PROJECT INFORMATION DOCUMENT (PID)



PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB751

|Project Name |Economic Management TA Program (EMTAP) |

|Region |SOUTH ASIA |

|Sector |General Public Sector (100%) |

|Project ID |P083890 |

|Borrower(s) |GOVERNMENT OF BANGLADESH |

|Implementing Agency |MINISTRY OF FINANCE AND ECONOMY |

|Environment Category |[ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined) |

|Safeguard Classification |[ ] S1 [ ] S2 [ ] S3 [X] SF [ ] TBD (to be determined) |

|Date PID Prepared |March 8, 2004 |

|Estimated Date of Appraisal Authorization |April 1, 2004 |

|Estimated Date of Board Approval |June 22, 2004 |

1. Key development issues and rationale for Bank involvement

The Government of Bangladesh has embarked on a broad economic and sectoral reform agenda including macroeconomic management, state enterprise and financial sector reform, energy sector reforms, as well as a range of reforms to improve revenue administration, public expenditure and financial accountability. These reform areas have been highlighted in the government’s Interim Poverty Reduction Strategy Program (I-PRSP) and are being supported by the International Financial Institutions and bilateral donors.

This reform agenda requires stronger institutions for policy management and a better functioning of the civil service and public administration for the country to achieve better economic, social and service delivery outcomes.

Strengthening institutions for policy formulation, implementation and monitoring is essential at a time when the government is undertaking strategic policy initiatives such as the one for poverty reduction and is trying to implement ambitious structural reforms. Despite progress made in selected areas, stronger institutions for policy formulation, implementation and monitoring will yield much better outcomes. The Government needs better coordination among various policy initiatives and sector policy analysis.. The link between policies and allocation of resources through the budget needs to be strengthened. There is a substantial segregation of investment and recurrent expenditure planning processes. There should be more emphasis on policy programs than on individual projects. Moreover, cumbersome procedures for project screening and evaluation impede implementation. Monitoring is focused on large foreign financed investment and evaluation of outcomes or impacts of policy initiatives is scanty.

Improving the civil service practices and the functioning of the public administration is equally important. While some modest progress has been made on staff promotions, many of the fundamental issues need to be addressed. Low compensation, inadequate mechanisms to improve staff skills, rigid rules for recruitments and promotions are some of those issues. They have been partly the result of complex institutional factors, and are contributing to low accountability, lack of motivation and inefficiency in delivering basic public services to the population. Without a well functioning and adequately skilled civil service, poverty reduction policies, improvements in the business environment and the ambitious reform agenda will falter in their implementation .

The Government’s strategic vision with regard to these issues is laid out in its I-PRSP. Establishing strong institutions and improving the governing of the state to improve the investment climate, foster private sector led growth and reduce poverty are clearly stated as major priorities. The upcoming Country Assistance Strategy (CAS) of the World Bank, currently under preparation, also seems to supports three emerging themes: (i) making Government more effective; (ii) enhancing business environment; and (iii) improving public services. The EMTAP aims to enhance institutional capacities in these key areas, in line with these CAS objectives.

Government’s commitment to improved institutional capacities is manifested by various ongoing efforts and initiatives. As noted, the government has already embarked on efforts to enhance macroeconomic stability, improve budgetary management by moving towards a medium term expenditure framework, improve revenue administration by strengthening customs administration and income tax, reform accounting and auditing functions, emphasize training in the public administration, improve promotion practices in the civil service and consider more serious personnel management reforms. These reform efforts, however, need to be more coordinated and strategic aided by appropriate capacity to make them truly sustainable

2. Proposed objective(s)

The main objective of the EMTA program will be to help strengthen core economic management capacities and contribute to better policy management and better functioning of the public administration across a broad range of sectors. While supporting the main priorities of the development agenda to be outlined in the PRSP and reflected in the CAS, the design of this program will include some flexibility in order to respond to emerging needs during implementation. The program will help the Government look into the institutional and other constraints that affect the sustainability of the envisaged improvements. The preparation of the EMTA is planned to proceed in parallel with the on-going reform initiatives of the Government to support the capacity enhancement needs associated with reforms. It is envisaged that the proposed EMTA program will aim to support activities that will strengthen the capacity of agencies to:

• formulate improved macroeconomic and sectoral policies, and develop and implement the sectoral reform agenda effectively;

• design programs and projects of high quality, and shift increasingly to a sector-wide program approach to sector development;

• improve institutions for revenue collection and administration;

• improve the efficiency of project implementation and recurrent spending and accountability for outcomes;

• enhance coverage and improve quality and targeting of public services to the poor;

• improve transparency of activities of public and corporate entities and accountability for their performance and development outcomes, through timely reporting, effective monitoring, and audit and ex-post evaluation;

• promote rationalization of activities and role of the public sector vis-à-vis the private sector in the economy, including efficient public-private partnership;

• improve the investment climate; and,

• improve the information technology in the public sector (e-governance elements).

Better policies and institutions are likely to help Government better meet the objectives of the PRSP.

3. Preliminary description

The World Bank is currently in a dialogue with the government on a medium term program of structural reforms that will be supported by an IDA credit. The EMTA program is envisaged as an umbrella operation that will provide technical assistance to high priority needs in order to facilitate the implementation of the Government’s reform program.

The Government suggested a range of areas in which they needed technical assistance, including:

• Strengthening government capacities for better policy formulation and implementation, project planning and improving the functioning of the civil service and public administration: support to the PM’s office, MoF, Planning Commission, Ministry of Establishment, Public Administration Training Center and other line ministries.

• Support for strengthening revenue administration: support to the National Bureau of Revenues.

• Support for improving the accounting and auditing standards and practices: support to MoF and Ministry of Commerce in implementing the recommendations of the recently completed ROSC.

• Support for improving the information technology in the Government (first steps towards e-governance): support to PM’s office and Ministry of Information in establishing a government wide electronic network of communication, record keeping and archiving.

• Strategic Communication: assistance to a country wide effort to create a constituency that would support reforms and raise awareness on the benefits associated with various structural measures.

The project includes a certain degree of flexibility mainly associated with the first component. Sub-project proposals that are likely to arise in various sectors during the life of the project will be reviewed and supported, if they meet policy priorities and certain criteria agreed in advance with the Government. The Government has expressed preference for this approach given their previous experience with TA projects that have been overly specified and not able to adjust to changing needs and priorities over the project cycle. .

Co-financing with other donors involved in TA is not being considered but close coordination, notably with DFID, ADB, IMF and UNDP is planned.

4. Safeguard policies that might apply

No safeguard policies apply to this program

5. Tentative financing

|Source: |($m.) |

|BORROWER/RECIPIENT | |

|INTERNATIONAL DEVELOPMENT ASSOCIATION GRANT FOR POOREST COUNTRIES |20 |

| Total |20 |

6. Contact point

Contact: Alma Kanani (HQ), Syed Nizamudin (Bangladesh Country Office)

Title: Sr Economists

Tel: (202) 473-7659/

Fax:

Email: Akanani@, Snizamudin@

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