Home 
Countries and Regions Country Partnership Strategies Document
|
Country Strategy and Program Update 2004-2006: Bangladesh
II. Implementation of the Country Strategy and ProgramA. Progress under the Partnership Agreement on Poverty Reduction6. The Government has accelerated efforts in improving the quality of life of the poor through provision of basic economic and social infrastructure, and microfinance assistance for income-generating activities. However, reaching the medium-term (2005) and long-term (2010) targets in the Partnership Agreement on Poverty Reduction (PAPR), signed with ADB, for both income and human poverty reduction remains a daunting task. 7. In its recently completed NS-EGPRSD, the Government has developed a set of longterm targets taking into account the imperatives such as achieving the Millennium Development Goals (MDGs) and the targets set in the PAPR. The NS-EGPRSD sets targets for the year 2015 in line with the MDGs. But, unlike the MDGs that use the year 1990 as the benchmark (59% income poverty), it uses the year 2000 as the benchmark (50% income poverty), hence represent an accelerated program for poverty reduction as compared with the MDGs. In comparison with the PAPR, however, the NS-EGPRSD targets represent a slower rate of progress. PAPR sets out for 2010 roughly the same targets that NS-EGPRSD sets out for 2015, both with the year 2000 as the base. Hence, the levels of achievement set in PAPR for 2010 are much more ambitious. 8. With renewed emphasis on human development, the targets for child mortality and enrollment and gender equality in primary education are achievable. The target of reducing income poverty by half by 2010 as envisaged in the PAPR, or even by 2015 as visualized in the NS-EGPRSD, would require significant additional efforts. To achieve the target in the PAPR, Bangladesh needs to accelerate the pace of poverty reduction from one percentage point per year in the decade ending 2000 to 2.5 percentage points per year during 2000–2010, and for this, an annual GDP growth rate of about 8% would be required, following the trends of responsiveness of poverty reduction to growth in Bangladesh during the past decade. Likewise, to achieve the target of income poverty reduction in the NS-EGPRSD, an annual GDP growth rate of about 7% would be required during 2000–2015 compared to the annual average GDP growth rate of around 5% during the past decade. B. Progress in the Country Strategy and Program Focus Areas1. Governance9. Weak governance remains one of the key obstacles to achieving faster economic growth and major development objectives. It is the general view of all stakeholders that development assistance focusing on poverty reduction in Bangladesh must address governance-related issues upfront. Recent measures by the Government to address broad issues in this area include steps toward the creation of an independent anticorruption commission and the separation of the judiciary from the executive, further improvement of the law-and-order situation, introduction of merit-based promotion system for mid-level government officials, and appointment of several senior officials on merit from the outside of the Government, and further reforms in the energy, transport, financial, and social sectors to improve sector governance and build local government capacities. 10. ADB will, together with other DPs, continue to help strengthen capacity and performance across the public sector. The ongoing and proposed pipelines include support for the implementation of anticorruption initiatives, poverty reduction monitoring, and national account management; improvement of procurement practices and procedures; financial reporting and auditing; and the strengthening of key central agencies to develop adequate institutional capacity. At the sector level, ADB will continue to address governance-related issues by supporting policy and institutional changes to improve public sector management as well as corporate governance of the post-reform unbundled sector entities in the sectors where ADB operates. In addition, building municipal and local capacities to support the Government’s policy on decentralization and improving municipal and local governance through both sector and integrated approaches will continue to be key features of ADB-assisted projects for rural and urban infrastructure improvement. 2. Private Sector Development11. Although recent policy reforms have removed many obstacles to privatization and restrictions on private investments, the environment for private sector development remains restrictive. Of particular concern are the country’s weak governance (resulting in high transaction costs in doing business), inadequate physical infrastructure and social/human capital, inefficient financial system, and an unfavorable global environment. There is also a considerable gap between policy pronouncements and implementation. The Government has made progress in expediting the privatization process, with the most prominent achievement being the closure of Adamjee Jute Mill, the largest loss-incurring manufacturing state-owned enterprise (SOE) in Bangladesh. The Government is currently considering closing or downsizing several other SOEs involved in trading, agriculture, manufacturing, oil marketing, and banking. 