"The Peruvian health sector has recovered rapidly after collapsing in the late 1980s and early 1990s as a result of hyperinflation and terrorism. Total public and private spending on health rose by over 50% in real terms in the three years after 1994. The supply of health services increased sharply,... Health outcomes have also improved rapidly in recent years..."Several reforms were attempted during the health sector's recuperative years. Some were successful, others failed. To increase the chances for success in the future, policymakers in Peru must face three key challenges: • continue to reduce the large gap between the health status of the poor and that of the nonpoor; • increase the resources assigned to provide care for the poor; • increase the efficiency in the use of these resources. This report is meant to help the Government continue to develop its agenda to improve health care for the poor. Its focus is on poverty, and particularly on ways to improve the Ministry of Health's primary health subprogram, rather than on sector-wide reforms, to increase efficiency. The report emphasizes that there is much to be gained by sustaining and deepening the reforms directed toward improving health care for the poor while using the shift in focus and responding to the key challenges. The executive summary and introduction are provided in both English and Spanish.