At the heart of the growth problem, thepersistence of poverty, and issues of policy reform inZambia is the public sector reform program. The bestpractice in public sector reform identifies three areas inwhich governments can improve their performance and theirimpact on the economy and poor: 1) macroeconomic discipline(the satabilization problem); 2) strategic priority setting(the allocation problem); and 3) efficient public-servicedelivery (the execution problem). Zambia's problemappears to be in all three areas. In particular, theaggregate performance, allocation, and execution of thebudget are vital to the success of Zambia's publicsector reform program. All three areas, particularly theallocation and execution issues, as they apply to publicexpenditure are the subject matter of the present publicexpenditure review (PER).