Govt-WB spat affects aid flow
Saturday, 10 July 2010
FHM Humayan Kabir
The aid from the world's largest multilateral donor World Bank (WB) has been hard hit in the just concluded fiscal year due to a row between the government and the global lender on the amendment to the public procurement (PP) law, officials said.
The finance ministry official said the government has received some US$ 400 million aid in 12 months of FY2010.
The commitment of loans and grants by the Washington-based lender for Bangladesh has also dropped significantly to less than $700 million in the last fiscal, economic relations division (ERD) data showed.
The aid commitment in the previous FY2009 crossed the one billion dollar mark, the ERD said.
"The World Bank's aid disbursement has shrunk significantly in last fiscal. The row between the donor and the government has affected the aid commitment and disbursement for about three months in the middle of FY2010," a senior ERD official told the FE.
The Washington-based lender has raised its serious reservation about the government's move to revise Bangladesh's standard public procurement rules, when the administration drafted amendment to the law.
The government at last amended the existing public procurement rules (PPR) in August 2009 and the public procurement act (PPA) in November last year relaxing 'working experience' and 'financial qualifications' of the contractors in submitting bid for public purchase up to Tk 20 million.
In the second week of November in a letter to the finance minister, the World Bank asked the government to "temporarily put on hold" local procurement of its ongoing 26 projects in the country, saying the amendments made to the PPA are not consistent with the Bank's procurement guidelines.
The WB has raised objections to several key amendments such as the lottery system to break a tie in bidding, allowing inexperienced contractors for development works and rejecting bids with price above or below five per cent of the official estimate.
A World Bank official told the FE that their office was dissatisfied at the amendment to Bangladesh's "world class procurement law" since its revisions have affected the credibility of the original one.
After the amendment, the World Bank is following its own rules for the local procurement, which has affected some aid disbursement in due time in the country, he said requesting anonymity.
The senior ERD official said the multilateral donor has lost its position in the last FY2010, as the Asian Development Bank has outshone the global lender providing the highest amount of aid.
The Manila-based lender during July-April period last fiscal disbursed $969 million in assistance, the ERD data showed.
The ERD official said the row between the government and the World Bank on the procurement law has also delayed loan processing of more than 10 projects involving $2.50 billion during the stipulated time until FY2010.
The Washington-based lender in its last lending programme (Country Assistance Strategy) during 2006 to 2009 period earmarked more than a 3.5 billion dollar fund for Bangladesh to improve its investment climate, governance and empower the poor.
But the government has failed to confirm most of the fund components upon completing necessary negotiations and other processes resulting in the fund being caught in a web of uncertainty, the ERD official said.
The aid from the world's largest multilateral donor World Bank (WB) has been hard hit in the just concluded fiscal year due to a row between the government and the global lender on the amendment to the public procurement (PP) law, officials said.
The finance ministry official said the government has received some US$ 400 million aid in 12 months of FY2010.
The commitment of loans and grants by the Washington-based lender for Bangladesh has also dropped significantly to less than $700 million in the last fiscal, economic relations division (ERD) data showed.
The aid commitment in the previous FY2009 crossed the one billion dollar mark, the ERD said.
"The World Bank's aid disbursement has shrunk significantly in last fiscal. The row between the donor and the government has affected the aid commitment and disbursement for about three months in the middle of FY2010," a senior ERD official told the FE.
The Washington-based lender has raised its serious reservation about the government's move to revise Bangladesh's standard public procurement rules, when the administration drafted amendment to the law.
The government at last amended the existing public procurement rules (PPR) in August 2009 and the public procurement act (PPA) in November last year relaxing 'working experience' and 'financial qualifications' of the contractors in submitting bid for public purchase up to Tk 20 million.
In the second week of November in a letter to the finance minister, the World Bank asked the government to "temporarily put on hold" local procurement of its ongoing 26 projects in the country, saying the amendments made to the PPA are not consistent with the Bank's procurement guidelines.
The WB has raised objections to several key amendments such as the lottery system to break a tie in bidding, allowing inexperienced contractors for development works and rejecting bids with price above or below five per cent of the official estimate.
A World Bank official told the FE that their office was dissatisfied at the amendment to Bangladesh's "world class procurement law" since its revisions have affected the credibility of the original one.
After the amendment, the World Bank is following its own rules for the local procurement, which has affected some aid disbursement in due time in the country, he said requesting anonymity.
The senior ERD official said the multilateral donor has lost its position in the last FY2010, as the Asian Development Bank has outshone the global lender providing the highest amount of aid.
The Manila-based lender during July-April period last fiscal disbursed $969 million in assistance, the ERD data showed.
The ERD official said the row between the government and the World Bank on the procurement law has also delayed loan processing of more than 10 projects involving $2.50 billion during the stipulated time until FY2010.
The Washington-based lender in its last lending programme (Country Assistance Strategy) during 2006 to 2009 period earmarked more than a 3.5 billion dollar fund for Bangladesh to improve its investment climate, governance and empower the poor.
But the government has failed to confirm most of the fund components upon completing necessary negotiations and other processes resulting in the fund being caught in a web of uncertainty, the ERD official said.