## _cr0653 ## Source details **Canonical URL:** [_cr0653](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0653.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0653.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0653.pdf.json) --- ### INTRODUCTION #### Overview - Around independence, Bangladesh was described as the “test case of development.” - Steady improvement in indicators of social and economic well-being gives ground for cautious optimism, though formidable challenges in human development and governance remain. - The extent and depth of poverty in Bangladesh remains high with half of the population still living below the poverty line. - Government built on the I-PRSP and articulated the full PRSP: Unlocking the Potential – National Strategy for Accelerated Poverty Reduction (NSAPR). - PRSP’s definition of poverty includes deprivations in income, food security, quality of life, and vulnerability; main pillars: pro-poor growth, human development, and governance. - PRSP is positioned as an important step toward achieving MDG targets for Bangladesh by the year 2015. - This Joint Staff Advisory Note (JSAN) provides staffs’ advice on key priorities for strengthening the PRS and ensuring effective implementation; highlights strengths and weaknesses of existing policies that may undermine implementation. ### CHARACTERISTICS OF THE NSAPR #### A. Inclusive Participatory Process - Preparation included comprehensive participatory consultations with Members of Parliament, development partners, civil society/academics, NGOs, and broader society. - Government owned, managed, and largely financed the PRS process. - NSAPR documents government actions to enhance participation; staffs recommend improving processes to incorporate received feedback in the next review cycle. #### B. Poverty Diagnostics - Diagnostics draw on latest available surveys supplemented by qualitative information. - Poverty incidence has declined substantially between 1991–92 and 2000, with differing declines between rural and urban areas. - Statistical correlates associated with lower probability of being poor: electricity connection, education, land and asset ownership. - Most correlates improved over the 1990s, corroborating the decline in consumption poverty. - Qualitative insights (e.g., incidence of hunger, urbanization patterns, declining importance of land, deeper market penetration) need substantiation with representative data. - Sectoral analysis: growth led by a few dynamic sectors, producing higher inequality within and across sectors. - Household Income and Expenditure Surveys (HIES) provide robust data for measuring consumption poverty trends. - Staff recommendations: - Agree on a unique methodology for measuring poverty. - Identify gaps in availability of data to measure correlates of poverty. - Conduct more focused policy analysis beyond determinants of poverty and inequality for the annual Progress Report. - Substantiate qualitative evidence with systematic empirical analysis. - NSAPR anchors to the MDGs; Bangladesh appears on track to meet most MDGs due to budgetary priority on essential services and NGO space in service delivery. - A unique NGO–private sector participation model allows cost-effective provision of education and health services. - NSAPR identifies service delivery as a major challenge and emphasizes improvements. ### PRIORITIES AND CRITICAL AREAS FOR SUCCESS #### A. Accelerating Pro-poor Growth - Strategic agenda built on pro-poor growth, human development, and governance; consistent with accelerating growth and poverty reduction. - Most analysts believe Bangladesh has been under-performing relative to its potential. - Implementation will test government commitment. Ensuring macroeconomic stability - NSAPR medium-term macroeconomic framework broadly in line with staff projections under a high growth scenario. - Sustained high growth necessary to meet the MDG for poverty reduction. - Staffs recommend future PRS documents include at least two scenarios: - A baseline scenario that reflects progress toward agreed objectives but is more in line with past experience. - A more ambitious high-growth scenario. - Budgeting expenditure on a very optimistic outlook could risk losing fiscal discipline unless dramatic improvements in revenue mobilization occur. - Staffs welcome government commitment to maintain macroeconomic stability and support NSAPR macroeconomic policies. - Continued prudent macroeconomic policies noted despite difficult politics and external shocks. - Implementation and funding of social expenditures without jeopardizing fiscal and debt sustainability depend on: - Successful efforts to improve revenue collections. - Eliminating quasi-fiscal losses currently recorded in the state enterprise sector. - Staffs urge authorities to speed implementation of revenue administration measures identified in NSAPR. - Recommend rationalizing tax exemptions and incentives to reduce revenue losses. - Emphasis on monetary policy geared toward price stability and market-based instruments is welcomed. - Low inflation and maintaining policy interest rates positive in real terms will help promote exchange rate stability. - Document reaffirms commitment to a flexible exchange rate policy; staffs encourage further improvement in foreign exchange market functioning and allowing the exchange rate to move in response to fundamentals. - Government’s commitment to restrain domestic borrowing and rely on concessional external borrowing will contribute to maintaining debt sustainability. - Government debt has remained relatively low and debt service payments have been manageable. - Staffs call for more discussion in future PRS documents of macroeconomic impact, including on fiscal sustainability, of substantial quasi-fiscal costs associated with: - ongoing operating losses in the Nationalized Commercial Banks (NCBs); - pricing of petroleum and natural gas products. - New external borrowing should be carefully screened; non-concessional loans kept to a minimum. - External debt monitoring and management capacity need considerable strengthening. - NSAPR lacks a well thought out process for growth acceleration to justify high growth projections. - Growth prospects are adversely affected by inadequate investment in physical and human capital, infrastructure bottlenecks, and poor governance. - Document does not clarify how assumed productivity increases would be achieved; many sources of productivity growth will take time. - Successful implementation depends on improving effectiveness of public expenditure management. - NSAPR correctly identifies freeing the annual development program from under-completed and under-funded projects as a major challenge. - Government commitment to align NSAPR to a medium-term budgetary framework (MTBF) is a positive step. - Government implemented the first phase of a new budget process for four ministries in the FY06 budget and will roll out the new system to six more ministries in preparation of FY07 budget. - New system encourages allocation of resources for programs integrating recurrent and capital spending and medium-term expenditure plans in line with PRSP priorities. - Recommendation: develop a medium-term trade reform strategy focusing on nondiscriminatory trade liberalization and account for revenue implications of lower tariffs, because: - The document underplays trade policy’s role in achieving globally competitive industrialization. - Current high trade protection creates significant anti-export bias and a cumbersome import regime that drags on export growth. - NSAPR gives no indication of future course for reforming the highly protective trade regime. - NSAPR has not adequately addressed challenges faced by the RMG industry in the post-MFA era; little discussion of policy distortions or strategic options. Agriculture and rural development - NSAPR identifies agriculture and rural development as priority areas and outlines a comprehensive but very ambitious strategy. - Job creation and poverty reduction depend on broader development of the non-farm rural sector, which receives insufficient attention. - Key implementation questions: whether priorities will be reflected in annual budgetary allocations, enforcement, development of institutions, program implementation, and ownership/action plans of line ministries. - Real resource and capacity constraints and limited coordination among line ministries make achieving projected growth and poverty reduction within the stipulated time frame very difficult. - Document lacks clear prioritization essential to achieve outcomes within resource, capacity and governance constraints. - Policy Matrices are not always consistent with the text and are often vague (e.g., Policy Matrix 10 on water resources development and management). - NSAPR does not give adequate attention to sustainability of proposed policies, projects and programs to accelerate agriculture and rural development. Private sector development - Staffs applaud NSAPR focus on PSD-driven pro-poor growth with government creating an enabling environment; emphasis on SME development and labor-intensive industries is welcome. - Focus on improving legal and regulatory environment and implementing an explicit competition policy is welcome; requires capacity building. - Staffs believe foreign direct investment should have been given higher prominence as a driver of competitiveness. - Inability to expeditiously and transparently process large foreign investment proposals has had a bad signaling effect. - Need to build technical capacity in government to negotiate with large foreign investors. - NSAPR includes direct support to private enterprises; staffs argue subsidies should promote change, not maintain status quo. - Staffs recommend avoiding attempts to promote particular sectors (government identifies 5 sectors) since sector promotion strategies rarely work. - Recommend institutionalizing regulatory streamlining and subjecting proposed regulations to regulatory impact assessments; pilot bold reforms (e.g., special economic zones). - NSAPR recognizes need to implement NCB reforms but does not reflect government’s own roadmap for financial sector reforms (roadmap implementation has begun). - Roadmap includes time-bound action plan for corporatization and eventual privatization of the NCBs, and strengthening Bangladesh Bank with full authority and autonomy. - Future PRS documents should incorporate the government’s banking sector reform program. - NSAPR omits discussion of other financial sector facets (capital markets and contractual savings institutions) which are underdeveloped. - NSAPR emphasizes upscaling micro-credit—reaching about 20 million poor people—and enhancing its poverty impact. - Need to strengthen legal and regulatory framework for micro-credit sector; some recent government initiatives are encouraging. - Challenge of addressing the “missing middle” (micro and small enterprises excluded by micro-credit institutions and formal banks) is particularly relevant; requires innovative solutions with stakeholder consultation. Infrastructure and urban development - World Bank’s Investment Climate Assessment (ICA) identified infrastructure as top constraint to business investment; NSAPR endorses infrastructure’s pivotal role. - Transport section omits discussion of the National Land Transport Policy (NLTP). - Power sector strategy needs greater focus on governance improvements in BPDB, DESA, and the PBSs, and on setting a generation framework providing least cost planning, transparent procurement, and support to attract private