The World Bank said the Bangladesh government’s policy actions were not enough to approve the proposed loan, recommending incorporation of “concrete reform actions” in the policy matrix.
The suggestins came at a recent meeting presided over by Economic Relations Division Senior Secretary Mohammad Mejbahuddin at the Planning Commission office in Dhaka.
ERD, however, hopes to get $500m as policy support fund from World Bank in the next fiscal year.
The World Bank is expected to consider only those policy actions that have been under discussions with the government of Bangladesh for last few months to expedite finalisation of the policy loan.
“The World Bank board didn’t pass our initial proposal but we are continuing negotiation,” said a Finance Division official.
He said the line ministries were serious about the fixation of the timeframe of conditions of the Growth Development Policy Credit (GDPC) fund from the World Bank.
He said different officials from line ministries came to the negotiation meeting without knowing about previous development regarding the line ministries’ conditions and GDPC facilities.
Another official said the World Bank’s budget support for Bangladesh was not passed by the board as the two government agencies failed to fix the deadline of the two legislative matters - implementation of proposed direct tax code and amending of Bangladesh Telecommunication Act 2001.
“We have already held nine meetings with the World Bank officials in this regard but there is still no progress due to lack of commitment by line ministries,” said the Finance Division official.
“There was no breakthrough in the recent meeting either.”
The meeting discussed the National Social Security Strategy which was already approved by the cabinet and launched.
About the tax related issues and direct tax code, the NBR representative told the meeting that the works related to introduction of same e-TIN for income tax and VAT registration was also in progress.
In regards to direct tax code, a number of activities including extensive consultations, consolidating new tax incentives and simplification of code along with Bangla version of the law need to be done which will take a bit longer time, he said.
The meeting sources said the NBR should have at least a zero draft on the direct tax code by the end of March 2016 so the law can be approved by the cabinet by the end of 2016.
ERD official said the proposed Charts of Accounts law has already been developed and submitted for approval by CAG.
The Industries Ministry official said the BSTI Act was at the draft making stage and a meeting would held in two weeks to finalise the draft.
About the progress of the Companies Act, the Commerce Ministry official appraised that a series of consultations were held with different stakeholders on the draft law and a meeting was scheduled on November 19 to finalise it.
BEZA representative said the guidelines for the selection and employment of developers will be ready shortly.
Some initiatives are going on in the Prime Minister’s Office to establish a mechanism for bitter coordination among different entities dealing with economic zones, the official said.
Power Division representative said the process of corporatisation of the northern distribution zones is at an “advanced stage.”
The meeting was also told that the Public-Private Partnership law has already been approved by the cabinet.
Nearly a year ago, the Bank had given some policy matrices on the public-sector reforms to the government to obtain the budgetary credit support that will help in offsetting the Tk866.57bn budget deficit.
The high government executives opined that the government would reiterate the need of the Bangladesh’s budget support to the WB and request it to proceed with the assured loan soon.
The WB is the largest donor to Bangladesh in development funding. It usually makes commitment for disbursing $1.5bn in assistance annually and disburses nearly $700m.
The Bank disbursed a record high of $1.0bn in assistance to Bangladesh in last fiscal year.
The Bank last provided Bangladesh with a budget support of $50m in 2008 to help cyclone Sidr affected families. ADB extended budgetary support credit of $300m this fiscal year.