PRSP misses strategy to fight corruption

The General Economic Division (GED) earlier submitted the draft PRSP to the Prime Minister's Officer (PMO) on July 31, 2004. The PMO formed 14 thematic groups like macro-economic stability and pro-poor growth, financial sector reforms, infrastructure development, domestic resources mobilisation, reforms in governance, judiciary reform, health and population, education, rural development and information technology to prepare the PRSP. Twelve major ministries, mainly finance, commerce and planning were assigned as lead ministries for the thematic groups. The PRSP being framed with an action plan to reduce poverty level chalked out a set of projection back in December. But these were criticised for being partly out of context. The donor agencies put stress on a wide range of consultation on the PRSP to reach a broad-based consensus to make it more functional.

The World Bank and the International Monetary Fund (IMF) advised the developing countries to prepare a PRSP, corresponding to the Millennium Development Goals (MDGs) as declared by the United Nations in September 2000. The IMF supplied a guideline of around 1,000 pages for preparing the PRSP, which was also considered as the pre-condition for providing the Poverty Reduction and Growth Facilities (PRGF) loan by the IMF. Bangladesh has already received two tranches of the PRGF loan from the IMF within the framework of the PRSP, which is only 0.5 percent interest based and to be repaid by 10 years with a grace period of 5 years. In fact the PRSP is an initiative supported by the donor agencies for poverty reduction and is committed to development assistance by the donors within its framework.

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The PRSP has set a seven-point strategic agenda with employment topping the list. The other agenda include nutrition, maternal health, quality education, sanitation and safe water, criminal justice and local governance. In tackling growth-induced income inequality, the document said that accelerating growth and bringing a pro-poor orientation in the growth process would be achieved through emphasising four priority areas: 1) accelerated growth in rural areas and development of agriculture and non-farm economic activities, 2) small and medium manufacturing enterprises, 3) rural infrastructure and 4) information and communication technology. The PRSP also featured a policy matrix of the government's future programmes including complete separation of the judiciary from the executive, establishment of a human rights commission, reconsidering setting up of a central bonded warehouse, hiring talented people for top level pubic administrative positions from outside the government by 2007.

The PRSP showed a projection of expenses in some of its progr-ammes, such as, $12.12 billion for primary education and $343.8 million for sanitation programme. Planning and Finance Minister M Saifur Rahman said that 14 percent resources of GDP a year is needed for implementation of the programmes under the PRSP. Out of this, 10 percent will be mobilised from the internal resources while the rest 4 percent will be collected from external sources. Four donor agencies would provide funds of about $ 150 million to implement the three-year PRSP programmes. But the World Bank's funding will be conditional on the government's implementing the programmes under the PRSP. The Finance Minister also said, the delay in endorsing the PRSP was among the causes for which the World Bank has suspended the disbursement of the third tranche of the Development Credit Support (DCS) amounting to $ 200 million which was due in August.

A three-day meeting with the donor agencies is scheduled to be held from November 15 in Dhaka to discuss how the donors will contribute to the implementation of the PRSP. The forthcoming meeting with the donors has been styled as 'PRSP Implementation Forum' instead of the previous Bangladesh Development Forum (BDF) as the donor agencies have decided that their development assistance will now be based on the PRSP. The Local Consultative Group (LCG), a forum of the country's bilateral and multilateral donors also made a number of recommendations for reforms in few programmes of the PRSP. The donors Joint Country Assistance Strategy (CAS) is being prepared in the light of the PRSP. The World Bank, the Asian Development Bank (ADB) and the Department for International Development (DFID) of the United Kingdom (UK) have agreed to prepare a joint country assistance strategy (CAS) for Bangladesh for 2005-08 to harmonise their development support activities. Japan, which is the biggest bilateral donor for Bangladesh, is also expected to join the others in this exercise.

The chief of the World Bank who visited Bangladesh recently said, Bangladesh can achieve even an 8 percent GDP growth a year instead of the present 5 percent, if corruption and confrontational politics are contained. 'You have wonderful, talented people.

But the problem of corruption is big drag on your economy,' he added. He also said that World Bank's future assistance for the projects including those in the power sector would depend on reducing corruption. 'We cannot commit money unless we are convinced it is going to be spent in the right way' said Wolfowitz. Before his departure, at a short press briefing at Zia airport he, however, said World Bank would continue assisting Bangladesh in its endeavours to reduce poverty.

The critical shortcoming that has turned the PRSP into a virtual non-strategy from practical point of view is that it does not contain the strategy to fight the unabated corruption in the country. Corruption is perceived to be most acute in Bangladesh and it has again been crowned as the top corrupt state in the world for the fifth consecutive year. The local consultative group suggested inclusion of a number of specific measures in the document to get rid of confrontational politics, corruption and law and order situation, but the PRSP barely reflects them. With the government fine-tuning the much-vaunted PRSP, no direct approach to address corruption has been outlined. The PRSP, however, observed that the problem of corruption and poor governance lied largely in the fact that certain strategic sector, particularly the police, judiciary and transport remain largely unreformed. The PRSP policy matrix also said little about its strategy to make the Anti-Corruption Commission effective which needs to pull its socks up. The Anti-Corruption Commission was setup on November 21, 2004. But this much-hyped Commission is yet to put its feet down.

The PRSP, first of its kind in Bangladesh, is framed to serve as a strategic tool for combating the country's pervasive poverty. There is no denying that all pervading corruption is the major impediment to our economic growth and poverty reduction. Most of the people of this country living in the abject poverty are deprived of their basic needs due to widespread corruption. According to an estimate, about 75 percent of Tk 2000 billion of foreign aid and grants received since independence for poverty reduction allegedly has been siphoned off. Many of our economists have made it clear that, poverty reduction is simply impossible without curbing corruption. So, the PRSP must contain a strategy of direct approach to address corruption as its top agenda, bringing home the point that poverty cannot be stamped out without combating corruption.

ANM Nurul Haque is a banker.