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