## _cr1362

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---

### Overview and purpose
- SFYP provides a framework for implementing the Government’s development agenda during FY11–FY15.
- SFYP lays out strategic directions and policy framework to achieve main socio-economic targets of the Government’s Perspective Plan 2010–2021 and Vision 2021 (middle-income status by beginning of next decade).
- Published in July 2011; prepared by the Awami League government and serves as Bangladesh’s current Poverty Reduction Strategy Paper (PRSP).
- This document is a Joint Staff Advisory Note (JSAN) providing feedback on strengthening the SFYP as a poverty reduction strategy and identifying priority areas for improvement.

### Macroeconomic framework and policies — findings and staff assessments
- SFYP growth targets described as ambitious; macro framework broadly in line with the reform scenario of the IMF-supported ECF program approved April 2012.
- ECF-supported program aims at raising medium-term growth to 7-8 percent a year, contingent on higher investment rates and additional public investment financed from increased tax revenues.
- SFYP emphasizes raising growth and employment to reduce poverty by 10 percentage points by end of plan period; SFYP poverty target of 22 percent by 2015 is viewed as consistent with an 8 percent growth target but considered overly optimistic by staffs.
- Staffs consider a poverty rate of 26 percent feasible if growth averages 6 percent over 2010–2015, with average growth of 6.5 percent achieved in FY11–FY12.
- SFYP underperformed against growth targets to date; projected growth trajectory averaging 7.3 percent annually during the plan period and rising to 8 percent by end of period should be revisited.
- Key constraint: increase investment rate from below-plan 25 percent of GDP in the past two years to 32.5 percent by end of plan period.
- Agricultural growth target: increase from 2.5 percent in FY12 to 4.4 percent in FY13–FY15—viewed as difficult given loss of arable land and need for substantial total factor productivity gains.
- SFYP short on specifying time paths for key policy instruments (tax rationalization, targeting subsidies, reducing quasi-fiscal losses, easing trade protection, institutional reforms).
- Inflation and fiscal metrics:
  - Headline inflation in FY11 and FY12 was 8.8 percent and 10.6 percent respectively versus SFYP envisaged average of 7 percent.
  - Inflation decelerated to 7.3 percent in September.
  - Fiscal deficit (excluding grants) within 5 percent of GDP in FY12.
  - Tax revenue exceeded 10 percent of GDP for the first time in FY11.
  - Target for average reserves cover of 3.5 months of imports during plan period supported by more restrained policies and exchange rate flexibility.
- Financing and debt management:
  - Financing public investment requires intensified domestic revenue mobilization, encouragement of non-bank financing, and more aggressive concessional external financing focused on high return projects.
  - Projected increase in public saving by about 2 percentage points of GDP requires realization of revenue strategy and containment of current expenditures and net lending, particularly subsidies and transfers.
  - Gross external disbursements target of 2 percent of GDP on average per annum during plan period is judged not ambitious relative to historic trends.
  - High cost of domestic debt reduces fiscal space despite low initial domestic debt share; SFYP envisages debt management reforms. Staffs advise all borrowing be within a comprehensive debt management strategy that considers contingent liabilities.

### Growth and inclusion — priorities and critical areas for success

Finance and Private Sector Development
- SFYP focus: private sector-led industrial development and exports, creation of high productivity jobs, increased competition, and raising share of manufacturing in GDP, particularly export-oriented manufacturing.
- Regulatory bottlenecks identified as major obstacles; SFYP unclear on how bottlenecks will be addressed.
- Staff recommendations:
  - Develop overarching and sectoral investment policies and strategies.
  - Implement a well-designed, structured program to identify regulatory barriers and undertake prioritized, sequenced regulatory reforms.
  - Use the Private Sector Development Policy Coordination Committee (housed under the Prime Minister’s Office) to coordinate reforms.
  - Leverage the private sector-led PPD platform Business Initiative Leading Development (BUILD) for regular, structured, evidence-based policy dialogue.
  - Conduct public awareness campaigns to strengthen stakeholder watchdog roles, transparency, and accountability.
- On PPPs, Plan could be strengthened by:
  - Detailing a credible financing strategy.
  - Outlining a concrete strategy/action Plan for PPP capacity development in ministries.
  - Detailing resources for sector/project feasibility studies and transaction advisory services.
  - Explicitly specifying PPP Office functions to ensure effective coordination.

