objectives of the PRF are to:

• Assist the villagers to develop community infrastructure and gain improved access to services and income generation;
  
  
• Build capacity and empower poor villagers in poor districts to plan, manage and implement their own public investment in a decentralized and transparent manner; and
  
  
• Strengthen local institutions to support participatory decision-making and conflict resolution processes at the village, khet, and district levels, involving a broad range of villagers, including women, the poor and ethnic minorities.

Targeted Provinces and District

	Year One of Implementation Cycle I (2003-2004)	Year Two of Implementation Cycle II (2004-2005)	Year Three of Implementation Cycle III (2005-2006)	Year Four of Implementation Cycle IV (2006-2007)	Year Five of Implementation Cycle V (2007-2008)
Provinces	Districts	Districts	Districts	Districts	Districts
Huaphanh	Sobbao	Sobbao	Sobbao	Sobbao	Sobbao
	Add	Add	Add	Add	Add
	Xiengkhor	Xiengkhor	Xiengkhor	Xiengkhor	Xiengkhor
		Viengxay	Viengxay	Viengxay	Viengxay
		Huameaung	Huameaung	Huameaung	Huameaung
		Xamtay	Xamtay	Xamtay	Xamtay
				Viengthong	Viengthong
Savannakhet	Sepone	Sepone	Sepone	Sepone	Sepone
	Nong	Nong	Nong	Nong	Nong
	Vilabury	Vilabury	Vilabury	Vilabury	Vilabury
		Phin	Phin	Phin	Phin
Champasack	Mounlapamok	Mounlapamok	Mounlapamok	Mounlapamok	Mounlapamok
	Khong	Khong	Khong	Khong	Khong
	Pathoumphone	Pathoumphone	Pathoumphone	Pathoumphone	Pathoumphone
	Sukuma	Sukuma	Sukuma	Sukuma	Sukuma
Xiengkhuang			Kham	Kham	Kham
			Khoun	Khoun	Khoun
			Nonghad	Nonghad	Nonghad
Saravanh			Ta oiy	Ta oiy	Ta oiy
			Toumlanh	Toumlanh	Toumlanh
			Samouy	Samouy	Samouy
5 Provinces	10 Districts	14 Districts	20 Districts	21 Districts	21 Districts

PRF Project Activity Cycle (Lao version)
PRF Project Activity Cycle (English version)
PRF Organization and Structure (Lao version)