Bangladesh: Public Expenditure Support Facility Program and Countercyclical Support Facility Support Program - PESF

Sovereign Project | 43157-013

Summary

The objective of the PESF is to accelerate reforms that are essential for long-term economic growth while also improving service delivery for social protection. The CSF will supplement the PESF by providing support to scale up the Government's countercyclical development program.

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Project Name Public Expenditure Support Facility Program and Countercyclical Support Facility Support Program - PESF
Project Number 43157-013
Country Bangladesh
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2566-BAN: Public Expenditure Support Facility Program and Countercyclical Support Facility Support Program - PESF
Asian Development Fund US$ 44.85 million
Loan 2567-BAN: Public Expenditure Support Facility Program and Countercyclical Support Facility Support Program - PESF
Asian Development Fund US$ 100.00 million
Loan 2568-BAN: Public Expenditure Support Facility Program and Countercyclical Support Facility Support Program - PESF
Ordinary capital resources US$ 100.00 million
Loan 2569-BAN: Public Expenditure Support Facility Program and Countercyclical Support Facility Program - CSF
Ordinary capital resources US$ 500.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Agriculture, natural resources and rural development - Agricultural policy, institutional and capacity development
Finance - Money and capital markets - Small and medium enterprise finance and leasing
Industry and trade - Small and medium enterprise development
Public sector management - Economic affairs management - Public expenditure and fiscal management
Gender Equity and Mainstreaming
Description The objective of the PESF is to accelerate reforms that are essential for long-term economic growth while also improving service delivery for social protection. The CSF will supplement the PESF by providing support to scale up the Government's countercyclical development program.
Project Rationale and Linkage to Country/Regional Strategy

The Program will help mitigate the impact of the global economic crisis on Bangladesh through two components: (i) the Public Expenditure Support Facility Program (PESF) will support reforms for enhancing economic and social policies essential for long-term growth as well as scaling up of social safety net programs (SSNPs); and (ii) the ojective of the Countercyclical Support Facility Support Program (CSF) is tol help the Government implement its countercyclical development program for coping with the effects of the global crisis.

Sound economic management enabled Bangladesh to withstand major external shocks while sustaining its growth momentum. The economy was severely tested in FY2008 when it experienced repeated floods and the catastrophic cyclone Sidr, with major loss of life and destruction of property and crops; and the external shock resulting from surging petroleum and other commodity prices.

Although Bangladesh reduced poverty significantly between 1991 and 2005, the country still remains poor with an estimated 56 million people or 40% of population in poverty in 2005. While Bangladesh is on track to achieve the 2015 Millennium Development Goals target of reducing income poverty by half, income inequalities widened especially in the 1990s. Progress in poverty reduction has also been highly uneven across regions.

Even without the global economic crisis, the development challenges in Bangladesh are daunting. Growth in exports and remittances decelerated significantly since October 2008 (the second quarter of FY2009). The economic slowdown is also affecting revenue collection. With more than 2.2 million workers directly engaged in the ready-made garments sector, and an equal number of workers employed in ancillary activities, the slowdown in exports translates into widespread poverty in both urban and rural areas. Further, slowdown in the growth of remittances will cause hardship for recipient households and deepen poverty. The decline in the number of workers leaving for overseas jobs will also create pressure on the already slack domestic job market.

The Government's development agenda, which pays particular attention to economic stability, elimination of poverty, energy security, combating corruption, and good governance, reflects its concerns about the economic and social implications of the crisis, the prevailing high poverty incidence, and the effect of recent natural disasters. The Government established a task force to monitor national and global events, and provide prompt advice to enable decisions for mitigating the impact of the crisis. In April 2009, the Government announced a fiscal stimulus package for Tk34.2 billion ($495 million) for exports, agriculture, power, and SSNPs.

The FY2010 budget affirms the Government's commitment to maintaining macroeconomic stability and undertaking fundamental policy and institutional reforms to attain pro-poor inclusive growth. A countercyclical development program in the form of additional fiscal expenditures was announced in the FY2010 budget in June 2009. The Government's countercyclical development program has four broad components: (i) a fiscal stimulus package; (ii) an expansion of the SSNPs; (iii) a substantial increase in the Annual Development Program; and (iv) introduction of a new public-private partnership (PPP) scheme.