Trade and Investment Policies
- SFYP strategy: transition from rural agro-based economy to urban manufacturing-based economy; deepen labor-intensive export-oriented manufacturing and diversify agriculture.
- Implementation through reforms in macroeconomic management, tax and public expenditure, trade policy, financial sector, infrastructure and skills development.
- Staff concerns and recommendations:
  - Recent reversals in trade liberalization and expansion of para-tariffs over last three years are worrisome; these have offset reductions in average nominal protection while real effective rate of protection has increased since 2006.
  - Current trade regime undermines export competitiveness and impedes export diversification.
  - Encourage strategy to deepen South Asia cooperation and trade via trade liberalization and development of logistics and transport corridors with neighbors.

Agriculture and Rural Development
- SFYP recognizes pivotal role of agricultural and rural development for food security and income opportunities; identifies measures on land productivity, diversification, market access, climate adaptation, technology for information dissemination, and nutrition.
- Plan provides legal institutional framework for decentralized agricultural extension and references National Food Policy.
- Staff recommendations:
  - Further prioritize and sequence proposed policies, conduct institutional capacity analysis, and develop a policy/strategy to stimulate overall agricultural performance.
  - Give more emphasis to the recently revised National Agricultural Extension Policy.
  - Develop specific policies/strategies for:
    - promoting crops requiring less water, encouraging water recycling and location-specific surface water harvesting and conservation;
    - improving access to land and land security, especially for vulnerable groups;
    - institutional capacity strengthening of producer organizations;
    - promoting stronger economic partnerships and contract farming to strengthen sector competitiveness.

Infrastructure and Urban Development
- Energy sector findings and challenges:
  - SFYP proposes strategies for energy with targets and timeline; assumes extensive private sector participation in power generation via IPPs; recent actions reduced load shedding during summer in last two years.
  - Concerns about raising finance from international markets due to perceptions of poor sector governance.
  - Sector reform and unbundling of Bangladesh Power Development Board face strong resistance; government behind schedule on some planned activities and targets may be too ambitious.
  - Key challenges identified:
    - Delay in implementation of large base-load power plants making sector dependent on substantial subsidies for payments to private generators.
    - Availability of natural gas to support ambitious power generation expansion.
    - Need for rapid exploration to cover immediate energy shortfall.
    - Below-cost gas price that needs gradual increases and indexing to international fuel oil price to attract investment.
    - Ample coal reserves remain underutilized in absence of a coal policy to reduce high dependency on gas.
    - Limited collaboration between gas and power sectors.
    - Relatively poor governance of the energy sector.
- Urban development and water/sanitation:
  - SFYP explicitly discusses rapid urbanization and related challenges; provides background on past policies and an urbanization strategy focusing on city governance and urban resource mobilization.
  - Staffs suggest a more dynamic integration of growth dynamics into urbanization; SFYP short on implementation details and could consider a separate ministry for urban development.
  - SFYP sets extremely ambitious targets for water supply and sanitation in urban settings; centralization of service delivery conflicts with SFYP’s decentralization emphasis.
  - Staff recommendation:
    - Develop legal and social instruments to enable local governments to coordinate service provision by governmental and non-governmental providers effectively.

### Knowledge economy: priorities suggested by staffs (paragraph 20)
- Staffs recommend prioritizing policies along four key pillars:
  - (i) an appropriate economic and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship;
  - (ii) an educated and skilled population that can create, share, and use knowledge;
  - (iii) an efficient innovation system of firms, research centers, universities, think tanks, consultants, and other organizations that can tap into the growing stock of global knowledge, assimilate and adapt it to local needs, and create new technology;
  - (iv) information and communication technologies (ICT) that can facilitate the effective communication, dissemination, and processing of information.

