This policy note examines the impact of the World Bank's poverty reduction support credit (PRSC) budget support instrument (BSI) in the context of rural water supply (RWS) and sanitation in Uganda. The policy note is based on a 2004 study commissioned by the World Bank: towards the millennium development goals (MDGs) in Uganda: a retrospective study of the impact of three years of the BSI on rural water. Uganda can meet the MDG if the BSI process continues to be refined, and poverty eradication action plan (PEAP) targets are also within reach. The outlook for the next 12 years indicates that the MDG are indeed within reach, however, targets set in the sector investment plan (SIP) and PEAP appear less attainable. With continued refinement, indications are strong that the BSI process will further enhance accountability and efficacy of RWS. Continued and improved implementation of the BSI thus offers the optimal approach to meet all targets.