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Countries and Regions Country Partnership Strategies Document
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Country Strategy and Program Update 2004-2006: Bangladesh
IV. Country Performance and Assistance LevelsA. Lending Level Proposed29. Under the performance-based allocation (PBA) exercise, the extent of resources allocation for Bangladesh may be low, base, or high level, assessed in terms of the indicators given in Table A1.12. In 2003, the base case scenario is once again applied in ADF allocation to Bangladesh following rigorous assessments of the country performance. Macroeconomic management has improved substantially over the past year mainly through prudent fiscal policy, recent structural and sector-specific reforms are also encouraging, and the overall portfolio performance has been satisfactory. In comparison, Bangladesh is currently in the middle quintile among ADB’s ADF-borrowing countries. In 2003, the resulting base allocation of ADF for Bangladesh is $226.2 million compared with $267 million in 2002. Depending on ADF resource availability in 2004, the ADF lending program will need to be reviewed. The issue will be revisited and confirmed during the Country Program Confirmation Mission. The 2005 and 2006 ADF lending program will depend on the outcome of the discussions regarding ADF replenishment. An annual average OCR lending of $172 million is considered in selective projects/sectors during 2004–2006, based on a joint assessment with the Government of the overall criteria for using OCR resources (e.g. the country’s debt service capability and the financial viability of the selected projects). 30. The lending program for 2004–2006 concentrates on fewer numbers of sectors reflecting ADB’s comparative strength in terms of its long involvement in the sectors, strong commitments of the Government to reforms, and complementarity with other development partners. The program accommodates several thematic priorities, e.g., promotion of the private sector, good governance, gender and development, and regional cooperation. In developing the assistance program, the outcomes of the Bangladesh Development Forum of May 2003 – which stressed, among others, the importance of private sector led, broad-based economic growth, good governance, and human development – were also be taken into account. Accordingly, the firmlending program for Bangladesh during 2004–2006 consists of 17 projects totaling $1,205 million (comprising $690 million ADF and $515 million OCR). The annual average lending comes to $402 million (including $230 million ADF) compared to the annual average lending of $391 million (including $283 million ADF) programmed in the CSPU for 2003-2005. Scope for any further increase in the level of financial support is limited due to the ADB-wide ADF shortages. B. Nonlending Program31. The TA program during 2004–2006 contains 23 TAs for an annual allocation of about $5 million for ADB financing, of which 15 are PPTAs. Each of the TAs has been carefully designed to facilitate timely preparation of ensuing projects and/or help strengthen institutional capacity of various agencies and address crosscutting issues. Seven economic, thematic, and sector works have been proposed, mainly to assist in updating ADB’s operational focus and monitoring of its implementation. Given the declining ADB TA funds and the pressing need of Bangladesh for grant assistance in both project preparation and institutional capacity building, efforts will be made to mobilize co-financing from the other DPs to meet such high requirements. C. Summary of Changes to Lending and Nonlending Programs32. The new pipeline of loans reflects some changes compared with the CSPU 2003–2005 for the overlapping years 2004–2005. The SME Development and Export Expansion Project that slipped from 2003 is included in 2004. The Regional Rail Traffic Enhancement and the Land Administration Reform projects are deferred from 2004 to 2005, and the Capital Market Development Program II is renamed as Financial Markets Governance Program and advanced from 2005 to 2004, reflecting the progress of the respective sector reforms. The Road Network Improvement and Maintenance Project III is made a standby in 2005 and firm in 2006 and renamed as the Road Sector Development Project to support major sector and institutional reforms following a sector roadmap agreed with the Government. Changes to the nonlending pipelines essentially encompass adjustments in the timing of the TAs, reflecting the performance of earlier ADB-financed projects in the respective sectors. In addition, the PPTA for Arsenic Mitigation in 2004 was reformulated and advanced to 2003, to undertake necessary review and strategy formulation. The PPTA for the Regional Power Project in 2005 is renamed the Power Sector Development Program II. The PPTA for Support for National Nutrition Program in 2004 was dropped to avoid duplication with those of other DPs under the second phase of the nationwide health, population, and nutrition development program.
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