The government of Bangladesh on Thursday signed a $100 million financing agreement with the World Bank to improve public service delivery through an effective, efficient and transparent public financial management system.
The Strengthening Public Financial Management (PFM) Program to Enable Service Delivery program will support the government’s PFM Action Plan 2016-2021. The program will help improve fiscal forecasting, public budget preparation and execution as well as enhance financial reporting and transparency in the ministry of education, ministry of health, finance division, local government division, roads, public works, and local government.
“An efficient Public Financial Management system is essential for sound macroeconomic management,” said Dandan Chen, World Bank Acting Country Director for Bangladesh and Bhutan. “The program will build on the successes of the government’s ongoing efforts to help public agencies strengthen oversight and improve availability of public resources for effective and efficient public service delivery.”
In the last two decades, Bangladesh has improved its PFM systems with prudent fiscal management. Yet, a few bottlenecks exist in public resource allocation, availability, and use for social service delivery. The program will help Bangladesh address these bottlenecks using the country’s own systems. It will help strengthen the capacity of the Budget Management Committees in the line ministries, including the timely release of budgetary allocations. It aims to reduce the time taken to release funds from departments to frontline service delivery units by more than half.
The program will also help improve fiscal planning, pension and debt management and SOE, for example by supporting modernizing payment processes, including electronic fund transfer for pension processing and payment.
“The Government of Bangladesh is committed to further strengthen the Public Financial Management System and ensure transparency and accountability. Bangladesh is a pioneer in having a PFM with built-in disintegration ability in terms of climate, gender, poverty and other development priorities. For example, the government has rolled out climate budgeting across 20 ministries with climate-relevant expenditure. Such PFM sensitiveness ultimately aims that the citizens receive social services effectively and on time,” said Monowar Ahmed, Secretary, Economic Relations Division, Government of Bangladesh.
The agreement was signed by Monowar Ahmed and Dandan Chen on behalf of the government of Bangladesh and the World Bank, respectively, at the Economic Relations Division.
The credit is from the World Bank’s International Development Association (IDA), has a 30-year term, including a five-year grace period, and carries a service charge of 0.75 percent and an interest of 1.25 percent. The World Bank was among the first development partners to support Bangladesh following its independence. Since then the World Bank has committed over $30 billion, mostly in grants and interest-free credits to Bangladesh. Bangladesh currently has the largest IDA program totaling $12.6 billion.