This rural strategy paper aims to document the approach of the Bank's Eastern Europe and Central Asia Region (ECA) to stimulating broad-based and sustainable growth in the rural economy of the region, and to improving social well-being in rural areas. About half of the poor in ECA live in rural areas, a lower share than most regions, and ECA also has a lower poverty rates tan Africa or Asia. However, poverty ans inequality have increased faster in ECA than anywhere else over the past decade. In the majority of ECAcountries, there are more poor in rural then in urban areas and the rural poverty incidence is higher in virtually every ECA country. Thus, making a dent on poverty in the Region will require continued support to rural areas and this paper lays out a strategy for that work. The focus will vary widely between countries, depending on poverty levels as well as growth potential and willingness of client countries to work with the Bank. The strategy address rural development broadly, covering not only increased agricultural productivity, but also off-farm enterprise development, social and physical infrastructure, sustainable land, water and forest management, and natural and financial risk mitigation. It aims to learn from experience and provide support to replicate and scale uo approaches which have worked (such as community-based irrigation, forestry and watershed management, and micro-credit, farm privatization, restructuring and land registration, dam safety and flood protection, and rural water supply). It aims also to develop models in areas where success has so far been limites, such as marketing and processing, off-farm enterprise development and employment creation, and affordable rural heating systems and social services. This rural strategy recommends a continued focus on investment leading to support community based approaches, institutional capacity development, sustained policy reform and improvements in living standards. It recommends adjustment lending only when there is broad ownership for reform, and it emphasizes the increasingly important role of partnerships and broad-based poverty reduction strategies. Development of this strategy benefited from consultations with stakeholders, who emphasized the need for simple project design, and for realistic reform agendas.

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