12. A key area of ADB’s operational focus is to improve the climate for private sector development and mobilize private sector resources for faster economic growth, through both policy dialogue, and investment and technical assistance projects. For instance, the ongoing and planned assistance is intended to help the Government in facilitating and soliciting private sector participation in port, railway, natural gas, and electricity projects, and in the provision of education and urban primary health care services complementary to public sector investments. Further, the technical assistance (TA) pipeline contains assistance to support small and medium enterprise (SME) development and export expansion across all sectors. ADB has also approved an advisory TA to assist the Government in facilitating privatization of selected SOEs. 3. Gender and Development13. While the gender gap has narrowed as reflected in various social indicators, women still form the majority of the poorest, being denied their due human and legal rights and lagging behind their male counterparts in decision making. The Government has taken several key initiatives recently aimed at women’s empowerment and the expansion of their role in the socioeconomic and political spheres, including specifying the responsibilities of the members and ward commissioners of the reserved seats (for women) of local government bodies. Women have, for the first time, been elected to the reserved seats of city corporations. 14. Gender concerns will continue to be addressed through both policy dialogue and various ADB-supported projects. The loan pipeline contains several projects with design features to reduce gender inequality by providing capacity building of line agencies to address genderrelated issues and ensure increased participation of women in project activities. Provision is also made to support social protection of disadvantaged women and children through pilotbased service provision and institutional strengthening of the relevant agencies. 4. Regional Cooperation15. Substantial progress has been achieved under the ADB-assisted South Asia Subregional Economic Cooperation (SASEC) program, which aims to initiate and institutionalize cooperative dialogue among the participating countries comprising Bangladesh, Bhutan, India, and Nepal. Following the Country Advisors’ Group meeting led by the finance secretaries of the participating countries in late 2002, the second phase of the SASEC program has started to identify and prioritize subregional projects for implementation supported by ADB’s special resources allocation for regional/subregional economic cooperation activities. Besides the road network improvement project being processed in 2003, and the ongoing and planned assessments of the regional railway and power projects, the pipeline also includes assistance to improve the efficiency of Chittagong port as a regional hub. 5. Sector Prioritiesa. Agriculture and Natural Resources16. The Government continues to accord high priority to sustain foodgrain self-sufficiency and develop rural areas (where most of the poor live), through accelerating the growth of agriculture and the rural nonfarm sector. It has developed a plan of action to implement the 1999 Agriculture Policy, which indicates specific areas such as fisheries and livestock where support is needed, and measures to encourage women’s contribution, especially by way of homestead production. The National Rural Development Policy (2001) emphasizes an integrated approach to accelerating rural development, including encouraging rural industrialization through infrastructure investment, improving local governance, empowering the poor through education and skills development, and promoting agribusiness development through expanding information and communication technologies to the rural areas. 17. The development of water resources, including irrigation development, flood control, and drainage improvement, has played a significant role in increasing agriculture production and food security. The National Water Management Plan will guide the management of the country’s water resources and ADB’s operational focus over the medium and long term. In agriculture and natural resources, several projects have been proposed to support the Government’s development policies and strategies on poverty reduction in rural areas. b. Social Sectors18. There has been considerable quantitative expansion of education in recent years; however, its quality remains a major concern across the whole sector. In primary education, 35% of enrolled students do not complete the full cycle and less than 2% of those who complete it pass the relevant competence test. ADB, together with other DPs, assisted the Government in the preparation of the second phase of the primary education development program (2003– 2009), focusing on quality improvement through a radically improved system of governance, including reform of the examination system and overall management of the subsector, and on addressing the issue of a widening “quality divide” in education between the rich and the poor. A robust pipeline has been developed to support quality improvement (especially for the poor) across the sector over the medium term. 19. Though the infant mortality and total fertility rates have shown declining trends over the last few decades, the majority of the population continue to suffer from poor health, malnutrition, and lack of access to health care services. Waterborne diseases remain a major cause of mortality and morbidity. Arsenic contamination has become a threat to many, and vulnerability to HIV/AIDS is on the increase especially in the cross-border areas. ADB has been supporting the Government in the delivery of primary and maternal health care services in urban areas in accordance with its operational focus in the health sector, and will continue this support over the medium term. Support will also continue at the secondary town level to help reduce the arsenic threat through the provision of sustainable water supply and sanitation services. 