The government and World Bank (WB) have recently agreed to form a US$ 5-million worth Bank Executed Trust Fund (BETF) facility to steer the results of the recently formulated Public Financial Management (PFM) Reform Strategy.
The duration of the scheme would be three years, and its necessary funding would come from the unspent money of the recently-completed Strengthening Public Expenditure Management Programme, Ministry of Finance (MoF) sources told the FE.
The parties concerned reached an agreement in this regard during a meeting between the government and WB, held at Bangladesh Secretariat last week.
Chaired by Finance Secretary Hedayetullah Al Mamoon, the meeting was attended by WB Country Director Qimiao Fan, among others.
European Union (EU), Department for International Development (DFID) of UK and Canadian International Development Agency (CIDA) are other co-financiers of the scheme.
"In addition to providing urgently needed technical assistance for IBAS++, BETF will also support the government in finalization and implementation of PFM Reforms Action Plan," MoF Additional Secretary Mohammad Muslim Chowdhury told the FE after the meeting.
Reforming the public financial management system has always been a burning issue for the country in ensuring better governance accountability.
Various macro-economic analyses over the years have revealed that strong PFM systems are critical to derive maximum benefit from a steady increase in the government expenditures.
In this context, the government with the support of a Multi-Donor Trust Fund, led by WB, earlier implemented Strengthening Public Expenditure Management Programme from 2007 to 2016.
Consequently, MoF also approved a new PFM Reform Strategy in last August, based on Public Expenditure and Financial Accountability Assessment (PEFA), carried out in 2015, and the lessons learnt from the previous PFM reform programmes.
The guiding principles of this PFM reforms have been country ownership and gradualism, with a stronger focus on getting the basics in place.
"Although, attempts have been made to translate this strategy into an action plan, a complete, sequenced and prioritized action plan, covering needed funds and different sources of funding, was not finalized," said a senior official of MoF, seeking anonymity.
"In this context, we felt the need of forming a complementary Bank Executed Trust Fund, taking from the unspent funds of SPEMP MDTF for augmenting the results of PFM Reform Strategy," he added.
According to the sources, the government is also in talks with WB and other development partners concerned for formulating the second phase of SPEMP project. The estimated cost of the project could be around $ 100 million, which may start operation within six months to one year.
In the meantime, DETF facility would steer some major works of the public financial reforms activities including that of iBAS++ -- an integrated budget and accounting system, they informed.
Experiences of earlier PFM reforms in Bangladesh usually point to the need for a greater focus on fewer priorities to effectively advance the reform strategy.
In addition, there is a need for an effective change management approach to ensure that reforms are solving functional PFM problems and that improved PFM systems and processes actually lead to better service delivery and asset management, they added.
In this context, BETF Facility would support immediate advisory and technical assistance needs of Finance Division relating to iBAS++ rollout as well as Budgeting and Accounting Classification Standards (BACS) implementation, the MoF sources said.
In addition, it would also support the government in finalizing PFM Action Plan and related change management for the implementation of PFM Strategy, they added.
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