Programmatic Adjustment Loan Project Development Objective (Note: will be disclosed in the MOS) ,,The proposed Loan of US$250 million equivalent is a Programmatic Adjustment Loan (PAL) that will support the Med ium-Term Economic Development and Reform Program of the Government of  Ukraine.  It is envisaged that over FY0 1-03, there could be up to three PAL operations to support the  implementation of the Government Program.  PAL I will have two tranches: the first based on past achievements and the second linked to the track-record of the new Cabinet appointed in May 2001.  Subsequent PALs are expected to be single-tranche operations based on results. ,,Ukraines reform program aims to set the basis for sustained economic growth, poverty reduction and improved environmental protection.  It seeks to build key missing ins titutions of a market economy and improve public and private sector governance, while maintaining macroeconom ic stability.  The first PAL operation rewards the progress already accomplished  and continued reform effort s in the following five thematic areas of the medium-term Government Program:,, Â·Improved fiscal and financial disci pline through elimination of non-transparent budget offsets, reduction  of budget arrears and an increase in c ash collections for energy; in the medium run, the objective is to  resolve the non-payment problem and reduce the stock of arrears from 90 to 20 percent of GDP;,, Â· Better regulatory framework  for entry and operation of enterprises  through shorter and more efficient registration and licensing procedures and rationalized business inspections; in the medium term, the objective is to improve further corporate governance and introduce modern regulatory functions in critical sectors (including telecom, energy and finance);,, Â·Creation and protection of clear property rights has al ready produced initial results in advancing transparent privatizations of large industrial and energy compani es, Ukrtelecom and agricultural land, and the start of bankruptcy procedures for the largest indebted enterpr ises and banks; in the medium run, improved property rights will be the basis for the revival of economic gro wth coming from private investment and FDI; ,, Strengthened public sector accountability  through greater fiscal transparency, rule-based intergovernmental transfers, improved procurement procedures, advances in streamlining the government and ref orming the public administration; in the medium run, the Government is committed to completing the reform of the fiscal system and meeting international fiscal transparency and special data dissemination standards; and ,, Â·Imp roved social and environmental risk management  is based on strengthening the effectiveness and inclusiveness of social benefits and social care services, improving old-age income security through pension and social pr otection reform, and on reducing the risks of poverty and further environmental degradation; in the medium ru n, the implementation of the government program will help complete the pension reform, streamline social assi stance, provide a basis for better delivery of health and education services, and put in place a viable system of environmental protection..  Board Schedule Comments ,,Approved by the Board on September 20, 2001;