investors. - Management of natural gas resources needs further consideration. - Recommend reassessing optimal allocation of medium-term resources across sectors with better account of pro-poor potential in urban traffic management, inland water transport and high-capacity urban public transport. - Power sector restructuring is strongly needed to improve finances, attract investors and increase service delivery to the poor; staffs recommend reviewing governance arrangements to allow more independence of entities currently part of BPDB and PBSs, addressing DESA’s contribution to the quasi-fiscal deficit, and setting a generation framework for least cost planning and transparent procurement. - Staffs agree with NSAPR’s assessment of the worsening state of the urban poor—lack of land, housing, access to sanitation, insufficient infrastructure services, and growing inequality. - Deteriorating urban conditions do not receive enough emphasis despite significant urban population growth and economic contribution. - Recognition of water and sanitation as a priority is welcome. - Strategy would benefit from concrete review of critical reforms needed to improve urban service delivery, including local government, corporate and non-governmental options, within costs compatible with a realistic medium-term fiscal framework. - Needed: better performance monitoring, cost recovery targets and reforms in urban management (e.g., land use). ### B. Promoting Human Development - (Text in this unit ends at the heading; substantive HNP and related content follows in subsequent sections included below.) ### 25. The NSAPR’s focus on human development as one of the three strategic pillars #### Human development focus — overall assessment - NSAPR’s focus on human development as one of three strategic pillars is appropriate and targeted goals are consistent with the MDGs. - Main institutional challenges: - division of the education sector between two ministries that are not well coordinated; - overly centralized health service delivery system; - fragmented social safety net. - NSAPR strengths: - focus on education quality and internal efficiency; - focus on access to education and health services for the poor; - recognition that human development and health improvements can reduce poverty by enabling poor to access benefits of growth. - NSAPR weaknesses in costing and coordination: - costing omits large and expensive items (e.g., secondary and post-secondary education); - does not address risks from lack of coordination between Ministries of Primary and Secondary Education; - high overheads from multiple overlapping programs run by multiple Ministries; - centralized model of health service delivery remains unaddressed. #### Primary and secondary education - Positive elements: - Emphasis on strategic collaboration between government and NGOs to achieve MDG target of universal primary access is welcome. - Recommendations for secondary education consistent with improving quality and access. - MoE key reform agenda highlighted, including: - strategy to prevent ‘elite capture’ of SMCs by empowering them to reduce political influence in their composition; - setting up of the Teacher Registration and Certification Authority; - linking financing of institutions to performance. - Discussion of targeting the stipend program to the poorest and aligning madrasah curriculum with the general curriculum. - Plan to shift operational decision making to district and upazilas is appropriate. - Implementation caveat: - More elaboration needed on how greater ‘local governance’ is envisaged given weak lower-level government capacity. #### Higher education and TVET - Strategic focus appropriate for higher and vocational/technical education (TVET). - Proposed plans expected to lead to a more demand-driven, efficient and cost-effective system. - No need to impose a percentage target for number entering vocational streams. - Recommendation: back strategic approach with a costing exercise for higher education and TVET. #### Health, nutrition and population (HNP) - HNP goals closely linked to the MDGs. - Bangladesh is well on its way to achieving these goals, except maternal health. - Emphasis on malnutrition and a multisectoral approach is justified. - Country may be on track to achieve the MDG of halving malnutrition between 1990 and 2015, though current malnutrition levels—amongst the highest in the world—remain a severe handicap. - Recommend multisectoral attention to related areas: food security, food safety, water and sanitation, commerce, trade, agriculture, early childhood development, disaster management. - Areas of weakness in NSAPR HNP coverage: - lack of explicit recommendations and strategies on NGO/private service delivery diversification, health governance and targeting schemes; - absence of performance indicators from the policy matrix. #### Social safety nets - NSAPR summarizes key social safety net programs and discusses impacts while acknowledging lack of rigorous evaluations. - Staff agreement with most proposed actions; support greater coordination among government and non-government agencies in design and implementation. - Proposal to evaluate programs is welcome. - Recommendation: more discussion of targeting, especially use of proxy means testing to better target beneficiaries. #### Gender and women’s empowerment - NSAPR gives high priority to women’s advancement and empowerment as critical for poverty reduction and sustainable development. - Staffs welcome the approach to ensuring social inclusion and empowerment of women to create equality of opportunities. #### Environment and natural resources - NSAPR establishes poverty–environment linkage and stresses improved management of natural resources and the environment for sustainable development. - Attention to conservation