## 1. Bangladesh’s second Poverty Reduction Strategy Paper – “Steps Towards Change: National Strategy for Accelerated Poverty Reduction II (NSAPR II)”

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---

### Summary and context
- NSAPR II provides a framework for implementing the government’s agenda during FY09-FY11; first prepared by a Caretaker government and later revised by the elected government to reflect its priorities.
- Outlines five strategic priorities and supporting strategies; this Joint Staff Advisory Note (JSAN) provides feedback on priority areas for strengthening NSAPR II and its implementation.
- Government preparing a long-term Perspective Plan (2010-2020) and will begin implementing the Sixth Five Year Plan (2010-2015) starting July 2010; staffs note a clearer description of how NSAPR II and the Sixth Five Year Plan fit together would have been useful.
- Consultations: Central Ministries, local governments, development partners, academia, civil society organizations, private sector; NSAPR II placed before Parliament and publicly disseminated at the Bangladesh Development Forum in February 2010.
- References an upcoming Joint Cooperation Strategy between government and development partners for harmonizing and aligning development assistance.

### Progress since first NSAPR and key outcomes
- Real GDP grew on average by 6.2 percent during FY05-09.
- Per capita incomes rose at an average rate of 4.9 percent during FY05-09.
- All available projections point to a decline in poverty during FY05-09.
- Human development:
  - Gender parity attained in primary and secondary education.
  - Bangladesh is on track to achieving targets of halving people living below the poverty line, net primary enrolment ratios, and reduction of child mortality.
  - Since 2003, infant mortality declined by 20 percent and child mortality declined by 25 percent; substantial narrowing of the gender gap in neonatal, infant and child mortality.
- Governance and business environment: improvements in some global governance rankings and a recent National Public Perceptions survey; Doing Business indicators have shown improvements since 2005.
- Key reforms during 2005-09: adoption of a medium-term budget framework (MTBF); generally sound public procurement regime; passage of a Right to Information Act; corporatization of state-owned banks; regulatory reform gains; strengthened local government capacity and revival of elected local councils.

### Poverty diagnostics (findings and data needs)
- Uses the 2005 Household Income and Expenditure Survey and identifies three main challenges: poverty of women, regional inequality, and extreme and chronic poverty.
- Staffs view the poverty diagnostic as well prepared and of good quality.
- Given Bangladesh’s vulnerability to recurring shocks, staffs recommend exploring ways of increasing the frequency of reliable poverty data to enhance timely response capacity; staffs note the limitations of 2009 projected poverty estimates as recognized in NSAPR II.
- NSAPR II lacks analysis of the growth and distributional impacts of past policies and programs, especially during the first PRSP period; staffs recommend such analysis to sharpen NSAPR II focus and to inform the Sixth Five Year Plan.
- NSAPR II should discuss mechanisms to ensure the Government’s annual budget and MTBF are broadly consistent with the strategy’s poverty alleviation objectives.

### Pro-poor economic growth — macroeconomic framework (findings, projections, risks)
- NSAPR II is ambitious in targeting growth acceleration underpinned by higher investment, including additional public investment financed from increased tax revenue.
- If implemented, NSAPR II’s medium-term macroeconomic framework could put the economy on a path to achieve a growth rate of 8 percent as the global economy recovers.
- Immediate challenge: stem the decline in the public investment rate seen in recent years and raise it to above 5 percent of GDP, as envisaged in NSAPR II.
- Large resource gap projected for the three-year NSAPR II implementation period:
  - NSAPR II looks to mobilize US$12.5 billion from external sources.
  - Gross aid disbursements amounted to US$1.7 billion in FY09 and are not likely to exceed US$2.5 billion per annum in the coming years.
  - For FY10, there may be a shortfall in net financing from external loans and grants compared to the original FY10 budget (2.0 percent of GDP) and the NSAPR II’s macroeconomic framework (2.4 percent of GDP).
  - Under-spending on ADP and PPP budgets in FY10 is likely to keep domestic borrowing well within the budget target despite a shortfall in net foreign financing in FY10.
- Inflation and monetary risks:
  - Private sector credit growth at 19.3 percent and broad money growth at 21.3 percent (both year-on-year in January 2010) are well in excess of NSAPR II targets.
  - Staffs view the inflation targets in NSAPR II as potentially unrealistically low given recent developments and an accommodative monetary policy stance; rising international commodity prices and monetary growth may raise inflationary expectations and risk the poverty reduction objectives.
- External sector risks:
  - Weakness in textile and garment exports and a likely slowdown in remittance growth due to a recent large decline in the number of migrants make balance of payments projections appear optimistic.
  - NSAPR II could have more extensive discussion of trade and trade-related policies needed to broaden the export base.