### Promoting human development (Education; Health, Nutrition, and Population)
- Education (paragraphs 21–22):
  - Staffs welcome the SFYP’s analysis of key constraints and endorse the Government’s vision for education.
  - Observations and gaps:
    - Students from poor households remain disadvantaged; progress on early marriage for girls and low female labor market participation noted but more progress needed.
    - Plan discusses activities but lacks elaboration on implementation and operationalization of performance indicators.
    - Areas needing stronger treatment: higher education, early childhood development, separation of equity discussion by gender and socio-economic perspectives, linkages between labor market and education reforms, and analysis of returns to quality of education.
- Health, Nutrition, and Population (paragraph 23):
  - Staffs concur that governance in the health sector must be strengthened to sustain recent gains.
  - Identified governance weaknesses: absenteeism, postings/vacancies, procurement, management of medicines, and resource allocation.
  - Recommended actions:
    - Focused leadership at the Ministry of Health and Family Welfare (MOHFW) and better governance across its departments.
    - Build partnerships with NGOs and improve monitoring and evaluation.
    - Develop practical and realistic strategies to overcome governance obstacles from misaligned incentives.
    - Accelerate development of well-designed health PPPs to ensure equity and access for the poor in a mixed health care system.

### Reducing poverty, ensuring inclusion, and providing social protection
- Poverty diagnostics (paragraphs 24–25):
  - Staffs find the poverty diagnostic well prepared and of high quality; SFYP gives a clear overview of progress and MDG status.
  - Recommendation: set clear priorities and well-defined targets.
  - Data limitations:
    - Reliability issues in price data affecting CPI and divergence between inflation measures used for official poverty estimates and the CPI.
    - Scarcity of reliable labor force data constraining analysis of supply- and demand-side constraints to jobs.
    - Acknowledgement of BBS efforts to increase frequency of the Household Income and Expenditure Survey to a three-year cycle.
- Social empowerment, inclusion, and protection (paragraphs 26–27):
  - Staffs welcome SFYP integration of vulnerable communities and emphasis on inclusion.
  - Concerns:
    - Land allocation/use challenges for ethnic communities require participatory processes, which SFYP does not describe.
    - Targets and strategies for women’s inclusion are not prioritized and may be difficult to achieve.
    - Social inclusion agenda lacks clarity on implementation and funding given limited budget space.
  - Social protection recommendations:
    - Broaden scope beyond traditional safety nets to include urban poor, elderly, women, children, and disabled persons.
    - Consolidation, integration, and rationalization of overlapping safety net programs.
    - Focus on equity-based approaches to improve cost-effectiveness.
    - Improve administrative capacity and delivery mechanisms using technological innovations to reduce leakage.
    - National Social Protection Strategy should build on these priorities to develop a system composed of harmonized safety nets, social insurance, and labor market programs.
- Regional disparities (paragraphs 28–29):
  - SFYP correctly recognizes importance of spatial analysis of poverty and integrates regional gap strategies.
  - Staffs suggest:
    - More emphasis on regional development and incentives for industries to relocate to lagging regions given urban infrastructure constraints.
    - Mapping of land fertility to inform land use policy.
    - Broaden analysis beyond East-West divisions to emphasize urban/rural differences across districts and regions.
    - Systematic collection of reliable spatial data, including a CPI disaggregable by geographical area.
    - Utilize BBS–World Bank expertise in small area estimation for tracking malnutrition and poverty.

### Addressing governance and institutional challenges
- General governance recommendations (paragraphs 30–31):
  - Staffs support SFYP focus on strengthening institutions and addressing corruption; list of governance priorities is comprehensive but large.
  - Endorsed measures include enhancing transparency and ICT-enabled service provision to reduce corruption opportunities.
  - Recommended sequencing and prioritization of actions; institutional reforms should proceed in tandem with civil service reform to build administrative capacity.
  - Decentralization:
    - Staffs welcome strategy to improve service delivery via decentralization and increased financing devolution to local governments.
    - SFYP acknowledges need to first address legal framework and capacity of local authorities; staffs recommend clearer articulation of actions to improve local government capacity.
- Public Financial Management (paragraph 32):
  - Staffs commend recognition of need for reforms in planning and budgetary processes and enhanced monitoring and evaluation.
  - Suggested PFM actions:
    - (i) a specific roadmap for improving coordination between the development and non-development budgets;
    - (ii) actions to finalize the enhancement and roll-out of an integrated budget and accounting system to improve financial accountability;
    - (iii) actions towards full independence of the Comptroller and Auditor General’s Office and improvements in external scrutiny from audit and legislature.