The Government is aware that putting the economy on a higher growth trajectory, and achieving rapid and sustainable poverty reduction will require large-scale investments well beyond what the Government can provide. More investment-enabling policy measures will clearly be needed to induce large-scale domestic and foreign investment. To ensure timely implementation of development programs, the capacity of line ministries will also need to be enhanced. In addition, ensuring continued flows of credit to the private sector, and strengthening the capital market, would help attract investors to close the investment gap. More support to small and medium-sized enterprises (SMEs) and the housing sector would also contribute to making growth more inclusive.

In mitigating the adverse impact of the global economic crisis, the Government's emphasis is on protecting investments in human development through enhanced and effective spending on SSNPs. The crisis has prompted the Government to undertake policy reforms to ensure development momentum well into the future and to preempt hardships. Accordingly, support to the Government to deal with the impact of the global crisis, while also helping to address some institutional limitations, is proposed to be provided through the PESF and the CSF. The objective of the PESF is to accelerate reforms that are essential for higher long-term economic growth, while also improving service delivery for social protection. The CSF will supplement the PESF by providing support to scale up the Government's countercyclical development program

Impact To enhance pro-poor and gender-inclusive growth, improve living standards of the vulnerable populations given the country's exposure to external shocks and contribute to Government's efforts to achieve higher growth.
Project Outcome
Description of Outcome Stable macroeconomic environment where private sector development is emphasized, there is higher public and private investment, and where women and vulnerable populations have greater access to social services, including through effective gender targeting
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. More effective service delivery and expanded social safety net program (SSNP)

2. More conducive investment climate and larger Annual Development Program (ADP) implemented

3. Strengthened public financial management (PFM)

4. Private sector investment leveraged under public-private partnership (PPP)

5. Assistance to affected export sector provided under FY2010 stimulus package

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location National
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services No consulting services will be required.
Procurement No civil works/goods will be procured.
Responsible ADB Officer Jiro Tsunoda
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Ministry of FinanceEconomic Relations Division (ERD), MOF
Sher-e-Bangla Nagar, Dhaka_1207
Bangladesh
Timetable
Concept Clearance 17 Jun 2009
Fact Finding 07 Jun 2009 to 19 Jun 2009
MRM 16 Jul 2009
Approval 13 Oct 2009
Last Review Mission -
PDS Creation Date 30 Jun 2009
Last PDS Update 19 Oct 2009

Loan 2566-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Oct 2009 26 Oct 2009 06 Nov 2009 30 Jun 2011 - 28 Dec 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 232.59 Cumulative Contract Awards
ADB 44.85 13 Oct 2009 45.31 0.00 100%
Counterpart 187.74 Cumulative Disbursements
Cofinancing 0.00 13 Oct 2009 45.31 0.00 100%

Loan 2567-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Oct 2009 26 Oct 2009 06 Nov 2009 30 Jun 2011 - 28 Dec 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 518.60 Cumulative Contract Awards
ADB 100.00 13 Oct 2009 100.98 0.00 100%
Counterpart 418.60 Cumulative Disbursements
Cofinancing 0.00 13 Oct 2009 100.98 0.00 100%

Loan 2568-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Oct 2009 26 Oct 2009 06 Nov 2009 30 Jun 2011 - 28 Dec 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1,146.21 Cumulative Contract Awards
ADB 100.00 13 Oct 2009 100.00 0.00 100%
Counterpart 1,046.21 Cumulative Disbursements
Cofinancing 0.00 13 Oct 2009 100.00 0.00 100%

Loan 2569-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
13 Oct 2009 26 Oct 2009 06 Nov 2009 31 Dec 2010 - 28 Dec 2011
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 1,686.60 Cumulative Contract Awards
ADB 500.00 13 Oct 2009 500.00 0.00 100%
Counterpart 1,186.60 Cumulative Disbursements
Cofinancing 0.00 13 Oct 2009 500.00 0.00 100%

Safeguard Documents

See also: Safeguards

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Evaluation Documents

See also: Independent Evaluation

No documents found.


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