World Bank loan cancellation

The Bank's findings with respect to corruption are nothing new and nothing that other organisations and observers, specifically the media, have not reported on and documented throughout the tenure of the current administration. But the fact that the Bank felt that it had to take such a precipitous step as demanding cancellation of loans and refunding of money already disbursed is significant.

The Bank has long been a model of diplomatic restraint when it comes to the ills of successive Bangladeshi governments. It has gone out of its way to work with the government of the day and not be overly critical or to interfere unduly in domestic matters. The fact that it would so publicly signal its lack of confidence in the public procurement procedures that prevail under this administration should be a wake-up call to the government to get its act together.

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The amount of money involved is relatively insubstantial, but the implications are quite serious. It is not so much that the government cannot survive without donor funds, but the message that has been communicated to the world that our public procurement procedures do not measure up to international standards. This will not only cause other donors to rethink their funding of projects, but will also cast a negative pall over the entire foreign investment climate.

It is not just foreign investors who might be put out by the Bank's vote of no-confidence. This is also a sobering development for our home-grown entrepreneurs and businessman who wish to do business with the government. The Bank's decision will only serve to erode overall confidence in the government and its ability to steward the economy.

The Bank has pointed to a problem, the resolution of which is long overdue. The government needs to look into the matter of public procurement and take serious steps to ensure that the process is corruption-free and that those responsible for the illegality uncovered by the Bank are punished. This must be done, not just to save the government further embarrassment, but because it is one of the most important crises that the country needs to address at the moment.