### Digital Bangladesh and e‑governance (paragraph 33)
- SFYP documents potential of ICTs to enhance governance and service delivery; recognizes progress in telecommunication sector reforms and improved access.
- Staffs urge:
  - Ensuring telecommunications policy and regulatory framework encourages sustained private investment and allows operators to provide innovative and affordable services.
  - Addressing change management, project management, and IT skills within and outside Government agencies to meet Digital Bangladesh goals.
  - Greater coordination between Digital Bangladesh initiatives and sectoral interventions.

### Environmental management and tackling climate change (paragraphs 34–35)
- SFYP links poverty, development needs, environmental challenges, and climate vulnerabilities; emphasizes building institutional capacity and engaging private sector and NGOs via green financing and environmental reporting.
- Staffs welcome SFYP attention to research, tree cover protection, reforestation, linkage to Bangladesh Climate Change Strategy and Action Plan (BCCSAP), and discussion of industrial pollution.
- Staff recommendations:
  - (i) more focus on cross-sectoral collaboration with prioritization and sequencing of strategies aligned with budgetary allocations;
  - (ii) mechanisms for green governance to clarify environmental responsibilities, enhance transparency and accountability, and improve implementation of environmental rules and laws;
  - (iii) elaboration on involving a broader range of government agencies in their environmental responsibilities for synergistic goals of sustainability and climate adaptation/mitigation.

### Targets, indicators, monitoring, and evaluation (paragraph 36)
- Staffs welcome Government commitment to monitoring and evaluation with emphasis on results.
- SFYP provides a results-based framework with measurable indicators for both macroeconomic and sectoral performance; framework jointly developed by Government and development partners.
- Staffs support introduction of third-party monitoring to strengthen accountability and transparency.

### Conclusion, priorities, risks, and issues for discussion (paragraphs 37–40)
- Overall assessment (paragraph 37):
  - Staffs welcome the SFYP as a comprehensive framework addressing major challenges to growth and poverty reduction and as a basis for donor harmonization.
- Recommended prioritized and sequenced implementation (paragraph 38) — priorities include:
  - (i) implementing sound macro-financial policies to engender a stable, growth-supportive macroeconomic environment;
  - (ii) further intensifying revenue mobilization to generate more domestic resources to address development needs;
  - (iii) improving the business environment with emphasis on increasing the level and quality of infrastructure in both rural and urban areas;
  - (iv) ensuring trade liberalization does not stall or reverse;
  - (v) improving governance and accountability across all government ministries and agencies and sectors and activities of the economy;
  - (vi) making certain that the social protection system is composed of harmonized safety nets, social insurance, and labor market programs;
  - (vii) taking a more integrated approach to environmental degradation and climate change within the Government.
- Implementation risks (paragraph 39):
  - Severe external shocks could reignite macroeconomic pressures and undermine socio-economic targets.
  - Low implementation capacity risks making the SFYP measures overly ambitious; staff recommend streamlining for decision-making, implementation, and monitoring.
  - Need to simplify monitoring and evaluation framework and develop capacity to expand information quantity, quality, and timeliness.
  - Wavering reform commitment and weak governance pose further challenges.
  - Slow progress on decentralization and local empowerment can limit service delivery improvements.
- Issues for discussion (paragraph 40):
  - 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?

*IMF staff assessment of the SFYP as presented in the source content.*

### 1. Bangladesh’s Sixth Five Year Plan (SFYP)—Accelerating Growth and Reducing

### 1. Bangladesh’s Sixth Five Year Plan (SFYP)—Accelerating Growth and Reducing

### Overview and purpose
- SFYP provides a framework for implementing the Government’s development agenda during FY11–FY15.
- SFYP lays out strategic directions and policy framework to achieve main socio-economic targets of the Government’s Perspective Plan 2010–2021 and Vision 2021 (middle-income status by beginning of next decade).
- Published in July 2011; prepared by the Awami League government and serves as Bangladesh’s current Poverty Reduction Strategy Paper (PRSP).
- This document is a Joint Staff Advisory Note (JSAN) providing feedback on strengthening the SFYP as a poverty reduction strategy and identifying priority areas for improvement.

