WB keen to help Bangladesh in its transition
The World Bank has given the highest priority to helping Bangladesh reach the upper middle-income status by 2031 in its new country partnership framework (CPF), said the lender's managing director of operations.
Axel van Trotsenburg, the WB's managing director of operations, conveyed the intent during his meeting with Finance Minister AHM Mustafa Kamal yesterday, according to a finance ministry statement.
The Dutch-Austrian national is responsible for the WB's operations across the world, with a footprint spanning more than 140 offices. He is in Dhaka on a three-day visit to mark 50 years of partnership between Bangladesh and the World Bank Group.
During the meeting, van Trotsenburg discussed different issues of the CPF in detail with Kamal.
The new CPF encompasses fiscal 2022-23 through 2026-27 and is synced with the government's 8th Five-Year Plan. The WB's latest Systematic Country Diagnostic (SCD) update informs the CPF.
The SCD update identified four frontier challenges which, if tackled properly, can enable Bangladesh to accelerate its transition to a higher-middle income country level of development.
The challenges include the private sector's inability to drive growth and job creation for a lack of competition.
"Only a few large firms, including conglomerates, drive formal sector markets. Such firms remain mostly inward-looking and benefit from rents from protected domestic markets and RMG exports under special incentive programmes, and from being supported by close links with the banking sector," the WB said in the SCd.
Another challenge identified is that the pattern of spatial transformation is inefficient, unsustainable, and less inclusive.
"The current urbanisation process is creating significant negative externalities from environmental degradation and congestion, such as decreased productivity and inclusivity, and has resulted in a rising number of urban poor."
The recent increase in spatial welfare disparities across the country, such as access to quality education, health and other basic services highlights the country's challenges in managing the country's overall spatial transformation, the WB said.
Climate and environmental vulnerabilities pose serious risks to sustainable growth.
"Bangladesh is one of the world's most vulnerable countries to climate risks. Adapting to climate change remains a serious challenge to the country's development, especially in terms of managing its delta environment, which makes it particularly vulnerable to sea-level rise."
Climate change poses a serious threat to the country's agricultural productivity growth, said the Washington-based multilateral lender.
"Fourth, cutting across the above three challenges are weak institutions and markets."
There are significant gaps Bangladesh needs to overcome in terms of the overall quality of institutions, including capacity, regulatory quality and availability of formal institutions to create markets and make them contestable, it said.
Key areas for institutional capacity enhancement in the public sector include public service modernisation, public financial management, public procurement, statistics and citizen engagement.
"In addition, the current regulatory environment is not conducive to developing broad-based private sector growth."
The country's poor performance in terms of business environment can be partly explained by many outdated laws governing economic issues such as foreign exchange, land and company formation.
"Regulatory rules often overlap or contradict one another, and administrative processes are opaque and poorly enforced. Such business environment challenges are underscored by the weakness of institutions available to support market-based development."
This SCD Update identified eight priorities to tackle the four frontier challenges and support the country's transition to upper middle-income status.
Four priorities are foundational, as they provide an essential basis to propel the country's transformation towards the upper middle-income status. Another four priorities are enabling priorities to shift gears for accelerated transformation.
During the meeting yesterday, Kamal requested the WB to fund the country's mega projects.
Besides, he stressed that WB can share its vast experience in different countries with Bangladesh for its graduation from the least-developed country bracket.
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