20. The urban sector remains one of the priority sectors, and presents a unique opportunity for pro-poor economic growth and targeted poverty reduction. ADB assistance in the sector will continue to focus on integrated urban infrastructure development and urban governance improvement, including municipal management and local resource mobilization, the environment, and overall living conditions in secondary towns and cities. The progress of institutional reforms for better urban governance will be considered in the selection of project towns, to ensure sustainability of future investments. c. Finance21. A weak regulatory framework, a pervasive government presence, and the lack of an enabling environment for the private sector continue to characterize the country’s financial sector. The Government has undertaken several new measures to address these issues. Major amendments were made recently to the Bangladesh Bank Order 1972, Bank Company Act 1991, and the Bangladesh Banks (Nationalization) Order 1972, to give greater autonomy to the central bank and to strengthen the country’s banking system. The Government has also constituted a committee to address banking sector issues, including nonperforming loans. Further policy reforms are needed to deepen the financial system to increase private sector access to long-term financing. ADB will support the development of domestic financial markets through appropriate policy, legal, regulatory, and institutional reforms. d. Physical Infrastructure22. The impact of physical infrastructure on poverty reduction is well documented in Bangladesh and the region more generally. A key challenge facing the Government is to utilize its scarce resources to improve the basic infrastructure, currently one of the major impediments to higher and sustainable pro-poor economic growth. The Government, with ADB and other DP support, has developed a comprehensive reform agenda in the transport sector, ranging from establishing a national land transport sector policy for sustainable roads and railway development, to promoting private sector participation in these subsectors to improve safety and efficiency, and to supporting subregional cooperation through an improved railway and roads network as well as through port services under the national shipping policy. 23. The Government, with support of the DPs including ADB, has taken steps to undertake needs assessments, awareness building, and the selection of appropriate modalities for the creation of a self-supporting road fund for maintenance of the existing road network and an independent road board to administer it. Railway sector reform, which was stalled earlier, resumed its pace in 2002 with the preparation of a revised draft Act on Organizational Reform of Bangladesh Railway. Given the complexity and difficulties involved in these sector reforms, the elements of reforms and the timeframe for implementation will need to be formulated consistently, keeping in view the various ways to achieve the ultimate objective of improving sector efficiency. The 2004–2006 pipelines contain both loans and TAs to support the Government to accomplish the reform agendas in the transport sector. 24. ADB has long involvement in both public and private sector development of the energy sector. Currently, only 32% of Bangladesh’s population has access to electricity and 10% to natural gas. Power shortages and unstable supply remain a critical impediment to the country’s industrial and private sector development. Recent achievements with ADB support to improve sector efficiency include: (i) tariff rationalization for power and gas; (ii) corporatization of power sector entities; (iii) allowing full autonomy to key gas sector entities; (iv) establishment of an independent regulatory body to regulate the unbundled power and gas sectors; and (v) the Government’s recent decisions to privatize marketing of petroleum products and further induct the private sector in power generation, oil and gas oil exploration, and compressed natural gas business. ADB will continue to assist the Government, though policy dialogue, investment projects, and TA grants as well as its regional/subregional cooperation initiatives, to further the reform agenda and increase sector efficiency. C. Highlights in Coordination of External Funding and Partnership Arrangements25. ADB, Japan, and the World Bank continue to be the largest external financiers of development projects in Bangladesh. Significant assistance also continues to be provided by other DPs (Table A1.5). Partly due to its historical dependency on external aid, Bangladesh has one of the strongest local presence of external agencies. Coordination of external funding is mainly through the local consultations group (LCG). Currently, the LCG has 22 active sector/subsector working groups, which meet regularly to share with each other their operational strategies and programs, and to exchange views on development and policy issues. Recently, through the LCG subgroup on education, ADB has been working with the DPs to assist the Government to formulate and implement its second phase of primary education development program. Several DPs are expected to co-finance with ADB the proposed program on an untied basis (about $600 million of the planned $1.9 billion total investment during FY2003-2009 is expected from the DPs). 26. Overall, development assistance by the DPs has been complementary and reinforcing with that of the others. While the majority of the bilateral DPs have focused on improving the political and human side of governance, ADB has centered its assistance largely on improving sector governance based on its institutional strength. Regular consultations with the International Monetary Fund (IMF) and the World Bank have been maintained; the recent programs of support by the two agencies largely complement ADB’s assistance on key sector reforms especially in energy and the financial sectors.
|
RSS Feeds
Back
Top of page