and regeneration of natural resources is welcome. - Staffs recommend annual Progress Reports contain adequate reflection of environmental management actions taken by the Government. #### Governance - Given Bangladesh’s poor reputation for governance, NSAPR’s strong governance focus is very welcome. - Better governance could raise growth and poverty-reduction performance closer to PRS requirements. - NSAPR adopts a strategic and selective approach to governance issues, focusing on those most relevant to the poor (delivery of essential services and personal security). - Issues and recommendations: - Need to broaden ownership of sectoral governance reforms within government; sectoral governance reforms lack specificity. - NSAPR calls for strengthening and enforcing codes of conduct within the electoral process and resolving reform-priority differences within broad national consensus. - Notes decline in quality of policy engagement between politicians and public administration but offers few suggestions for improvement. - Public financial management: NSAPR emphasizes procurement as a key source of budgetary leakages; staff recommend a time-bound public financial management program to improve internal controls, asset inventories, accounting and audit processes, and personnel integrity. - Sectoral governance priority areas: infrastructure, communications, health, education, disaster management, local governance and land. - Need to address lack of transparency and accountability in private and public provision of infrastructure (power and ports) and weak regulatory framework and corrupt and weak tax administration to unlock investment and growth. #### Monitoring and evaluation - Effective implementation requires rigorous monitoring and evaluation and prioritization of programs. - NSAPR summarizes efforts and data sources to track long-term MDG-related indicators and intermediate poverty-monitoring indicators; proposal to include an “MDG module” in the HIES. - Gaps and recommendations: - Except for the HIES, frequency, regularity and implementing agencies for surveys and data gaps are not clarified. - Staffs recommend a systematic stocktaking of data sources, with consensus on indicators to monitor, to ascertain need for expanded HIES and capacity of BBS to carry out such expansion. - Two sets of poverty trends are reported using two alternate methodologies, creating difficulties in assessing trends; staffs recommend consensus on a single methodology before analysis of the upcoming HIES (2006). - Reliance exclusively on concerned ministries for input/output data can be misleading; monitoring systems in ministries need evaluation and improvement. - Third-party validation may be necessary to monitor outputs. - Recommendation: develop a comprehensive monitoring and evaluation framework and implementation plan in the annual Progress Report. ### CONCLUSION AND ISSUES FOR DISCUSSION - Staffs of the World Bank and the IMF believe NSAPR is comprehensive and contains critical policy actions that over time could foster accelerated growth and poverty reduction. - Poverty diagnostics are of high quality and address the multi-dimensional nature of poverty (income and human dimensions). - Implementation risks identified: - political risk from confrontational politics; - severe capacity constraints and lack of incentives in the civil service despite a sustainable institutional foundation and inter-ministerial partnership mechanism; - lack of a concrete strategy backed by adequate resources is the biggest implementation risk. - Positive development: MTBF aligned to the NSAPR is under implementation in ten ministries; countries aligned with MTBF have predictable plans and resources to move the PRSP agenda forward. - Issues for Executive Directors: - (i) concurrence with the broad direction of the proposed strategy built on pro-poor growth, human development and governance and its implementation; - (ii) concurrence with priority areas identified by staffs for strengthening the poverty reduction strategy and its implementation; - (iii) concurrence with staffs’ characterization of implementation risks. *Source: _cr0653 - INTRODUCTION; 25. The NSAPR’s focus on human development as one of the three strategic pillars* ### INTRODUCTION ### INTRODUCTION ### Overview - Around independence, Bangladesh was described as the “test case of development.” - Overall, the steady improvement in indicators of social and economic well-being gives ground for cautious optimism about the future, though formidable challenges in the areas of human development and governance remain. - The extent and depth of poverty in Bangladesh remains high with half of the population still living below the poverty line. - Building on the I-PRSP, the Government has articulated its poverty reduction strategy through a full PRSP, titled Unlocking the Potential –National Strategy for Accelerated Poverty Reduction (NSAPR). - The PRSP espouses a broad definition of poverty, including deprivations in income, food security, quality of life, and vulnerability, and seeks to address it through a strategically prioritized policy framework with pro-poor growth, human development, and governance as its main pillars. - The PRSP is an important step towards the achievement of MDG targets for Bangladesh by the year 2015. - This Joint Staff Advisory Note (JSAN) provides staffs’ advice on key priorities for strengthening Bangladesh’s poverty reduction strategy (PRS) and for ensuring its effective implementation; it highlights key strengths and some weaknesses of existing policies which may undermine successful implementation. ### Characteristics of the NSAPR #### A. Inclusive Participatory Process - Preparation of the NSAPR included a comprehensive participatory process that involved civil society at the