### Macroeconomic framework and policies
Findings and staff assessments:
- SFYP growth targets described as ambitious; macro framework broadly in line with the reform scenario of the IMF-supported ECF program approved April 2012.
- ECF-supported program aims at raising medium-term growth to 7-8 percent a year, contingent on higher investment rates and additional public investment financed from increased tax revenues.
- SFYP emphasizes raising growth and employment to reduce poverty by 10 percentage points by end of plan period; SFYP poverty target of 22 percent by 2015 is viewed as consistent with an 8 percent growth target but considered overly optimistic by staffs.
- Staffs consider a poverty rate of 26 percent feasible if growth averages 6 percent over 2010–2015, with average growth of 6.5 percent achieved in FY11–FY12.
- SFYP underperformed against growth targets to date; projected growth trajectory averaging 7.3 percent annually during the plan period and rising to 8 percent by end of period should be revisited.
- Key constraint: increase investment rate from below-plan 25 percent of GDP in the past two years to 32.5 percent by end of plan period.
- Agricultural growth target: increase from 2.5 percent in FY12 to 4.4 percent in FY13–FY15—viewed as difficult given loss of arable land and need for substantial total factor productivity gains.
- SFYP recognizes need for bold strategies to raise public and private investment but is short on specifying time paths for key policy instruments (tax rationalization, targeting subsidies, reducing quasi-fiscal losses, easing trade protection, institutional reforms).
- Fiscal and monetary stability commitment welcomed; actual headline inflation in FY11 and FY12 was 8.8 percent and 10.6 percent respectively versus SFYP envisaged average of 7 percent.
- Inflation decelerated to 7.3 percent in September (year unspecified in text).
- Fiscal deficit (excluding grants) within 5 percent of GDP in FY12; tax revenue exceeded 10 percent of GDP for the first time in FY11.
- Target for average reserves cover of 3.5 months of imports during plan period is supported by more restrained policies and exchange rate flexibility.
- Financing public investment requires intensified domestic revenue mobilization, encouragement of non-bank financing, and more aggressive concessional external financing focused on high return projects.
- Projected increase in public saving by about 2 percentage points of GDP requires realization of revenue strategy and containment of current expenditures and net lending, particularly subsidies and transfers.
- Gross external disbursements target of 2 percent of GDP on average per annum during plan period is judged not ambitious relative to historic trends.
- High cost of domestic debt reduces fiscal space despite low initial domestic debt share; SFYP envisages debt management reforms. Staffs advise all borrowing be within a comprehensive debt management strategy that considers contingent liabilities.

### Growth and inclusion — priorities and critical areas for success

Finance and Private Sector Development
- SFYP focuses on private sector-led industrial development and exports, creation of high productivity jobs, increased competition, and raising share of manufacturing in GDP, particularly export-oriented manufacturing.
- Regulatory bottlenecks identified as major obstacles; SFYP unclear on how bottlenecks will be addressed.
Staff recommendations:
  - Develop overarching and sectoral investment policies and strategies.
  - Implement a well-designed, structured program to identify regulatory barriers and undertake prioritized, sequenced regulatory reforms.
  - Use the Private Sector Development Policy Coordination Committee (housed under the Prime Minister’s Office) to coordinate reforms.
  - Leverage the private sector-led PPD platform Business Initiative Leading Development (BUILD) for regular, structured, evidence-based policy dialogue.
  - Conduct public awareness campaigns to strengthen stakeholder watchdog roles, transparency, and accountability.
- On PPPs: welcome recognition of PPPs to supplement government resources; Plan could be strengthened by:
  - Detailing a credible financing strategy.
  - Outlining a concrete strategy/action Plan for PPP capacity development in ministries.
  - Detailing resources for sector/project feasibility studies and transaction advisory services.
  - Explicitly specifying PPP Office functions to ensure effective coordination.

