Latvia programmatic structural adjustment loans

Latvia is one of the transition economies that came in existence after the end of Soviet reign. During late 1990s, the corruption and the lack of efficiency and proper mechanisms in the government system were the biggest obstacles in transition process. There was a need to improve service delivery mechanisms. People suffered because of high levels of corruption in the system that primarily existed in the form of state-capture. Bringing transparency and improving the working of government at macro level was important to ensure improved service delivery to citizens, and public access to information was necessary in order to bring accountability to the system.The Programmatic Structural Adjustment Loan (PSAL) project was initiated in 2000 by the World Bank to address these issues and to strengthen the reform process in Latvia. The program focuses on public sector reform, the privatization process, and creating a legislative basis for other reforms. The PSAL project attempted to bring certain changes through necessary reforms to reduce corruption and bring accountability in the system. Simultaneously, new mechanisms were introduced for improved service delivery and information access to the citizens. The project outcome is satisfactory, its sustainability likely, and the institutional development impact (within the government) is considerable. Although the World Bank Research suggests substantial poverty reduction through PSAL, the public governance issues under PSAL operations seem difficult to assess at present, as the change process will require time.