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World Bank’s vice president for South Asia replies to PRSP critics

Responding to the World Bank's vice president for South Asia, Praful Patel, argues that the World Bank and Bangladesh are development partners – but that Bangladesh owns its anti-poverty plan.

Many voices have been heard in Bangladesh since the country's poverty reduction strategy Unlocking the Potential: National Strategy for Accelerated Poverty Reduction was released.

The World Bank, along with the International Monetary Fund, requires a country to articulate its development and poverty-fighting priorities in a poverty reduction strategy paper, or PRSP, to set the context for appropriate international support.

From our side the logic is clear: a PRSP is an opportunity to redefine the aid relationship by empowering governments to set their own priorities, against which they will be held accountable. And the people of Bangladesh must decide, based on the document their government has placed before them, whether it is the right framework to deepen development.

Donors (not just the World Bank but all external public funders) are challenged to provide predictable, harmonised assistance aligned to those stated country priorities. In the Bank's experience, the best PRSPs have benefited from wide consultation.

The World Bank has been asked to comment on recent debate around the PRSP. I do not want a World Bank voice to get in the middle of what should be a national debate, especially in this pre-election season. The Bank has spoken openly about the PRSP in Bangladesh before, most notably at the PRSP Implementation Forum hosted by the government in November, and much of what I have said before I would happily say again.

Many segments of society were consulted in the formulation of the PRSP. But that consultation could usefully continue and Bangladesh would benefit from a deeper understanding and internalisation of the PRSP by civil society, parliament, the private sector, academia, and the wider community

For our part, as one of the country's development partners, the World Bank is committed to helping translate the development agenda laid out in the PRSP into action, and respecting this country-led process.

The PRSP is truly a Bangladeshi document laying out Bangladesh's poverty reduction priorities. Its strategic focus on areas such as health and education – as well as on infrastructure, decentralisation, and governance – reflects the priorities of the country's donor partners as well.

While Bangladesh faces many challenges outlined in the PRSP, it has also made significant progress. This country of 140 million people is among only a handful on target to meet key Millennium Development Goals; it is home to the most effective NGO/civil society network in the world; it is reducing poverty by one per cent each year; and has achieved growth of more than five per cent a year since the 1990s.

It is no longer deeply aid-dependent and has shown impressive achievements in economic and social development. The economy has shown steady growth with low inflation, and domestic debt, interest and exchange rates are stable.

The economy is growing: per capita GDP in the 1990s rose three times faster than in the 1980s and poverty declined one percentage point a year – an impressive nine per cent in the 1990s.

At the same time, Bangladesh has brought both boys and girls equally into primary education and achieved universal primary-school enrolment. Overall the country has performed quite well in comparison to developing-country standards.

In recent years the international donor community has been challenged to coordinate our assistance more effectively and we have to find ways to support government leadership of aid coordination on a sustained basis.

The PRSP sets out an ambitious path and if, in the period ahead, Bangladesh's reform priorities become a responsible part of election campaigning – a period during which the electorate is engaged in understanding these reform challenges and choices – then the ideas articulated in excellent plans like the PRSP stand a chance.

If opportunities are held hostage by violence and by petty partisan advantage, the PRSP and all aspirations like it will be hollow. And the international community would have no choice but to review its support.

What the PRSP envisages are tough reforms by any measure. I'd highlight three areas as deserving special emphasis: infrastructure, local government support, and good governance.

One of Bangladesh's biggest challenges is infrastructure, most especially with respect to the power sector. Unless this country can address its power needs in the near term growth will stagnate.

We have agreed with government on the need to formulate and adopt a least-cost generation development plan for investments in the power sector, and to ensure that all proposed generation investments are consistent with this plan.

Another critical area deserving emphasis is local government. The people of Bangladesh simply must receive the services they need, whether education, health, rural roads, or sanitation. The first results of the government's initiative to provide cash grants at the Union level have been encouraging.

We know that making government accountable at the local level can improve quality of life and decrease poverty through better allocation of resources, better service delivery, more accountability, and reduced corruption.

Last is governance. It is fitting that this issue has a prominent role in the PRSP. Focus areas for the strengthening of governance include improving implementation capacity, promoting local governance, tackling corruption, reforming the criminal justice system and enhancing access to justice for the poor, and improving sectoral governance.

If government can make progress in these areas, it will make a real difference to poverty reduction. If not, Bangladesh's important human development gains of the past could well see reversals.

Governance and corruption are subjects it is difficult to speak about openly. The debate is often cast as a polarised argument between government and the donor community.

Neither this government – nor any government – wants its country at the bottom of a corruption index, even a perception index. And donors find it extremely difficult to support Bangladesh's critical development challenges under the kinds of pressure brought to bear by this issue – this elephant in the room.

The PRSP recognises the issue and plans to tackle it; this will take time, and some gains will be small before they can accumulate to significance.

The donor community fully supports the government's articulated plan, but, to succeed, we must find the voice to speak openly and courageously about this, to support each other frankly and in public.

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10/18/2006

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