This report, which is a product of theWorld Bank's Recurso program - reviews Peru'srecent advances in health sector policy and performance anddiscusses upcoming challenges. Using the'accountability triangle' approach developed inthe 2004 World Development Report (WDR 2004), it focuses onstrengthening the accountability of health providers tousers to leverage improved service quality and outcomes. Thereport builds on the health chapter of the initial Recursoreport, developing and updating the analysis to take accountof the changes in policy and performance in the Peru healthsector in the period 2005-2010. The study focuses on twobroad sets of reforms, implemented in recent years that arerelevant to this agenda: those that aim to strengthenusers' rights and entitlements to good quality healthservices and thus to stimulate demand; and those that aim tostrengthen public sector management for delivering resultsin the health sector (budgetary planning, accountability andincentives). It asks whether institutional arrangements andincentives are adequate to achieve the desired levels ofhealth coverage and quality for all Peruvians. It analyzesinteractions between health entitlements, financing andservice delivery in the poorest regions of Peru, identifiesbottlenecks and conflicting policies and recommends optionsto improve synergies between the elements of the system.