The World Bank yesterday approved a $300 million fund for Bangladesh to empower the local governments that would benefit more than 11.5 crore residents.

Under the programme, discretionary funds would enable communities to decide and implement local development priorities at grassroots level, the multilateral lender said in a statement.

Built on the success of two predecessor projects, the Local Governance Support Project-3 or LGSP-3 will cover all the 4,550 union parishads, the lowest tier of the local government. The project will establish national budget transfers to the union parishads as a norm.

On Tuesday, the Executive Committee of the National Economic Council approved the project.

The project will also be expanded to the urban local government and pilot a fiscal transfer system in 16 municipalities in all eight divisions of the country, according to the statement. For the first time, the eligible municipalities will receive block grants with discretionary power to select sub-projects to improve service

delivery.

"The World Bank has been a longstanding partner in supporting the government's vision of advancing decentralisation and empowering the local governments," said Rajashree Paralkar, World Bank's acting country director for Bangladesh, Bhutan and Nepal.

"A predictable and transparent financial resource transfer system will help the union parishads and the participating pourashavas to further improve planning, participatory budgeting, public finance management, and accountability."

To institutionalise the fiscal transfer system, starting from the fourth year of the project, the government will fully finance the union parishad block grants out of the national budgetary allocations, with all the principal features.

This will allow the union parishads to respond to local needs more effectively, and further strengthen the accountability linkage between union parishads and their citizens, the World Bank said.

"Like its predecessors, LGSP-3 will also place a strong emphasis on gender empowerment. At least one third of the ward committees and supervision

committee members will continue to be women," said Shenhua Wang, World Bank's team leader for the Local Governance Support Project-3.

"To ensure women's decisions are implemented, 30 percent of the grant will be earmarked for schemes prioritised by women."

Since 2011 through the predecessor Local Governance Support Project, all union parishads have been receiving annual block grants with full discretion to deliver local services, after undergoing rigorous audit process.

The available funds that each union parishad receives annually for discretionary spending grew by more than 11-fold since 2006, when the first Local Governance Support Project pioneered the provision of block grants to the union parishads.

The LGSP-3 will maintain the momentum and continue to support transfer of enhanced fiscal resources to union parishads.

The credit from World Bank's International Development Association, which provides grants or zero-interest loans, has a 38-year term, including a six-year grace period and a service charge of 0.75 percent, according to the statement.