Addis Ababa,Apr.22(ENA)--Italy and Ethiopia on Thursday signed a grant agreement totalling 15 million Euro for the second phase of Arsi-Bale Rural Development Project, which is part of the Ethio-Italian Country Program.

Ethiopian State Minister of Finance and Economic Development (MoFED) Dr. Mulu Ketsela and Italian Ambassador to Ethiopia Guico La Tella signed the agreement in a ceremony held at the Ministry's conference hall.

The purpose of the grant is to improve the living conditions and food security status of the population in Arsi and Bale zones of the Oromia State, a MoFED press release said.

The sum will be used to support projects that are under institutions engaged in providing rural services, it said. Beneficiary institutions include the Oromia Rural Roads Authority, Water Resource Development, Irrigation Development Authority and Woreda Level Development Planning offices.

The three-year project covering the whole 40 Woredas of the two zones gives particular emphasis to poverty reduction and capacity building in line with Ethiopia's Sustainable Development and Poverty Reduction Program (SDPRP), a press release issued by the Italian Embassy here said.

The first phase of Arsi-Bale Rural Development Project (1996-2003) was focused on supporting the development of small farmers and rural entrepreneurship, seeds multiplication and marketing, small-scale irrigation and rural water supply and infrastructure development, it said.

Rural service delivery and investments, which will be more responsive to community demand and coherent with established poverty reduction and development policies, investments in rural infrastructures and strengthening the local capacity at Woreda level are the main objectives of the second phase of the project, it indicated.

"The new grant follows the positive results of the Ethio-Italian cooperation achieved so far," it said.

In the framework of the Italian country program in Ethiopia, 45 million Dollars had been disbursed in 2003, according to the release.