Scope breach of UN convention: WB

The World Bank (WB) said yesterday the provision of whitening money in the proposed budget for the next fiscal year (FY) is in conflict with the UN Convention against Corruption Bangladesh signed, and anti-graft laws of the country.

It described the budget as expansionary and innovative but protectionist. The increase in protection will hurt consumers while not benefiting the economy as a whole, it claimed.

The WB gave its reaction to the proposed budget at a press briefing at is office in the capital.

Senior economist at the WB Dhaka office Dr Zahid Hussain presented a detailed analysis of the budget for FY2009-10.

Outgoing Country Director of the WB Xian Zhu gave the address of welcome at the briefing.

"It is not clear in the policy how the government will differentiate between the money earned through use of arms, drug trade, robbery and stealing, and the undisclosed money earned through legal way," Zahid said responding to queries from journalists.

"The two categories of money are not the same. So much more clarity is needed even in practical terms, " he said.

"There is no controversy in Bangladesh regarding the moral or ethical side of whitening money. All are saying that whitening money is not right as it discourages honest taxpayers," the WB official said in reply to a question.

He went on, "Morally we all agree that it is not a right policy. Another practical concern is that much black money will not get whitened or much revenue earned from the provision. There is also question regarding how much investment will be attracted by the public-private partnership (PPP) initiative."

He mentioned that Bangladesh has passed anti-money laundering law. This (money whitening) provision is in conflict with that. And it is not clear how these conflicts would be addressed, he added.

WB economist Priyani Malik pointed out that Bangladesh signed the UN Convention against Corruption in 2007. The scope for money whitening undermines the status of Bangladesh as a signatory to the convention, he said.

Priyani further said domestically the Awami League government ratified in parliament the money laundering prevention act and anti-terrorism act. The scope also undermines these acts.

Zahid said the expansionary fiscal stance of the budget is appropriate given that growth is subject to significant downslide risks, but its effectiveness will depend on the quality and quantity of actual spending.

The ambitious projected spending hinges on mobilising concessional external financing and strengthening the revenue earning efforts, he said.

Implementation of the budget is a big challenge, he said, adding ADP ( annual development programme) implementation rate declined as original ADP size grew bigger and bigger over the years.

The WB economist said the budget is innovative as it also makes provisions for infrastructure development beyond the traditional ADP, and provides for dealing with the possible impact of global recession.

He appreciated that for the first time the proposed budget introduces the concept of PPP and stressed proper institutional arrangement for its implementation.

The WB country director said the FY- 10 budget broadly captures the promises made in the government's election manifesto.

Against the backdrop of global economic recession, the government rightly emphasised an expansion in public spending. At the same time, it must focus on strengthening its ADP implementation capacity, said Xian Zhu.

He also said strengthening accountability and transparency in the procurement process, selection of projects, determination of project costs, bidding process and evaluation of the quality of completed project would lead to faster and effective ADP implementation.