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Corporate sector to be accountable to JS

Govt to draft law, meet 12 more conditions to get $200m WB loan

Rejaul Karim Byron
The government has agreed to a World Bank (WB) condition to draft a law by June to make the corporate sector accountable to parliament
If the government fails to draft the law and to fulfil another 12 mandatory conditions by June it will miss the third tranche of the WB's Development Support Credit (DSC). On the other hand, if it can and the WB is happy, Bangladesh will get between $200 to $300 million by June.
The WB, which hammers away at private sector growth, feels that the country’s expanding corporate sector is not accountable to the
nation, which can lead to corruption and financial chaos.
The new law will introduce a system under which auditors will be appointed to look into the books of the corporate entities. The report of the auditors will then be placed at parliament.
"The government has to fulfil at least 13 such conditions," said a finance ministry source. The WB has spelled out a total of 64 conditions for the third tranche of the loan and 13 of them are mandatory to qualify to get the DSC's $200 million.
A DSC mission of the WB last month visited Dhaka and spelled out the conditions after discussion with the finance ministry. "If the government can fulfil all the 64 conditions, Bangladesh will get 300 million dollars," the source said.
The government is also compiling performance reports of all the ministries to present before parliament However, it has not yet set the deadline of the task, as it is not one of the 13 mandatory conditions, sources said.
To ensure accountability of the corporate sector, the WB recommends promulgation of a ’Financial Reporting Act’, which will include a provision for an independent oversight financial reporting council. The council will monitor how the auditors are conducting their assignment at the corporate bodies.
The WB will provide technical assistance and a consultant to draft the law. The consultant will review similar laws in other countries and suggest how it can be framed in the context of Bangladesh.
The government, under another mandatory condition, must reduce the financial losses of the state owned enterprises (SOE) by 10 percent by June. This means the SOEs must not incur losses more than Tk 300 crore, which was Tk 339 crorein thelast year.
The finance ministry informed the WB that the government had succeeded in reducing the SOE losses by 4 percent by December. The ministry believes that reducing it by 10 percent is a doablejob.
"The WB mission also told the government that to avail itself of the DSC tranche it will also have to qualify and get the $70 million worth fourth instalment of the Poverty Reduction Growth Facility (PRGF) loan of the International Monetary Fund (IMF)," said a finance ministry official.
Bangladesh was supposed to get the PRGF instalment in January. But its failure to fulfil some important conditions has stalled the disbursement process.
The government by June will also present a procurement law before parliament. It already has framed a draft of the law incorporating the existing procurement guidelines and the WB believes itisin the right track.
The WB also wants the government to make the Anti-Corruption Commission (ACC) fully staffed and operational. Although, by the book, the newly formed ACC is operational, it is unable to operate due to lack of manpower.
In the administration, the government should implement new personnel management, including extended merit-based promotions, transfers within clusters, revised compensations and enhanced training.
Sources said although the finance minister last year announced that the ministries had been put under four clusters in this line, there had been no practical change in the way administration was managed.
The government is also required to implement the first phase of new budget process in at least four selected ministries. Sources said the finance ministry is already working in this line and framing the upcoming budget accordingly.
The National Board of Revenue (NBR) will have to be modernised and strengthened. Special focus will be given on audit and information technology. NBR sources said it has made a strategic plan in this regard.
The WB also wants the government arrears in the power sector not to exceed three months of receivables. The power authorities must reduce receivables from the autonomous public entities and private customers to not more than six months' bills by December 2004 and three months by June 2005.
"It'll be possible to reduce the government arrears through budgetary allocations by June," a finance ministry source quipped.
Other mandatory conditions include announcing a policy to sell captive private power to the national grid (presently 1,000MW captive power is generated outside the national power production of maximum 3,500MW) and remove all import restrictions other than on grounds of health, religion, national security or environment.