national, regional, and local levels. - Consultations included Members of Parliament, development partners, civil society/academics, NGOs, and people from a wide spectrum of society. - The Government owned the PRS process, welcoming donors’ interest but managing and financing the process almost entirely on its own. - The NSAPR gives a fair description of the government’s actions to enhance participation; staffs recommend that processes to incorporate feedback received be improved with the next review cycle. #### B. Poverty Diagnostics - The poverty diagnostics underpinning the NSAPR draw on the latest available surveys supplemented by other qualitative information. - Poverty incidence has declined substantially between 1991–92 and 2000, although the extent of the decline differs between rural and urban areas. - Statistical analysis has shown that characteristics like electricity connection, education, and land and asset ownership are associated with a lower probability of being poor. - Most of these correlates improved over the decade of the 1990s, corroborating the decline in consumption poverty. - Qualitative insights suggest improvements, particularly in the incidence of hunger, and patterns in urbanization, declining importance of land as a source of wealth and power, and deeper penetration of markets — these patterns need to be substantiated with more representative data. - Sectoral analysis shows growth is led by a few dynamic sectors, producing higher inequality within and across sectors. - The Household Income and Expenditure Surveys (HIES) provide robust and credible data for measuring trends and patterns of consumption poverty. - Staffs recommend: - Agreeing on a unique methodology for measuring poverty. - Identifying gaps in the availability of data to measure correlates of poverty. - Conducting more focused policy analysis beyond determinants of poverty and inequality for the annual Progress Report. - Substantiating qualitative evidence with more systematic analysis based on empirical data. - The NSAPR is correctly anchored in targeting the MDGs as an overall theme; Bangladesh appears on track to meet most of the MDGs, thanks to the priority given in the budget to delivery of essential services and the space made for non-governmental activity in the sector. - A unique form of NGO-private sector participation has emerged allowing cost-effective provision of education and health services compared to neighbors. - The NSAPR regards service delivery as a major challenge going forward and lays considerable emphasis on improving service delivery. ### Priorities and Critical Areas for Success #### A. Accelerating Pro-poor Growth - The NSAPR’s strategic agenda is built on the policy triangle of pro-poor growth, human development, and governance and is consistent with accelerating growth and poverty reduction. - Most analysts believe Bangladesh has been under-performing relative to its potential. - The strategic agenda should lead to the right prioritization of policies, but the test of the government’s commitment will be in implementation. Ensuring macroeconomic stability - The medium-term macroeconomic framework in the NSAPR is broadly in line with staff projections under a high growth scenario. - Sustained high growth will be necessary to meet the MDG for poverty reduction. - Staffs recommend future PRS documents include at least two scenarios: - A baseline scenario that reflects progress toward agreed objectives but is more in line with past experience. - A more ambitious high-growth scenario. - Budgeting expenditure based on a very optimistic outlook could risk losing fiscal discipline unless dramatic improvements in revenue mobilization are recorded. - Staffs welcome the government’s commitment to maintain macroeconomic stability and support the thrust of macroeconomic policies proposed in the NSAPR. - Continued prudent macroeconomic policies are noted despite a difficult political environment and external shocks. - Implementation of the strategy, including funding social expenditures aimed at poverty reduction without jeopardizing fiscal and debt sustainability, will depend crucially on: - Successful efforts to improve revenue collections. - Eliminating quasi-fiscal losses currently being recorded in the state enterprise sector. - Staffs urge the authorities to speed the implementation of the revenue administration measures identified in the NSAPR. - Steps to rationalize the system of tax exemptions and incentives will need to be taken to reduce associated revenue losses. - Emphasis on monetary policy geared toward price stability and commitment to market-based instruments is welcome. - Low inflation and maintaining policy interest rates that are positive in real terms will help promote exchange rate stability. - The document reaffirms commitment to a flexible exchange rate policy; staffs encourage further improvement in the functioning of the foreign exchange market and allowing the exchange rate to move in response to economic fundamentals. - The government’s commitment to restrain domestic borrowing and rely on concessional external borrowing will contribute to maintaining debt sustainability. - Government debt has remained relatively low and debt service payments have been manageable. - Staffs call for more discussion in future PRS documents of the macroeconomic impact, including on fiscal sustainability, of substantial quasi-fiscal costs associated with ongoing operating losses in the Nationalized Commercial Banks (NCBs) and the pricing of petroleum and natural gas products. - New external borrowing will need careful screening with any non-concessional loans kept to a minimum. - External debt monitoring and management capacity need to be considerably strengthened. - The NSAPR lacks a well thought out process of growth acceleration