### Pro-poor economic growth — policy recommendations (macroeconomic and fiscal)
- Raise domestic revenue; expedite plans to reform tax policy and administration.
- Address capacity constraints and governance issues to increase implementation of the Annual Development Program (ADP).
- Consider the potential contribution of financial sector reform to growth:
  - strengthen banks’ capital;
  - allow more flexible interest rates;
  - deepen financial markets (building on FSAP Update recommendations).
- Strengthen institutional framework for PPPs and improve the business climate to attract FDI and private investment.

### Private sector development (constraints and recommendations)
- Staffs welcome NSAPR II objectives for private sector development and agree private enterprise should form the basis for sustainable growth and employment.
- Key constraints identified: poor infrastructure, burdensome regulations, limited access to finance, and limited availability of land.
- Access to finance — recommended systemic approach consistent with FSAP Update recommendations:
  - further reforms to state-owned banks;
  - increased access to long-term finance;
  - improvements to regulatory capacity of Bangladesh Bank;
  - strengthening of the Securities and Exchange Commission and the Micro-Finance Regulatory Authority.
- Land and economic zones:
  - facilitate efficient land markets and develop modern economic zones to manage land and achieve environmentally-and-socially-compliant industrialization;
  - modernizing land management and clearly articulating economic zones policy and regulations could attract private sector investment.
- Employment and skills:
  - promote demand-driven skills development linked to private sector needs.
  - On migration: NSAPR II proposes an Expatriate Welfare Bank; staffs recommend using existing banking channels instead and pursuing agreements with destination countries to facilitate safe and legal migration.
- Public-Private Partnerships (PPPs):
  - recommend: (i) forming a PPP cell with adequate staffing and resources; (ii) updating the 2004 Private Sector Infrastructure Guidelines to establish a sustainable PPP framework with clear guidance on interface with line ministries and the Ministry of Finance; (iii) reforming the Private Investment Committee by redefining its role in the context of the new PPP Cell; and (iv) adopting adequate safeguards for fiscal contingencies prior to embarking on large-scale PPPs.
  - To ensure long-term financing for PPPs, the central bank and the Securities and Exchange Commission should take steps to create a vibrant market for long-term financial intermediation.

### Agriculture, water, and land use (priorities, gaps, recommendations)
- NSAPR II prioritizes agriculture and rural development for poverty reduction, food security, employment, and growth; main thrust is use of technology for productivity gains in agriculture, livestock, and fisheries.
- Highlights PPPs, community-based methods in extension and fisheries management, and recognition of nutrition in food security.
- Staffs note insufficient attention to the rural non-farm sector, necessary for sustaining growth and reducing poverty.
- Recommendations:
  - prioritize and sequence agricultural and rural policies and programs given resource constraints, low institutional capacity, and weak coordination among subsector ministries and agencies;
  - include institutional analysis to improve public institutions’ performance and foster PPPs in agricultural research, technology, and marketing.
- Water sector:
  - main challenge: weak institutional capacity for maintaining water infrastructure (including irrigation) and sustainable river management.
  - NSAPR II could identify specific interventions to build long-term capacity of lead water institutions and highlight benefits of regional cooperation in trans-boundary rivers.
  - Given capacity and financial constraints, NSAPR II targets in the water sector could be made more realistic.
- Land use:
  - NSAPR II focuses on land use with modest targets; achieving them requires specifying measures to address capacity constraints and legal/regulatory amendments.

### Infrastructure and urban development — energy (findings and recommendations)
- Energy gap: the vast gap between demand and supply of energy is a serious impediment to sustainable development.
- Proposed policies and project list in NSAPR II are appropriate and comprehensive; many proposed projects are capital intensive with long gestation periods.
- Private sector role: private sector could play a much larger role in energy, contingent on improved sector image regarding financial solvency and governance.
- Financial and governance recommendations:
  - rapidly implement the Power Sector Financial Restructuring Plan and the balance sheet cleansing activity, both already approved.
  - maintain vigilance on procurement transparency, economy, and efficiency despite recent improvements.
- Coordination and rural electrification:
  - welcome coordination across generation, transmission, and distribution and suggest including gas infrastructure in coordination efforts.
  - rural electrification faces power shortages, revenue loss, severe staffing constraints, and governance issues; significant reforms are needed to meet universal electrification by 2020.
- Natural gas policy:
  - recommend rectifying severe under pricing of domestic gas.
  - more market-oriented price signals would help attract investors to expand domestic gas supplies and encourage efficient use of this non-renewable resource.
  - a power-purchase tariff geared towards renewable energy would encourage private sector entry into renewables.

