Bangladesh to get $500m WB loan to boost governance, financial sector stability
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The World Bank (WB) has approved $500 million in financing to help improve trust in Bangladesh’s public institutions through increased accountability and transparency, and enhance corporate governance and stability in the financial sector.
The Strengthening Governance and Institutional Resilience Development Policy Credit supports public and financial sector reforms, which are key for sustained economic growth. The reforms will also lay the foundations for improved services for vulnerable households, according to a statement.
Improvements in how public finances are managed are important for Bangladesh’s economy to grow sustainably. The government is taking ambitious steps to make its institutions more open and answerable, so they can serve the people better,” Gayle Martin, World Bank Interim Country Director for Bangladesh, said in the statement.
“This financing will support the government's efforts to strengthen its policies and regulatory framework to build a stronger, more inclusive economy that benefits everyone. Through another project that was approved last week, we are supporting the government to implement these reforms.”
Currently, Bangladesh has one of the lowest revenue-to-GDP ratios among middle-income countries, significantly limiting the government’s ability to deliver quality services to its people. This program supports reforms aimed at improving domestic revenue mobilisation.
The reforms would make tax administration and policy-making more transparent and efficient, aligning with international best practices. Furthermore, it will support reforms to adopt a more strategic, systematic, and transparent approach to managing tax exemptions, which will require Parliamentary approval for all exemptions. This would represent a significant step away from current ad hoc practices.
The financing will also strengthen corporate governance and risk management frameworks by aligning financial reporting with international standards and increasing transparency.
It will help improve financial sector stability by providing the Bangladesh Bank with a complete range of resolution powers to address vulnerabilities in the banking sector.
A third strand of reforms will improve transparency, accountability and efficiency across the public sector. By 2027, all government project appraisal documents will be required to be made public.
The public procurement system will be required to use electronic government procurement (e-GP), disclose beneficial ownership, and remove price caps to foster competition and reduce corruption risks.
To improve financial accountability and transparency in the public sector, the Office of the Comptroller and Auditor General’s auditing capacity will be strengthened.
The independence of the Bangladesh Bureau of Statistics will improve data transparency, leading to better service delivery for citizens.
Finally, cash transfer programs for the poor and vulnerable will be made more effective with the operationalisation of a dynamic social registry.