to justify high growth projections. - Growth prospects are adversely affected by inadequate investment in physical and human capital, infrastructure bottlenecks, and poor governance. - The document does not clarify how productivity increases of the magnitude assumed would be achieved; many potential sources of productivity growth will take time to materialize. - Successful implementation will depend on improving the effectiveness of public expenditure management. - The NSAPR rightly identifies freeing the annual development program from the burden of under-completed and under-funded projects as a major challenge. - The government’s commitment to align the NSAPR to a medium-term budgetary framework (MTBF) is a step in the right direction. - The government implemented the first phase of a new budget process for four ministries in the FY06 budget and will roll out the new system to six more ministries in the preparation of FY07 budget. - The new system encourages allocation of resources for programs integrating recurrent and capital spending and medium-term expenditure plans in line with PRSP priorities. - A more comprehensive review of the trade policy regime and how it constrains growth prospects would have been appropriate: - The document underplays the role of trade policy in achieving globally competitive industrialization. - Current high trade protection creates significant anti-export bias and a cumbersome import regime that acts as a major drag on export growth. - The NSAPR gives no indication of the future course for reforming the highly protective trade regime. - Recommendation: future PRS documents develop a medium-term trade reform strategy focusing on nondiscriminatory trade liberalization and account for revenue implications of lower tariffs. - The NSAPR has not adequately addressed the challenge faced by the RMG industry in the post-MFA era; little discussion of existing policy distortions or strategic options. Agriculture and rural development - The NSAPR identifies agriculture and rural development as priority areas for rapid poverty reduction and outlines a comprehensive but very ambitious strategy. - Job creation, sustained growth, and poverty reduction will depend on broader development of the non-farm rural sector, a topic which does not receive sufficient attention in the NSAPR. - Key questions remain whether priorities will be reflected in: - Annual budgetary allocations. - Enforcement of needed policies. - Development of agriculture and rural institutions. - Implementation of agriculture and rural development programs. - Ownership and action plans of the line ministries. - Given real resource and capacity constraints and limited coordination and commitment among line ministries, it will be very difficult to achieve projected growth rates and poverty reduction goals within the stipulated time frame. - The document lacks clear prioritization essential to achieve outcomes within resource, capacity and governance constraints. - Policy Matrices outlining action plans are not always consistent with the text and are often rather vague (e.g., Policy Matrix 10 on water resources development and management). - The NSAPR does not give adequate attention to sustainability of proposed policies, projects and programs to accelerate agriculture and rural development. Private sector development - The staffs applaud the NSAPR focus on PSD-driven pro-poor growth with government creating an enabling environment, emphasizing SME development and labor-intensive industries. - Focus on facilitating fair and competitive business by improving the legal and regulatory environment and implementing an explicit competition policy is welcome. - This will require adequate understanding of competition policy issues and capacity building in government, think-tanks and the private sector. - Staffs believe foreign direct investment should have been given higher prominence as a key driver of improving overall competitiveness. - The inability to expeditiously and transparently process large investment proposals from foreign investors has had a bad signaling effect. - There is a need to build technical capacity in government to negotiate with large foreign investors. - The NSAPR includes direct support to private enterprises; staffs believe use of subsidies makes sense only for promoting change, not maintaining the status quo. - Staffs recommend avoiding attempts to promote particular sectors (the government identifies 5 sectors to promote) since sector promotion strategies rarely work. - Staffs support emphasis on improving the legal and regulatory environment and recommend institutionalizing regulatory streamlining and subjecting proposed regulations to regulatory impact assessments. - Bold, in-depth regulatory reforms can be piloted in areas such as special economic zones and then replicated. - While the NSAPR recognizes the need to implement NCB reforms speedily, it does not reflect the Government’s own roadmap for financial sector reforms (a roadmap whose implementation has already begun). - The roadmap includes a time-bound action plan for corporatization and eventual privatization of the NCBs, and strengthening Bangladesh Bank with full authority and autonomy to supervise the entire banking system and conduct monetary policy independently. - Future PRS documents should incorporate the government’s banking sector reform program. - The NSAPR omits discussion of other facets of the financial sector, such as capital markets and contractual savings institutions, which are fairly underdeveloped. - The NSAPR rightly emphasizes upscaling micro-credit—reaching about 20 million poor people—and enhancing its poverty impact. - The need to strengthen the legal and regulatory framework for the micro-credit sector is aptly noted; some recent initiatives