Trade and Investment Policies
- SFYP strategy: transition from rural agro-based economy to urban manufacturing-based economy; deepen labor-intensive export-oriented manufacturing and diversify agriculture.
- Implementation through reforms in macroeconomic management, tax and public expenditure, trade policy, financial sector, infrastructure and skills development.
- Human development, infrastructure, and power prioritized for investment.
Staff concerns and recommendations:
  - Recent reversals in trade liberalization and expansion of para-tariffs over last three years are worrisome; these have offset reductions in average nominal protection while real effective rate of protection has increased since 2006.
  - Current trade regime undermines export competitiveness and impedes export diversification.
  - Encourage strategy to deepen South Asia cooperation and trade via trade liberalization and development of logistics and transport corridors with neighbors.

Agriculture and Rural Development
- SFYP recognizes pivotal role of agricultural and rural development for food security and income opportunities; identifies measures on land productivity, diversification, market access, climate adaptation, technology for information dissemination, and nutrition.
- Plan provides legal institutional framework for decentralized agricultural extension and references National Food Policy.
Staff recommendations:
  - Further prioritize and sequence proposed policies, conduct institutional capacity analysis, and develop a policy/strategy to stimulate overall agricultural performance.
  - Give more emphasis to the recently revised National Agricultural Extension Policy.
  - Develop specific policies/strategies for:
    - promoting crops requiring less water, encouraging water recycling and location-specific surface water harvesting and conservation;
    - improving access to land and land security, especially for vulnerable groups;
    - institutional capacity strengthening of producer organizations;
    - promoting stronger economic partnerships and contract farming to strengthen sector competitiveness.

Infrastructure and Urban Development
Energy sector findings and challenges:
- SFYP proposes strategies for energy with targets and timeline; assumes extensive private sector participation in power generation via IPPs; recent actions reduced load shedding during summer in last two years.
- Concerns remain about raising finance from international markets due to perceptions of poor sector governance.
- Sector reform and unbundling of Bangladesh Power Development Board face strong resistance; government behind schedule on some planned activities and targets may be too ambitious.
- Investment requirements sizeable; key challenges include:
  - Delay in implementation of large base-load power plants making sector dependent on substantial subsidies for payments to private generators.
  - Availability of natural gas to support ambitious power generation expansion.
  - Need for rapid exploration to cover immediate energy shortfall.
  - Below-cost gas price that needs gradual increases and indexing to international fuel oil price to attract investment.
  - Ample coal reserves remain underutilized in absence of a coal policy to reduce high dependency on gas.
  - Limited collaboration between gas and power sectors.
  - Relatively poor governance of the energy sector.
Urban development and water/sanitation:
- SFYP explicitly discusses rapid urbanization and related challenges; provides background on past policies and an urbanization strategy focusing on city governance and urban resource mobilization.
- Staffs suggest a more dynamic integration of growth dynamics into urbanization; SFYP short on implementation details and could consider a separate ministry for urban development.
- SFYP sets extremely ambitious targets for water supply and sanitation in urban settings; centralization of service delivery conflicts with SFYP’s decentralization emphasis.
Staff recommendations:
  - Develop legal and social instruments to enable local governments to coordinate service provision by governmental and non-governmental providers effectively.

_This summary is based on the Joint Staff Advisory Note (JSAN) feedback on Bangladesh’s Sixth Five Year Plan (SFYP) as provided in the source content._

### 20. Staffs welcome the detailed discussion in the SFYP on the strengths, weaknesses, and

### _cr1362 - 20. Staffs welcome the detailed discussion in the SFYP on the strengths, weaknesses, and

### Knowledge economy: priorities suggested by staffs
- Staffs welcome the SFYP discussion on strengths, weaknesses, and opportunities for Bangladesh to transition into a knowledge economy (paragraph 20).
- Staffs recommend prioritizing policies along four key pillars:
  - (i) an appropriate economic and institutional regime that provides incentives for the efficient use of existing and new knowledge and the flourishing of entrepreneurship;
  - (ii) an educated and skilled population that can create, share, and use knowledge;
  - (iii) an efficient innovation system of firms, research centers, universities, think tanks, consultants, and other organizations that can tap into the growing stock of global knowledge, assimilate and adapt it to local needs, and create new technology;
  - (iv) information and communication technologies (ICT) that can facilitate the effective communication, dissemination, and processing of information.

