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Seminannual Report on Project Administration and Technical Assistance Implementation for the Period Ending 30 June 1999 : Country Implementation Highlights
BangladeshThe number of ongoing loans decreased by one to 35 as a result of approval of one loan and closure of two during the period. All but three of the ongoing loans are rated as satisfactory in terms of both implementation progress and achievement of development objectives. Of the three loans, two are unsatisfactory in terms of implementation progress and one in terms of achievement development objectives. Two loans that were approved during the second half of 1998 were declared effective during the period while two-one approved during the second half of 1998 and one during the period-were signed and are awaiting effectiveness. Two loans underwent minor changes in project scope, including one for minor changes in implementation arrangements, to ensure the achievement of project objectives. Despite Bank initiatives to resolve implementation constraints, portfolio performance continued to be affected by long-standing problems. The 1999 joint Bank-World Bank CPRM identified these as (i) frequent transfers of project directors and other key staff, (ii) cumbersome procedures and lack of delegation of authority and accountability in decision making, (iii) long delays in procurement and consultant selection, and (iv) problems in land acquisition and resettlement. These issues were discussed with the Government and agreement was reached on the following key measures: (i) increased delegation of authority to project directors; (ii) improved selection of project directors and their retention; (iii) ensuring availability of counterpart funds; (iv) Bank assistance to improve procurement procedures through training procurement staff and strengthening capacity in line ministries; (v) strengthening Government audit capacity, and selectively using private auditing firms; (vi) joint supervision missions of the Bank and the government agency responsible for project monitoring; (vii) simplifying land acquisition and resettlement procedures; and (viii) continuation of the special arrangements for Bank assistance in the evaluation and selection of loan-financed consultants. To help the Government resolve implementation issues, a TA was programmed for 1999 to be implemented by the RM but will be initiated only after the Government has finalized the institutional arrangements for its implementation. The poor progress in resolving these long-standing issues is symptomatic of a problem of governance and of the will to implement changes. The problems of governance are well known, and there is widespread support for change among all major societal groups. Reluctance to change, however, begins within the bureaucracy when specific measures are identified and initiated. Another issue, which overshadows the reform and governance agenda, is the continuing confrontational nature of politics between the major political parties. The policies of the two major parties, particularly on economic issues, do not differ greatly, but the conflict centers on the holding of power. The worsening political situation forced the aid agencies, including the Bank, to issue a statement in April 1999, calling on all parties in the political arena to restore stability in the interest of development. So far, there is no sign that this statement has had any effect on the situation. Major governance problems include (i) poor public sector management, particularly in state-owned enterprises; (ii) lack of accountability and responsiveness of public institutions; and (iii) an overly centralized administrative system. Administrative reforms are urgently needed to achieve greater efficiency and transparency in public sector management. Reforms in related sectors are also necessary to improve governance. The Public Administration Reforms Commission was established in 1996. Three years and two chairmen later, it is still working for small adjustments to ongoing systems rather than toward a broad vision of reform. Corruption is widespread and is present in many transactions. While there are laws against corruption, enforcement is weak. A concerted effort among aid agencies, the Government, and civil society is needed to break the apathy and accept that corruption is a major problem. The Bank organized a workshop in Dhaka to disseminate the implications of the implementation of its anticorruption policy, which was well attended and appreciated by agencies concerned. Strict compliance with the policy would make a positive impact on portfolio management. The Bank continues to work with the Government to resolve these issues; the Government and the RM hold regular meetings to monitor agreed-upon implementation targets. In addition to regular meetings with the EAs, project implementation performance review meetings were organized at the Economic Relations Division of the Ministry of Finance. In general, efforts are being made to expedite implementation through enhanced emphasis on midterm reviews and repeat review missions. Institution-building efforts were pursued through various TAs to improve the country's capacity to implement Bank-assisted projects. In addition, the RM held workshops and seminars to train counterpart staff in planning, monitoring, and implementing projects. Establishment of a loan disbursement unit within the RM and delegation of further responsibility during the period were other steps toward improving project implementation performance. Three loans were delegated to the RM and none were closed during the period. A total of 12 delegated loans (including one for Bhutan) were under implementation by the RM. Contract awards reached $140.1 million as of 30 June 1999, or 120 percent of the semiannual projection and 42 percent of the annual projection of $334.6 million, indicating acceptable performance, given the general implementation constraints and unfavorable development climate. Disbursements of $111.4 million fell 12 percent short of the semiannual projection and reached only 32 percent of the annual projection of $350.7 million. There was no disbursement from program loans. The disbursement ratio slightly declined from 10.5 percent at 30 June 1998 to 9.6 percent at 30 June 1999, against the annual projection of 28 percent and Bankwide average of 11.9 percent, because of less than expected disbursements and an increase in the undisbursed loan balance. Net resource transfer also decreased from $85.7 million at 30 June 1998 to $65.5 million at 30 June 1999 due to low disbursements. For 25 loans, audited project accounts and financial statements were due for submission during the period. Compliance was met by 22, achieving a compliance level of 88 percent. Of the three noncompliant loans, two had delayed compliance of less than six months and one of between 6 and 12 months. Of the 35 ongoing loans, 14 loans complied with the environmental covenants, compliance was ongoing for another 14 loans, while compliance was not applicable for 7 loans. Compliance with social covenants was met for 13 loans and was ongoing for 14 loans. Compliance was not applicable to the remaining 8 loans. Tables 19 and 20 summarize the data for Bangladesh.  
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