by the government are encouraging. - The challenge of addressing the “missing middle”—micro and small enterprises excluded both by micro-credit institutions and the formal banking sector—is particularly relevant but without easy solutions; policymakers need to seek appropriate and innovative solutions in close consultations with micro-credit institutions and other stakeholders. Infrastructure and urban development - The World Bank’s Investment Climate Assessment (ICA) for Bangladesh identified infrastructure as the top constraint to business investment; the NSAPR endorses the pivotal role of infrastructure for growth and poverty reduction and gives a fair analysis of sector deficiencies with focus on urban-rural linkages. - The transport section does not discuss the National Land Transport Policy (NLTP). - The power sector strategy needs greater focus on governance improvements in BPDB, DESA, and the PBSs, and on setting a generation framework providing least cost planning, transparent procurement processes, and support to attract private investors. - Management of Bangladesh’s natural gas resources needs further consideration. - Analysis would be enhanced by reassessing optimal allocation of medium-term resources across sectors, with better account of pro-poor potential in sectors such as urban traffic management, inland water transport and high-capacity urban public transport. - Power sector restructuring is strongly needed to improve finances and attract investors and increase service delivery to the poor; staffs recommend reviewing governance arrangements to allow more independence of entities currently part of BPDB and PBSs, addressing DESA’s contribution to the quasi-fiscal deficit, and setting a generation framework for least cost planning and transparent procurement. - The staffs agree with the NSAPR’s assessment about the worsening state of the urban poor—lack of land, housing, access to sanitation, insufficient infrastructure services, and growing inequality. - Deteriorating urban conditions do not receive enough emphasis despite significant urban population growth and economic contribution. - Recognition of water and sanitation as a priority is welcome. - The strategy would benefit from a more concrete review of critical reforms needed to improve urban service delivery, including local government, corporate and non-governmental options, within costs compatible with a realistic medium-term fiscal framework. - This would entail better performance monitoring, cost recovery targets and needed reforms in urban management, such as land use. ### B. Promoting Human Development - (Text ends at the heading; substantive content on Promoting Human Development appears in subsequent sections not included here.) *Source: _cr0653 - INTRODUCTION* ### 25. The NSAPR’s focus on human development as one of the three strategic pillars ### 25. The NSAPR’s focus on human development as one of the three strategic pillars ### Human development focus — overall assessment - NSAPR’s focus on human development as one of the three strategic pillars is appropriate and targeted goals are consistent with the achievement of the MDGs. - Main challenge: institutional issues including: - division of the education sector between two different ministries which are not well coordinated; - overly centralized system of health service delivery; - fragmented social safety net. - NSAPR strengths: - focus on education quality and internal efficiency; - focus on access to education and health services for the poor; - recognition that improvement of human development and health can reduce poverty by providing the poor tools to access benefits of growth. - NSAPR weaknesses in costing and coordination: - costing omits large and expensive items (for example secondary and post-secondary education); - does not address risks from lack of effective coordination between separate Ministries of Primary and Secondary Education; - high overheads from multiple overlapping programs run by multiple Ministries; - centralized model of health service delivery left unaddressed. ### Primary and secondary education - Positive elements: - Emphasis on strategic collaboration between government and NGOs to achieve MDG target of universal access in primary education is welcome. - Recommendations for secondary education are consistent with improving quality and access. - MoE key reform agenda highlighted, including: - strategy to prevent ‘elite capture’ of SMCs by empowering them to reduce political influence in their composition; - setting up of the Teacher Registration and Certification Authority; - linking financing of institutions to performance. - Discussion of targeting the stipend program to the poorest and bringing the madrasah curriculum more in line with the general curriculum. - Plan to shift operational decision making to the district and upazilas is appropriate. - Implementation caveat: - More elaboration needed on how greater ‘local governance’ is envisaged, especially given weak capacity at lower levels of government. ### Higher education and TVET - Strategic focus is appropriate in higher and vocational/technical education (TVET). - Proposed plans are appropriate and expected to lead to a more demand-driven, efficient and cost-effective system. - No need to impose a percentage target for number entering vocational streams. - Recommendation: back strategic approach with a costing exercise for higher education and TVET. ### Health, nutrition and population (HNP) - HNP goals are closely linked to the MDGs. - Bangladesh is well on its way to achieving these goals, except for maternal health. - Emphasis on malnutrition and a multisectoral approach is justified. - Country may be on its way to achieving the MDG of halving malnutrition between 1990 and 2015, though current levels