### Promoting human development (Education; Health, Nutrition, and Population)
- Education (paragraphs 21–22):
  - Staffs welcome the SFYP’s analysis of key constraints and endorse the Government’s vision for education.
  - Observations:
    - Students from poor households remain disadvantaged; SFYP notes progress on early marriage for girls and low female labor market participation but more progress is needed.
    - The Plan discusses activities but lacks elaboration on implementation and operationalization of performance indicators.
  - Areas needing stronger treatment:
    - (i) more detailed discussion on higher education and early childhood development;
    - (ii) separation in discussion on equity across gender and socio-economic perspectives given reversal of gender gap favoring girls at primary and secondary levels but girls lagging at tertiary level;
    - (iii) linkages between the labor market and education reforms to address skills mismatch;
    - (iv) analysis of returns to quality of education, given quality is highlighted as a significant challenge.
- Health, Nutrition, and Population (paragraph 23):
  - Staffs concur that governance in the health sector must be strengthened to sustain recent gains.
  - Identified governance weaknesses include absenteeism, postings/vacancies, procurement, management of medicines, and resource allocation.
  - Recommended actions:
    - Focused leadership at the Ministry of Health and Family Welfare (MOHFW) and better governance across its departments.
    - Build partnerships with NGOs and improve monitoring and evaluation.
    - Develop practical and realistic strategies to overcome governance obstacles from misaligned incentives.
    - Accelerate development of well-designed health PPPs to ensure equity and access for the poor in a mixed health care system.

### Reducing poverty, ensuring inclusion, and providing social protection
- Poverty diagnostics (paragraphs 24–25):
  - Staffs find the poverty diagnostic well prepared and of high quality; SFYP gives a clear overview of progress and MDG status.
  - Recommendation: the Plan should set clear priorities and well-defined targets.
  - Data limitations noted:
    - Reliability issues in price data affecting CPI and divergence between inflation measures used for official poverty estimates and the CPI.
    - Scarcity of reliable labor force data, constraining analysis of supply- and demand-side constraints to jobs.
    - Acknowledgement of BBS efforts to increase frequency of the Household Income and Expenditure Survey to a three-year cycle.
- Social empowerment, inclusion, and protection (paragraphs 26–27):
  - Staffs welcome SFYP integration of vulnerable communities and emphasis on inclusion.
  - Concerns:
    - Land allocation/use challenges for ethnic communities require participatory processes, which SFYP does not describe.
    - Targets and strategies for women’s inclusion are not prioritized and may be difficult to achieve.
    - Social inclusion agenda lacks clarity on implementation and funding given limited budget space.
  - Social protection recommendations:
    - Broaden scope beyond traditional safety nets to include urban poor, elderly, women, children, and disabled persons.
    - Consolidation, integration, and rationalization of overlapping safety net programs.
    - Focus on equity-based approaches to improve cost-effectiveness.
    - Improve administrative capacity and delivery mechanisms using technological innovations to reduce leakage.
    - National Social Protection Strategy should build on these priorities to develop a system composed of harmonized safety nets, social insurance, and labor market programs.
- Regional disparities (paragraphs 28–29):
  - SFYP correctly recognizes importance of spatial analysis of poverty and integrates regional gap strategies.
  - Staffs suggest:
    - More emphasis on regional development and incentives for industries to relocate to lagging regions given urban infrastructure constraints.
    - Mapping of land fertility to inform land use policy.
    - Broaden analysis beyond East-West divisions to emphasize urban/rural differences across districts and regions.
    - Systematic collection of reliable spatial data, including a CPI disaggregable by geographical area.
    - Utilize BBS–World Bank expertise in small area estimation for tracking malnutrition and poverty.

