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Commentary

WB's concern should have been our own

Abu Ahmed Guest Columnist
World Bank president Lewis T Preston recently visited Bangladesh. He signalled that unless Bangladesh performs better economically, It will face hardship In future in getting aid. He specifically mentioned Vietnam. Cambodia and former Soviet Republics as other candidates for World Bank's soft loan.
The World Bank president also broke tradition to meet the politicians at the other end. who are not directly in the government but who are often found to be critical about World Bank's policy to LDCs. For the first time, the crymongering politicians heard directly from a chief executive whose organisation tn many ways is influencing the direction and level of Bangladesh’s development.
One concern the World Bank (MB) has In mind is the proper use of the money It lends to Bangladesh. The second concern is about overall health of our economy, In the face of growing population and poverty despite billions of dollar of aid. The Bank, It seems, now emphasises on two aspects — preventing poverty from further aggravation and stimulating the economy to achieve sustainable growth through various structural reforms and adjustments.
The Bank prescribed withdrawal of subsidies from the state-run enterprises, retrenchment the excess employees from the public sector, privatisation of public enterprises and tying the wages to productivity — to achieve these objectives, especially the latter. No sane mind will (Ind fault with these prescriptions. The Bank prescribes these when a particular LDC does not do these on their own but turn to It for aid after its tall is further sunk in the mud.
Bangladesh is a typical LDC which miserably failed In her in-house economic management, and very frequently turns to the Bank for soft loans. We must understand that there is a limit to soft loans because all other LDCs also seek the same. Also, soft loan has a cost. First, the loan cannot be used at will by a recipient, and second, the amount of soft loan Is always small, not enough to undertake any big economic development programme. Other loans carry interest rates which a country Bke ours finds hard to pay.
Many poor countries Including Bangladesh are Investing much less than required amount to attain a targeted growth rate. The result Is that year after year these countries are . moving around the same level of economic development which Is very low and marked by widespread poverty, unemployment and high population growth rate. The WB, at best, can help to break this vicious circle but It itself cannot pull these LDCs from this state of malaise. The poor countries themselves are to put their own efforts together keeping in mind the changing situation of the world.
Very often it Is argued that when the western Industrialised countries including USA are subsidising their agriculture. what Is the logic of withdrawing subsidy from Bangladesh's agriculture sector as the WB prescribes. It is true that the USA and western European countries are subsidising their agriculture, but they do not subsidise many other sectors of the economy like Bangladesh. When a sector or two are singled out as priority sectors, they can be given support
' in the form of subsidy, but whole economy, on no pretext, can be subsidised. The problem with Bangladesh is that it wants to subsidise too many sectors and wants to forget that subsidy underwrites inefficiency in many forms.
When public enterprises tn industrial sector canrtot be run on commercial basis then wherefrom money 1s to come to keep them going? Critics will say earning by public enterprises is a relative matter, because when Imports are restricted they will earn profit and when imports arc liberalised earnings will fall. We cannot expect an import-restricted regime always. If Import restriction prevails for a long time ■ consumers pay a higher price for what they consume. Whether money is used in public enterprises or private enterprises does really make a lot of difference. Money used in the private sector bring more profit, hence privatisation of public enterprises is advocated.
Many other say that public enterprises offer social benefits like employing more people, reporting truth to the government and keeping the price level stable for products. But if they actually lose monetarily by doing so, the ultimate result will be that social cost will be higher than the social benefits the public enterprises are thought to be rendering.
Our energy sector is In a total mess — 45 per cent of the total electricity produced are lost through system loss, which is nothing but a collusive product of corruption and inefficiency. In our neighbourhood, the loss is no more than 25 per cent. The WB kept credit to this sector suspended for about two years as a result of such inefficiency. Government formed the Dhaka Electric Supply Authority (DESA) to pacify the WB with a much drum beat, but any one who believes that DESA will be able' to reduce the system loss will be only fooling himself.
DESA itself Is a public enterprise, how can then It be expected to rectify the inefficiency prevailing in the PDB which IS another public enterprise? The Important step would had been allowing an organisation for the distribution purpose in the private sector, or at least having a public-private Joint collaborative project.
True, we are facing additional problems because of the suspension, but it is more true that unless we do something seriously about this sector, money will be simply misused in the present framework. The production of electricity In the private sector also can be considered. Production of energy through private sector-based small generators is found to be cost efficient. Bangladesh should consider a switch to private sector-based system both for production and distribution purposes.
The energy sector. It seems, is hostage to militant trade unionists. They are dictating almost every aspect of energy management, it is the government which is to face them po litlcally. If it cannot face them, it will be no use to take the issue to the WB and say that but we are helpless because of the labour unions. The WB should also see whether a government is governing or being governed, no matter how democratic it claims to be.