of malnutrition—amongst the highest in the world—remain a severe handicap. - Multi-sectoral attention recommended to related areas: food security, food safety, water and sanitation, commerce, trade, agriculture, early childhood development, disaster management. - Areas of weakness in NSAPR HNP coverage: - lack of explicit recommendations and strategies on NGO/private service delivery diversification, health governance and targeting schemes; - absence of performance indicators from the policy matrix. ### Social safety nets - NSAPR summarizes key social safety net programs and discusses impacts while acknowledging lack of rigorous evaluations. - Staff agreement with most proposed actions; support for greater coordination among government and non-government agencies in design and implementation. - Proposal to evaluate programs is welcome. - Recommendation: more discussion of targeting, especially use of proxy means testing to better target beneficiaries. ### Gender and women’s empowerment - NSAPR gives high priority to women’s advancement and empowerment as critical for poverty reduction and sustainable development. - Staffs welcome the approach to ensuring social inclusion and empowerment of women to create equality of opportunities. ### Environment and natural resources - NSAPR establishes poverty-environment linkage and stresses improved management of natural resources and the environment for sustainable development. - Attention to conservation and regeneration of natural resources is welcome. - Staffs recommend that annual Progress Reports contain adequate reflection of environmental management actions taken by the Government. ### Governance - Given Bangladesh’s poor reputation for governance, NSAPR’s strong focus on governance is very welcome. - Better governance could raise growth and poverty-reduction performance closer to levels required by the PRS. - NSAPR adopts a strategic and selective approach to governance issues, focusing on those most relevant to the poor (delivery of essential services and personal security). - Issues and recommendations: - Need to broaden ownership of sectoral governance reforms within government due to lack of specificity on sectoral governance reforms. - NSAPR calls for strengthening and enforcing codes of conduct within the electoral process and resolving reform-priority differences within a broad national consensus. - Document notes decline in quality of policy engagement between politicians and public administration but offers few suggestions for improvement. - Public financial management: NSAPR emphasizes procurement as key source of budgetary leakages; staff recommend a time-bound public financial management program to improve internal controls, asset inventories, accounting and audit processes, and personnel integrity. - Sectoral governance priority areas: infrastructure, communications, health, education, disaster management, local governance and land. - Need to address lack of transparency and accountability in private and public provision of infrastructure, particularly power and ports, and weak regulatory framework and corrupt and weak tax administration to unlock investment and growth. ### Monitoring and evaluation - Effective implementation requires rigorous monitoring and evaluation and prioritization of programs. - NSAPR summarizes efforts and data sources to track long-term MDG-related indicators and intermediate poverty-monitoring indicators; proposal to include an “MDG module” in the HIES. - Gaps and recommendations: - Except for the HIES, frequency, regularity and implementing agencies for surveys and data gaps are not clarified. - Staffs recommend a systematic stocktaking of data sources, with consensus on indicators to monitor, to ascertain need for expanded HIES and capacity of BBS to carry out such expansion. - Two sets of poverty trends are reported using two alternate methodologies, creating difficulties in assessing trends; staffs recommend consensus on a single methodology before analysis of the upcoming HIES (2006). - Reliance exclusively on concerned ministries for input/output data can be misleading; monitoring systems in ministries need evaluation and improvement. - Third-party validation may be necessary to monitor outputs. - Recommendation: develop a comprehensive monitoring and evaluation framework and implementation plan in the annual Progress Report. ### Conclusion and issues for discussion - Staffs of the World Bank and the IMF believe NSAPR is comprehensive and contains critical policy actions that over time could help foster accelerated growth and poverty reduction. - Poverty diagnostics are of high quality, addressing the multi-dimensional nature of poverty (income and human dimensions). - Implementation risks identified: - political risk from confrontational politics; - severe capacity constraints and lack of incentives in the civil service despite a sustainable institutional foundation and inter-ministerial partnership mechanism; - lack of a concrete strategy backed by adequate resources is the biggest implementation risk. - Positive note: MTBF, aligned to the NSAPR, is under implementation in ten ministries; countries aligned with MTBF have predictable plans and resources to move the PRSP agenda forward. - Issues for Executive Directors: - (i) concurrence with the broad direction of the proposed strategy built on pro-poor growth, human development and governance and its implementation; - (ii) concurrence with priority areas identified by staffs for strengthening the poverty reduction strategy and its implementation; - (iii) concurrence with staffs’ characterization of implementation risks. *Source: _cr0653 - 25. The NSAPR’s focus on human development as one of the three strategic pillars* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2006/_cr0653.pdf_