### Transport, Telecommunications, and Urban Development
- Transport:
  - emphasizes construction of new infrastructure but does not prioritize areas where resources and efforts should be concentrated;
  - private sector identified as potential partner but role remains unclear;
  - more attention to road maintenance required for sustainability;
  - poor governance in the roads sector remains a serious risk;
  - key actions (reform of Bangladesh Railways, creation of a Road Authority and a Road Fund) need greater commitment to speed up implementation;
  - Intermodal Transport Policy remains in draft and has not been adopted.
- Telecommunications:
  - focuses largely on government-owned telecommunications companies and needs better clarity in the regulatory framework, especially on license renewal and the sector’s taxation regime;
  - lacks a strategy for how ICTs and telecommunications infrastructure will be further developed;
  - does not discuss policy actions to increase broadband access;
  - in the postal sector, needs to recognize changing demand, capacity limitations to deliver new ICT services, and identify PPP-based strategies.
- Urban development:
  - correctly identifies key challenges and strategies but omits overall urban governance, particularly for Dhaka and Chittagong;
  - suggests considering a "metropolitan government" empowered to plan, budget and monitor urban issues;
  - investments need prioritization and clearer financing modalities;
  - role of the private sector in financing and operating urban facilities needs exploration;
  - creation of a statistical database for urban planning is suggested, but capacity for consultative urban planning also needs attention;
  - without prioritization, it is unclear how proposed investments can be achieved during the stipulated period.

### Education, Health, and Social Protection
- Education:
  - emphasis on improving quality education and collaboration with NGOs for universal access and increased student learning is welcomed.
  - target for 100 percent literacy by 2014 seems overly ambitious given high dropout rates, limited classroom time, and insufficient trained teachers.
  - NSAPR II lacks discussion on better measuring student learning levels systematically and standardized.
  - cross-sectoral link with school health and nutrition is not highlighted.
  - higher and technical and vocational education and training focus is appropriate and should lead to a more demand-driven, efficient and cost-effective system.
  - need elaboration on the vision for digital Bangladesh in higher education.
- Health, nutrition and population:
  - selected outcomes and indicators are appropriate but targets could be more realistic.
  - NSAPR II highlights progress in reducing infant and child mortality but acknowledges high maternal and neonatal mortality rates.
  - Bangladesh is no longer on track to meet the MDG target for malnutrition and is unlikely to meet the NSAPR II target of a 10 percentage point reduction in prevalence by 2011.
  - staffs recommend clearer articulation of how the government will integrate and mainstream nutrition in relevant sectors.
- Service delivery, decentralization, and social insurance:
  - NSAPR II identifies critical areas needing policy reforms but requires more specificity, sequencing, and achievable priorities.
  - decentralization of administrative and financial authority and increased community participation can improve local service quality through accountability and ownership.
  - social insurance is identified as a financing strategy for affordable health care but is absent from social protection sections.
- Social protection, inclusion, and empowerment:
  - attempts to consolidate policies across ministries and focuses on better targeting and coverage.
  - a phased approach with detailed year-on-year actions is recommended given complexity.
  - increasing vulnerability of the urban poor needs highlighting alongside rural poor focus.
  - roles of local governments, NGOs, and the private sector should be better defined.
  - exploring innovative approaches such as health insurance to mitigate risk would be useful.
- Disaster risk management:
  - reflects cross-sectoral nature and mainstreaming of disaster risk reduction into development planning.
  - given Bangladesh’s seismically active location, strategy could mainstream seismic risk reduction, preparedness interventions, and capacity building.
- Vulnerable groups:
  - takes a rights-based approach for women, children, indigenous communities, persons with disabilities, and disadvantaged and extreme poor.
  - staffs recommend concrete actions, strong baseline information, realistic targets, better data collection, and effective use of gender-disaggregated data.
  - policy reforms should be realistically costed.

### Governance, Public Financial Management, and Digital Bangladesh
- Governance as supporting strategy:
  - identifies improving governance as key to growth and poverty reduction.
  - breadth and vagueness of expected results weaken strategic focus; staffs recommend prioritization with emphasis on areas with highest impact on growth and poverty reduction such as infrastructure and local governance.
- Transparency and anti-corruption:
  - emphasizes transparency, e-governance, and sustaining the Anti-Corruption Commission (ACC).
  - passage of the Right to Information Act is noted but NSAPR II does not outline how to realize the Act’s potential—staffs recommend operationalizing the Act via rules and regulations and capacity building.
  - staffs recommend the ACC retain robust investigative and prosecutorial powers and be given space to operate independently.
- Public financial management:
  - proposes actions to deepen ongoing reforms including rolling out medium term budget framework to all 49 ministries, increasing parliamentary oversight, and following up on annual audits.
  - staffs note gaps and recommend specific measures for (i) improving revenue mobilization as expected in NSAPR II’s costing table (apart from recent VAT modernizing work), (ii) integrating capital and recurrent budgets, and (iii) ensuring independence of the Comptroller and Auditor-General by promulgating the Audit Act.
- Local and metropolitan government:
  - focuses on strengthening local government to improve service delivery.
  - staffs recommend clearer articulation of legal framework for functional responsibilities and allocation of human and financial resources.
- Digital Bangladesh:
  - presents an ambitious agenda for using ICTs to enhance governance and service delivery.
  - staffs recommend prioritization of activities while undertaking enabling actions on institutional arrangements, legal and regulatory framework, infrastructure, and services for e-governance.
  - key challenges include change management, project management and IT skills within and outside government agencies.
  - national identification card program investments should be leveraged for more effective delivery of citizen and business services.
  - greater clarity on private sector role in financing and delivering Digital Bangladesh and better coordination between Digital Bangladesh initiatives and sectoral interventions are urged.

