WB okays $23m loan to improve procurement system

The World Bank has approved a credit of US$23.6 million from International Development Association (IDA) to help improve public procurement system of Bangladesh. The approval was given in Washington on Thursday, the World Bank said in a statement issued here on Friday.

"Public procurement is an integral part of the development process and a priority area for governance improvement," said World Bank country director Xian Zhu.

He said budgets get translated into services in large part through the operation of the procurement system.

"Improving the use of public resources with greater efficiency, transparency, and accountability, and tackling corruption will help give better value for money and contribute to reducing poverty," he added.

The Public Procurement Reform Project II will support procurement reforms by improving procurement quality through better management and monitoring.

It aims to strengthen procurement management at sector level, create a sustained program of developing skilled procurement professionals, and will introduce electronic government procurement in target agencies and the Central Procurement Technical Unit on a pilot basis. It is also designed to create greater awareness of a well functioning public procurement system by engaging civil society, think tanks, and the private sector.

Shortfalls in core governance, including inefficiencies in public procurement practices, poor financial management, corruption, and quality of civil service have led to low expectations for public services in Bangladesh.

It has contributed to the high cost of doing business that, in turn, has deterred rapid private sector development. The Country Procurement Assessment Report 2002 for Bangladesh identified procurement as the single most significant issue affecting public sector performance, with enormous wastage of money. Following the report's recommendations, with the World Bank's technical assistance, the Government has been implementing a public procurement reform project that has successfully addressed key deficiencies in the legal and policy framework.

The Government established a procurement policy unit within the Implementation Monitoring and Evaluation Division (IMED) of the Ministry of Planning, issued Public Procurement Regulations in 2003, and in July 2006 passed a procurement law in the Parliament. The law and the regulations contain most features of international good public procurement practices.

In addition, it developed a critical mass of procurement professionals, trained over 1,800 staff, and has been piloting an automated procurement performance tracking system. "All of these actions are contributing to building confidence among people about the country's own procurement system," said the World Bank statement.

"Widespread corruption within procurement systems is particularly damaging since it perverts public spending, reduces the value of public assets, and distorts the economy," said Zafrul Islam, World Bank's Lead Procurement Specialist and the Project Team Leader. "Public procurement is an arena where corrupt practices can be exposed and addressed, and successful implementation and monitoring of reform actions can help curb corruption," he added. The project will target four agencies of key sector ministries (target agencies) chosen for the size of their annual procurement spending-Roads and Highways Department (RHD), Local Government Engineering Department (LGED), Rural Electrification Board (REB), and Bangladesh Water Development Board (BWDB). This project builds on the first Public Procurement Reform Project, which was approved by the World Bank on May 2, 2002. The credit from IDA, the World Bank's concessionary arm, is interest-free and has 40 years to maturity with a 10-year grace period. It carries a service charge of 0.75 percent.