Bangladesh-World Bank at 50: An evolving partnership
The 50 years of development partnership between the World Bank and Bangladesh is marked with mixed feelings.
There have been many controversies, the most serious of which is the Padma bridge financing debacle. There is also a perception that the WB conditionalities in the context of the structural adjustment loans have often been hurtful to Bangladesh's development.
Despite these concerns, few would deny that the financing and the knowledge sharing from global experiences brought in by the WB have facilitated progress in several areas of Bangladesh's development, especially in education, social protection, irrigation and flood control, transport and environment.
The WB began this partnership with a $50 million Emergency Recovery Credit in 1972. Since then, the WB committed more than $38 billion in financing.
Today, Bangladesh has the largest ongoing programme of the International Development Association (IDA), the arm of the WB that provides concessional financing. In aggregate, the WB is also the country's largest external supplier of development funding. Additionally, the IFC and MIGA have provided some $3 billion to support the Bangladesh private sector.
The functioning of the WB as a development partner has evolved over time.
In the early years, the relationship was often perceived by Bangladesh policymakers as one of arrogance and an inflexible "take it or leave it" stance of the WB.
Policymakers often felt that the WB staff dealing with low-income countries like Bangladesh were very arrogant, with a know-all and inflexible attitude.
The carrot of loan financing was often used as a source of power and authority. And the design brought in from Washington was pushed as the only way to go.
There was little willingness among the WB staff to listen and learn from country knowledge and experiences.
There was also a perception that both the Bretton Woods Institutions, the WB and the IMF, were captured by G7 leadership, especially the US, and their domestic policy agenda found its way into the functioning of the two global financial institutions.
The unfortunate Padma bridge debacle that substantially hurt Bangladesh's relationship with the WB is cited as a prime example of this political capture of the WB by the US.
In recent years, there has been marked improvement in the way that the WB conducts business with its member countries.
The word "donor" has been replaced by "development partner", country offices have been established with an empowered country director located in the country and available for consultation and conflict resolution on call, and country partnership documents are prepared with full consultation and involvement of country officials.
The dialogue over policies and the design of loans is now done with full participation from government officials, and the volume of loans and the types of loans are now substantially determined by country priorities.
These major changes in the way that the WB does business with Bangladesh and other member countries have significantly improved the relationship between Bangladesh and the WB. It has also strengthened the development impact of WB operations in Bangladesh.
Moving forward, the policymakers must always be in control of the development agenda and accept only those loans including technical assistance programmes that are consistent with Bangladesh's development priorities.
To make this fully effective, Bangladesh must also strengthen its capacity to negotiate with the WB staff.
The political role of G7 and especially the US remains a serious issue for the effectiveness of both the Bretton Woods Institutions. This is not unique to Bangladesh.
The WB's management often has little control in this matter. On the other hand, there is a strong role that member countries represented in the WB's operational board and the board of governors can play.
Non-G-7 members like Bangladesh, India, Brazil, Pakistan, China, Korea and Vietnam can mobilise majority member opinions to fight back and adopt policies that lower the scope for G7 members to insert their political agenda in polluting normal business operations of the WB.
Approval or withdrawal of lending operations must be dealt with on merit and strictly in line with agreed operational principles and policies.
The author is a former country director and chief economist of the WB and the vice-chairman of Policy Research Institute of Bangladesh