### Environment and Climate Change
- Emphasizes environmental sustainability as key to growth and poverty reduction and calls for enhanced financial allocation and substantial upgrading of Ministry of Environment and Forest’s capacity, convening and coordination role.
- Current low budgetary allocation of the Ministry is Tk. 0.87 billion or 0.3 percent of total ADP, indicating limited capacity and weak convening power.
- Policies cover integrated environment and climate change agenda, including scaling up climate proofing of vulnerable infrastructure and adaptation programs.
- Sequencing for policy, planning, regulations, and capacity building is appropriate but further delegation of responsibilities to proper stakeholders and Ministries based on mandate and comparative advantage would enhance effectiveness.
- Capacity building elements focus on awareness and research but should include institutional capacity building.
- NSAPR II contains 11 strategic goals, but important goals including climate change adaptation and reforming institutions to improve effectiveness are not included and may hinder effective implementation.
- Challenge is to match strategy, policy and outcomes with appropriate institutional arrangements, effective monitoring, and adequate funding.

### Implementation, Monitoring, and Evaluation (M&E)
- NSAPR II articulates implementation arrangements and an M&E system and emphasizes building capacity to implement them.
- Institutional framework described in detail and Annex 3 provides an exhaustive list of policy goals with corresponding concrete monitoring indicators.
- Existing capacity gaps to monitor, analyze, validate and disseminate information on inputs, outputs, and outcomes at every level are not directly addressed.
- Staffs recommend developing a capacity building strategy and action plan to support proposed M&E arrangements at both systemic and human resource levels.
- Monitoring instruments and data sources — priorities:
  - urgent priority to identify which monitoring instruments will be used to create suggested indicators and the corresponding implementation agencies;
  - NSAPR II indicates Household Income and Expenditure Survey and other surveys would be used, but recognized data sources are not specified in Annex 3;
  - frequency, regularity, implementation agencies, and financial sources of survey instruments need to be decided to ensure reliability and feasibility of the M&E system;
  - staffs recommend reporting annually on progress identifying monitoring indicators, survey instruments, and implementation agencies.

### Conclusion, Risks, and Issues for Discussion
- Overall assessment:
  - staffs consider NSAPR II a starting point for addressing growth and poverty reduction challenges; strategy is comprehensive and can help donors harmonize and align assistance.
  - NSAPR II would have benefited from a candid assessment of lessons from NSAPR I and clearer articulation of how those lessons shaped NSAPR II.
- Resource needs and priorities:
  - NSAPR II identifies resource needs of around US$12.5 billion from external sources, implying a considerable resource gap to address all priorities.
  - Staffs consider medium-to-long term priorities that include: increasing tax revenue and the quantity and quality of public investments; enhancing the business environment for the private sector; reducing environmental degradation and vulnerability to climate change; improving social service delivery including through decentralization; and enhancing accountability.
- Implementation risks:
  - low implementation capacity makes the list of policy measures overwhelming and necessitates streamlining for decision-making, implementation, and monitoring.
  - need to simplify the M&E framework while developing capacity to expand amount, quality, and timeliness of information.
  - wavering commitment to reforms combined with weak governance (affecting expenditure effectiveness) pose challenges to implementation.
  - uncertainty on continuation of political support for regional cooperation can truncate likely gains.
  - slow progress in decentralized decision-making and local empowerment can limit improvements in service delivery.
- Issues for discussion (as posed):
  - do Executive Directors agree with main areas identified by staffs for further strengthening?
  - do Executive Directors agree with the main risks to implementation identified above?

