This report analyzes recent innovations brought to the health sector in Papua New Guinea by the Health Sector Development Program. Focusing on health service delivery, this program presented a fundamentally new approach to assistance in the health sector. Prepared and implemented in the context of the major Asian fiscal crisis in the mid-1990s, the Health Sector Development Program proved successful despite difficult circumstances. This work highlights lessons learned from that program, particularly the advantages of transparency and government reinforcement in low-income countries.