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Poor governance, law & order draw donor flak

Two-day BDF meeting reviews government track record

Staff correspondent
Donors yesterday rebuked the government for failing to improve governance, law and order and extortion on the first day of the two-day meeting of the Bangladesh Development Forum (BDF).
The World Bank (WB) and the International Monetary Fund (IMF) said these are the main hindrances to growth and poverty eradication.
They asked the government to evolve clear strategies to bring about fundamental improvements in these areas.
The government's relations with the NGOs, investment climate, size of the cabinet, red tapism, port problem and salary of the govern-
ment staff also came up during discussions.
The meeting held at a local hotel was attended by delegations from around 20 countries and representatives from various multilateral development agencies. Prime Minister Khaleda Zia inaugurated it as chief guest.
Finance and Planning Minister M Saifur Rahman, WB Vice-president for South Asia Meiko Nishimizu, IMF's Assistant Director Chanpen Puckahtikom and Secretary of the Economic Relations Division (ERD) Anisul Hoque Chowdhury also spoke.
"Of immediate concerns are a host of governance issues, notably law and order," the IMF vicepresident said. "It will be important
to define clear strategies for bringing about a fundamental improvement in this areas."
A European country representative said the government has been acting adversely against some NGOs. In reply, officials of the local government and rural development ministry said the government has been working closely with the NGOs and a complete mutual understanding exists.
They also said actions against some NGOs were taken following specific allegations verified by the NGO bureau.
Donors by and large identified law and order deterioration, excessive bureaucratic control and low human rights record as the main hurdles to investment, both local
and foreign.
Saifur defended by saying that Bangladesh offers one of the best investment incentives. But donors pointed out that incentives alone are not enough to make the difference. What Bangladesh really needs is a congenial climate, they said.
Donors also wanted to know how the government wants to form an independent anti-corruption commission and how the rural people are going to be benefited by it.
Nishimizu said the commoners are the worst sufferers of corruption, eradication of which can raise the GDP by 3-4 per cent. When the donors questioned the size of the jumbo cabinet, Saifur admitted that a huge amount of tax payers' money is being spent to maintain this size.
Nishimizu said the issue would be further discussed today since it cuts across many vital issues.
She said a number of ministries are redundant and pointed out that the planning and finance ministries can be merged.
She also felt that salary of the government staff should be increased, matching with the private sector's, to ensure their productivity. "It is a shame that they get so little as salary," she said.
The development partners also emphasised the need for reforms in the state-owned enterprises (SoEs) by shutting or privatising the loss-making units, reforms in the nationalised commercial banks (NCBs) and restricting their lending to curb the flow of new non-performing loans.
They hailed the government's efforts in accelerating the GDP growth rate to 5.2 per cent in the current fiscal, comfortable foreign exchange reserve, low inflation
rate, successes in immunisation, reduced population growth rate and primary school enrollment.
"So, what is stopping the story? Where is the hindrance to the good news?" Nishimizu asked.
"In a word, if I may, I think the answer is governance. And linked to it in the very same breath: law and order," she said.
"Corruption and law and order are the twin-plague that holds them back."
She said the incumbent government moved swiftly to restore macro-economic stability by initiating significant structural reforms in banking, SoEs, education and the energy sector.
"And, the hallmark of these reforms has been the singular focus on good governance," she remarked.
Quoting from the Quran, she said, "Verily never will Allah change the condition of a people until they change it themselves, with their own souls."
Puckahtikom underscored the need for improving economic governance to face the challenges ahead.
"The need for improved gover-
nance extends across diverse areas of public resource management, from tax and customs administration to expenditure management and to lending practices in the NCBs," she said.
Saifur said the government succeeded in restoring macrostability through reduction of budget deficits to 4.7 per cent of GDP last year and to 4.2 per cent this year with commensurate improvement in the consolidated deficit.
But the European Union, Sweden and the UK said the macroeconomic stability will not be sustainable unless non-economic issues like corruption, law and order and human rights are addressed first.
He said that the government has decided to privatise one NCB, hire professional management for another and take a few professional experts on board for the rest two.
On law and order, Saifur said the business community welcomed the 'Operation Clean Heart'. It received broad-based support of the people because it substantially achieved its objective to curb crime.