*Source: _cr12294 - 1. Bangladesh’s second Poverty Reduction Strategy Paper – “Steps Towards Change:*

### 1. Bangladesh’s second Poverty Reduction Strategy Paper – “Steps Towards Change:

### 1. Bangladesh’s second Poverty Reduction Strategy Paper – “Steps Towards Change: National Strategy for Accelerated Poverty Reduction II (NSAPR II)”

### Summary and context
- NSAPR II provides a framework for implementing the government’s agenda during FY09-FY11; first prepared by a Caretaker government and later revised by the elected government to reflect its priorities.
- NSAPR II outlines five strategic priorities and supporting strategies; this Joint Staff Advisory Note (JSAN) provides feedback on priority areas for strengthening NSAPR II and its implementation.
- The government is preparing a long-term Perspective Plan (2010-2020) and will begin implementing the Sixth Five Year Plan (2010-2015) starting July 2010; staffs note that a clearer description of how NSAPR II and the Sixth Five Year Plan fit together would have been useful.
- Consultations undertaken: Central Ministries, local governments, development partners, academia, civil society organizations, private sector; NSAPR II was placed before Parliament and publicly disseminated at the Bangladesh Development Forum in February 2010.
- NSAPR II references an upcoming Joint Cooperation Strategy between government and development partners as a step toward harmonizing and aligning development assistance.

### Progress since first NSAPR and key outcomes
- Real GDP grew on average by 6.2 percent during FY05-09.
- Per capita incomes rose at an average rate of 4.9 percent during FY05-09.
- All available projections point to a decline in poverty during FY05-09.
- Human development: gender parity attained in primary and secondary education; Bangladesh is on track to achieving targets of halving people living below the poverty line, net primary enrolment ratios, and reduction of child mortality.
- Since 2003, infant mortality declined by 20 percent and child mortality declined by 25 percent; progress included substantial narrowing of the gender gap in neonatal, infant and child mortality.
- Governance and business environment: improvements in some global governance rankings and a recent National Public Perceptions survey; Doing Business indicators have shown improvements since 2005.
- Key reforms during 2005-09 include: adoption of a medium-term budget framework (MTBF); generally sound public procurement regime; passage of a Right to Information Act; corporatization of state-owned banks; regulatory reform gains; strengthened local government capacity and revival of elected local councils.

### Poverty diagnostics (findings and data needs)
- NSAPR II uses the 2005 Household Income and Expenditure Survey and identifies three main challenges: poverty of women, regional inequality, and extreme and chronic poverty.
- Staffs view the poverty diagnostic as well prepared and of good quality.
- Given Bangladesh’s vulnerability to recurring shocks, staffs recommend exploring ways of increasing the frequency of reliable poverty data to enhance timely response capacity; staffs note the limitations of 2009 projected poverty estimates as recognized in NSAPR II.
- NSAPR II lacks analysis of the growth and distributional impacts of past policies and programs, especially during the first PRSP period; staffs recommend such analysis to sharpen NSAPR II focus and to inform the Sixth Five Year Plan.
- NSAPR II should discuss mechanisms to ensure the Government’s annual budget and MTBF are broadly consistent with the strategy’s poverty alleviation objectives.

### Pro-poor economic growth — macroeconomic framework (findings, projections, risks)
- NSAPR II is ambitious in targeting growth acceleration underpinned by higher investment, including additional public investment financed from increased tax revenue.
- If implemented, NSAPR II’s medium-term macroeconomic framework could put the economy on a path to achieve a growth rate of 8 percent as the global economy recovers.
- Immediate challenge: stem the decline in the public investment rate seen in recent years and raise it to above 5 percent of GDP, as envisaged in NSAPR II.
- Large resource gap projected for the three-year NSAPR II implementation period:
  - NSAPR II looks to mobilize US$12.5 billion from external sources.
  - Gross aid disbursements amounted to US$1.7 billion in FY09 and are not likely to exceed US$2.5 billion per annum in the coming years.
  - For FY10, there may be a shortfall in net financing from external loans and grants compared to the original FY10 budget (2.0 percent of GDP) and the NSAPR II’s macroeconomic framework (2.4 percent of GDP).
  - Under-spending on ADP and PPP budgets in FY10 is likely to keep domestic borrowing well within the budget target despite a shortfall in net foreign financing in FY10.
- Inflation and monetary risks:
  - Private sector credit growth at 19.3 percent and broad money growth at 21.3 percent (both year-on-year in January 2010) are well in excess of NSAPR II targets.
  - Staffs view the inflation targets in NSAPR II as potentially unrealistically low given recent developments and an accommodative monetary policy stance; rising international commodity prices and monetary growth may raise inflationary expectations and risk the poverty reduction objectives.
- External sector risks:
  - Weakness in textile and garment exports and a likely slowdown in remittance growth due to a recent large decline in the number of migrants make balance of payments projections appear optimistic.
  - NSAPR II could have more extensive discussion of trade and trade-related policies needed to broaden the export base.

### Pro-poor economic growth — policy recommendations (macroeconomic and fiscal)
- Raise domestic revenue; expedite plans to reform tax policy and administration.
- Address capacity constraints and governance issues to increase implementation of the Annual Development Program (ADP).
- Consider the potential contribution of financial sector reform to growth: strengthen banks’ capital, allow more flexible interest rates, deepen financial markets (building on FSAP Update recommendations).
- Strengthen institutional framework for PPPs and improve the business climate to attract FDI and private investment.