### Addressing governance and institutional challenges
- General governance recommendations (paragraphs 30–31):
  - Staffs support SFYP focus on strengthening institutions and addressing corruption; list of governance priorities is comprehensive but large.
  - Endorsed measures include enhancing transparency and ICT-enabled service provision to reduce corruption opportunities.
  - Recommended sequencing and prioritization of actions; institutional reforms should proceed in tandem with civil service reform to build administrative capacity.
  - Decentralization:
    - Staffs welcome strategy to improve service delivery via decentralization and increased financing devolution to local governments.
    - SFYP acknowledges need to first address legal framework and capacity of local authorities; staffs recommend clearer articulation of actions to improve local government capacity.
- Public Financial Management (paragraph 32):
  - Staffs commend recognition of need for reforms in planning and budgetary processes and enhanced monitoring and evaluation.
  - Suggested PFM actions to provide a more comprehensive view:
    - (i) a specific roadmap for improving coordination between the development and non-development budgets;
    - (ii) actions to finalize the enhancement and roll-out of an integrated budget and accounting system to improve financial accountability;
    - (iii) actions towards full independence of the Comptroller and Auditor General’s Office and improvements in external scrutiny from audit and legislature.

### Digital Bangladesh and e‑governance (paragraph 33)
- SFYP documents potential of ICTs to enhance governance and service delivery; recognizes progress in telecommunication sector reforms and improved access.
- Staffs urge:
  - Ensuring telecommunications policy and regulatory framework encourages sustained private investment and allows operators to provide innovative and affordable services.
  - Addressing change management, project management, and IT skills within and outside Government agencies to meet Digital Bangladesh goals.
  - Greater coordination between Digital Bangladesh initiatives and sectoral interventions.

### Environmental management and tackling climate change (paragraphs 34–35)
- SFYP correctly links poverty, development needs, environmental challenges, and climate vulnerabilities; emphasizes building institutional capacity and engaging private sector and NGOs via green financing and environmental reporting.
- Staffs welcome SFYP attention to research, tree cover protection, reforestation, linkage to Bangladesh Climate Change Strategy and Action Plan (BCCSAP), and discussion of industrial pollution.
- Staff recommendations:
  - (i) more focus on cross-sectoral collaboration with prioritization and sequencing of strategies aligned with budgetary allocations;
  - (ii) mechanisms for green governance to clarify environmental responsibilities, enhance transparency and accountability, and improve implementation of environmental rules and laws;
  - (iii) elaboration on involving a broader range of government agencies in their environmental responsibilities for synergistic goals of sustainability and climate adaptation/mitigation.

### Targets, indicators, monitoring, and evaluation (paragraph 36)
- Staffs welcome Government commitment to monitoring and evaluation with emphasis on results.
- SFYP provides a results-based framework with measurable indicators for both macroeconomic and sectoral performance; framework jointly developed by Government and development partners.
- Staffs support introduction of third-party monitoring to strengthen accountability and transparency.

### Conclusion, priorities, risks, and issues for discussion (paragraphs 37–40)
- Overall assessment (paragraph 37):
  - Staffs welcome the SFYP as a comprehensive framework addressing major challenges to growth and poverty reduction and as a basis for donor harmonization.
- Recommended prioritized and sequenced implementation (paragraph 38):
  - Given limited resources, staffs recommend prioritizing targets and sequencing actions. Priorities include:
    - (i) implementing sound macro-financial policies to engender a stable, growth-supportive macroeconomic environment;
    - (ii) further intensifying revenue mobilization to generate more domestic resources to address development needs;
    - (iii) improving the business environment with emphasis on increasing the level and quality of infrastructure in both rural and urban areas;
    - (iv) ensuring trade liberalization does not stall or reverse;
    - (v) improving governance and accountability across all government ministries and agencies and sectors and activities of the economy;
    - (vi) making certain that the social protection system is composed of harmonized safety nets, social insurance, and labor market programs;
    - (vii) taking a more integrated approach to environmental degradation and climate change within the Government.
- Implementation risks (paragraph 39):
  - Severe external shocks could reignite macroeconomic pressures and undermine socio-economic targets.
  - Low implementation capacity risks making the SFYP measures overly ambitious; staff recommend streamlining for decision-making, implementation, and monitoring.
  - Need to simplify monitoring and evaluation framework and develop capacity to expand information quantity, quality, and timeliness.
  - Wavering reform commitment and weak governance pose further challenges.
  - Slow progress on decentralization and local empowerment can limit service delivery improvements.
- Issues for discussion (paragraph 40):
  - 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?

*IMF staff assessment of the SFYP as presented in the source content.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2013/_cr1362.pdf_