### Private sector development (constraints and recommendations)
- Staffs welcome NSAPR II objectives for private sector development and agree private enterprise should form the basis for sustainable growth and employment.
- Key constraints identified: poor infrastructure, burdensome regulations, limited access to finance, and limited availability of land.
- Access to finance: staffs recommend a broader systemic approach consistent with FSAP Update recommendations:
  - Further reforms to state-owned banks.
  - Increased access to long-term finance.
  - Improvements to regulatory capacity of Bangladesh Bank.
  - Strengthening of the Securities and Exchange Commission and the Micro-Finance Regulatory Authority.
- Land and economic zones:
  - Support for facilitating efficient land markets and developing modern economic zones to manage land and achieve environmentally-and-socially-compliant industrialization.
  - Modernizing land management and clearly articulating economic zones policy and regulations could attract private sector investment.
- Employment and skills:
  - Promote demand-driven skills development linked to private sector needs.
  - On migration: NSAPR II proposes an Expatriate Welfare Bank; staffs recommend using existing banking channels instead and pursuing agreements with destination countries to facilitate safe and legal migration.
- Public-Private Partnerships (PPPs):
  - Staffs recommend: (i) forming a PPP cell with adequate staffing and resources; (ii) updating the 2004 Private Sector Infrastructure Guidelines to establish a sustainable PPP framework with clear guidance on interface with line ministries and the Ministry of Finance; (iii) reforming the Private Investment Committee by redefining its role in the context of the new PPP Cell; and (iv) adopting adequate safeguards for fiscal contingencies prior to embarking on large-scale PPPs.
  - To ensure long-term financing for PPPs, the central bank and the Securities and Exchange Commission should take steps to create a vibrant market for long-term financial intermediation.

### Agriculture, water, and land use (priorities, gaps, recommendations)
- NSAPR II prioritizes agriculture and rural development for poverty reduction, food security, employment, and growth; main thrust is use of technology for productivity gains in agriculture, livestock, and fisheries.
- NSAPR II highlights PPPs, community-based methods in extension and fisheries management, and recognition of nutrition in food security.
- Staffs note insufficient attention to the rural non-farm sector, which is necessary for sustaining growth and reducing poverty.
- Recommendations:
  - Prioritize and sequence agricultural and rural policies and programs given resource constraints, low institutional capacity, and weak coordination among subsector ministries and agencies.
  - Include institutional analysis to improve public institutions’ performance and foster PPPs in agricultural research, technology, and marketing.
- Water sector:
  - Main challenge: weak institutional capacity for maintaining water infrastructure (including irrigation) and sustainable river management.
  - NSAPR II could identify specific interventions to build long-term capacity of lead water institutions and highlight benefits of regional cooperation in trans-boundary rivers.
  - Given capacity and financial constraints, NSAPR II targets in the water sector could be made more realistic.
- Land use:
  - NSAPR II focuses on land use with modest targets; achieving them requires specifying measures to address capacity constraints and legal/regulatory amendments.

### Infrastructure and urban development — energy (findings and recommendations)
- Energy gap: the vast gap between demand and supply of energy is a serious impediment to sustainable development.
- Proposed policies and project list in NSAPR II are appropriate and comprehensive; many proposed projects are capital intensive with long gestation periods.
- Private sector role: private sector could play a much larger role in energy, contingent on improved sector image regarding financial solvency and governance.
- Financial and governance recommendations:
  - Rapidly implement the Power Sector Financial Restructuring Plan and the balance sheet cleansing activity, both already approved.
  - Maintain vigilance on procurement transparency, economy, and efficiency despite recent improvements.
- Coordination and rural electrification:
  - Staffs welcome coordination across generation, transmission, and distribution and suggest including gas infrastructure in coordination efforts.
  - Rural electrification faces power shortages, revenue loss, severe staffing constraints, and governance issues; significant reforms are needed to meet universal electrification by 2020.
- Natural gas policy:
  - Staffs recommend rectifying severe under pricing of domestic gas.
  - More market-oriented price signals would help attract investors to expand domestic gas supplies and encourage efficient use of this non-renewable resource.
  - A power-purchase tariff geared towards renewable energy would encourage private sector entry into renewables.

*Source: _cr12294 - 1. Bangladesh’s second Poverty Reduction Strategy Paper – “Steps Towards Change:*

### 22. The NSAPR  II  provides  an  ambitious  vision  for  the  transport  sector  beyond  the

### _cr12294 - 22. The NSAPR  II  provides  an  ambitious  vision  for  the  transport  sector  beyond  the

### Transport, Telecommunications, and Urban Development
- Transport: NSAPR II emphasizes construction of new infrastructure but
  - does not prioritize areas where resources and efforts should be concentrated;
  - identifies the private sector as a potential partner but the private sector’s role remains unclear and there is no clear vision for tapping this potential;
  - staffs concur that more attention to road maintenance is required for increased sustainability;
  - poor governance in the roads sector remains a serious risk that may jeopardize government programs;
  - key actions identified (reform of Bangladesh Railways, creation of a Road Authority and a Road Fund) need greater commitment to speed up implementation;
  - the Intermodal Transport Policy remains in draft and has not been adopted.
- Telecommunications: NSAPR II focuses largely on government-owned telecommunications companies and
  - needs better clarity in the regulatory framework, especially on license renewal and the sector’s taxation regime;
  - lacks a strategy for how ICTs and telecommunications infrastructure will be further developed;
  - does not discuss policy actions to increase broadband access in Bangladesh;
  - in the postal sector, NSAPR II needs to recognize changing demand, capacity limitations to deliver new ICT services, and identify PPP-based strategies.
- Urban development: NSAPR II correctly identifies key challenges and strategies but
  - omits the issue of overall urban governance, particularly for Dhaka and Chittagong;
  - suggests considering a "metropolitan government" empowered to plan, budget and monitor urban issues;
  - investments need prioritization and clearer financing modalities;
  - the role of the private sector in financing and operating urban facilities needs exploration;
  - creation of a statistical database for urban planning is suggested, but capacity for consultative urban planning also needs attention;
  - without prioritization, it is unclear how proposed investments can be achieved during the stipulated period.

### Education, Health, and Social Protection
- Education
  - staff welcome emphasis on improving quality education and collaboration with NGOs for universal access and increased student learning;
  - the target for 100 percent literacy by 2014 seems overly ambitious given high dropout rates, limited classroom time, and insufficient trained teachers;
  - NSAPR II lacks discussion on better measuring student learning levels systematically and standardized;
  - cross-sectoral link with school health and nutrition is not highlighted.
  - higher and technical and vocational education and training focus is appropriate and should lead to a more demand-driven, efficient and cost-effective system;
  - need for elaboration on the vision for digital Bangladesh in higher education.
- Health, nutrition and population
  - selected outcomes and indicators are appropriate but targets could be more realistic;
  - NSAPR II highlights progress in reducing infant and child mortality but acknowledges high maternal and neonatal mortality rates;
  - Bangladesh is no longer on track to meet the MDG target for malnutrition and is unlikely to meet the NSAPR II target of a 10 percentage point reduction in prevalence by 2011;
  - staffs recommend clearer articulation of how the government will integrate and mainstream nutrition in relevant sectors.
- Service delivery, decentralization, and social insurance
  - NSAPR II identifies critical areas needing policy reforms but requires more specificity, sequencing, and achievable priorities;
  - decentralization of administrative and financial authority and increased community participation can improve local service quality through accountability and ownership;
  - social insurance is identified as a financing strategy for affordable health care but is absent from social protection sections.
- Social protection, inclusion, and empowerment
  - NSAPR II attempts to consolidate policies across ministries and focuses on better targeting and coverage;
  - a phased approach with detailed year-on-year actions is recommended given complexity;
  - increasing vulnerability of the urban poor needs highlighting alongside rural poor focus;
  - roles of local governments, NGOs, and the private sector should be better defined in future social protection strategies;
  - exploring innovative approaches such as health insurance to mitigate risk would be useful.
- Disaster risk management
  - NSAPR II reflects cross-sectoral nature and mainstreaming of disaster risk reduction into development planning;
  - given Bangladesh’s seismically active location, strategy could mainstream seismic risk reduction, preparedness interventions, and capacity building.
- Vulnerable groups
  - NSAPR II takes a rights-based approach for women, children, indigenous communities, persons with disabilities, and disadvantaged and extreme poor;
  - staffs recommend concrete actions, strong baseline information, realistic targets, better data collection, and effective use of gender-disaggregated data;
  - policy reforms should be realistically costed.

### Governance, Public Financial Management, and Digital Bangladesh
- Governance as supporting strategy
  - NSAPR II identifies improving governance as key to growth and poverty reduction;
  - breadth and vagueness of expected results weaken strategic focus; staffs recommend prioritization of governance initiatives with emphasis on areas with highest impact on growth and poverty reduction such as infrastructure and local governance.
- Transparency and anti-corruption
  - NSAPR II emphasizes transparency, e-governance, and sustaining the Anti-Corruption Commission (ACC);
  - passage of the Right to Information Act is noted but NSAPR II does not outline how to realize the Act’s potential—staffs recommend operationalizing the Act via rules and regulations and capacity building;
  - staffs recommend the ACC retain robust investigative and prosecutorial powers and be given space to operate independently.
- Public financial management
  - NSAPR II proposes actions to deepen ongoing reforms including rolling out medium term budget framework to all 49 ministries, increasing parliamentary oversight, and following up on annual audits;
  - staffs note gaps and recommend specific measures for (i) improving revenue mobilization as expected in NSAPR II’s costing table (apart from recent VAT modernizing work), (ii) integrating capital and recurrent budgets, and (iii) ensuring independence of the Comptroller and Auditor-General by promulgating the Audit Act.
- Local and metropolitan government
  - NSAPR II focuses on strengthening local government to improve service delivery;
  - staffs recommend clearer articulation of legal framework for functional responsibilities and allocation of human and financial resources.
- Digital Bangladesh
  - NSAPR II presents an ambitious agenda for using ICTs to enhance governance and service delivery;
  - staffs recommend prioritization of activities while undertaking enabling actions on institutional arrangements, legal and regulatory framework, infrastructure, and services for e-governance;
  - key challenges include change management, project management and IT skills within and outside government agencies;
  - national identification card program investments should be leveraged for more effective delivery of citizen and business services;
  - greater clarity on private sector role in financing and delivering Digital Bangladesh and better coordination between Digital Bangladesh initiatives and sectoral interventions are urged.

### Environment and Climate Change
- NSAPR II emphasizes environmental sustainability as key to growth and poverty reduction and calls for enhanced financial allocation and substantial upgrading of Ministry of Environment and Forest’s capacity, convening and coordination role;
- current low budgetary allocation of the Ministry is Tk. 0.87 billion or 0.3 percent of total ADP, indicating limited capacity and weak convening power;
- policies cover integrated environment and climate change agenda, including scaling up climate proofing of vulnerable infrastructure and adaptation programs;
- sequencing for policy, planning, regulations, and capacity building is appropriate but further delegation of responsibilities to proper stakeholders and Ministries based on mandate and comparative advantage would enhance effectiveness;
- capacity building elements focus on awareness and research but should include institutional capacity building;
- NSAPR II contains 11 strategic goals, but important goals including climate change adaptation and reforming institutions to improve effectiveness are not included and may hinder effective implementation;
- challenge is to match strategy, policy and outcomes with appropriate institutional arrangements, effective monitoring, and adequate funding.

### Implementation, Monitoring, and Evaluation (M&E)
- NSAPR II articulates implementation arrangements and an M&E system and emphasizes building capacity to implement them;
- institutional framework is described in detail and Annex 3 provides an exhaustive list of policy goals with corresponding concrete monitoring indicators;
- existing capacity gaps to monitor, analyze, validate and disseminate information on inputs, outputs, and outcomes at every level are not directly addressed;
- staffs recommend developing a capacity building strategy and action plan to support proposed M&E arrangements at both systemic and human resource levels;
- monitoring instruments and data sources
  - urgent priority to identify which monitoring instruments will be used to create suggested indicators and the corresponding implementation agencies;
  - NSAPR II indicates Household Income and Expenditure Survey and other surveys would be used, but recognized data sources are not specified in Annex 3;
  - frequency, regularity, implementation agencies, and financial sources of survey instruments need to be decided to ensure reliability and feasibility of the M&E system;
  - staffs recommend reporting annually on progress identifying monitoring indicators, survey instruments, and implementation agencies.

### Conclusion, Risks, and Issues for Discussion
- Overall assessment
  - staffs consider NSAPR II a starting point for addressing growth and poverty reduction challenges; strategy is comprehensive and can help donors harmonize and align assistance;
  - NSAPR II would have benefited from a candid assessment of lessons from NSAPR I and clearer articulation of how those lessons shaped NSAPR II.
- Resource needs and priorities
  - NSAPR II identifies resource needs of around US$12.5 billion from external sources, implying a considerable resource gap to address all priorities;
  - staffs consider medium-to-long term priorities that include: increasing tax revenue and the quantity and quality of public investments; enhancing the business environment for the private sector; reducing environmental degradation and vulnerability to climate change; improving social service delivery including through decentralization; and enhancing accountability.
- Implementation risks
  - low implementation capacity makes the list of policy measures overwhelming and necessitates streamlining for decision-making, implementation, and monitoring;
  - need to simplify the M&E framework while developing capacity to expand amount, quality, and timeliness of information;
  - wavering commitment to reforms combined with weak governance (affecting expenditure effectiveness) pose challenges to implementation;
  - uncertainty on continuation of political support for regional cooperation can truncate likely gains;
  - slow progress in decentralized decision-making and local empowerment can limit improvements in service delivery.
- Issues for discussion (as posed)
  - do Executive Directors agree with main areas identified by staffs for further strengthening?
  - do Executive Directors agree with the main risks to implementation identified above?

*Source: _cr12294 - 22. The NSAPR  II  provides  an  ambitious  vision  for  the  transport  sector  beyond  the*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2012/_cr12294.pdf_