Mr. Secretary Azam of ERD,
Ladies and Gentlemen, Good afternoon!
I am delighted to be here to sign the financing agreement for the Local Governance Support Project 3 on behalf of the World Bank.
Bangladesh has had a long history of local governance stretching back over 150 years, but it’s only recently that local institutions have been able to start realizing their full potential in the development of the country.
Over the past decade, the World Bank and the Government, through the Local Government Division (LGD), have worked closely to implement the Government’s vision of a stronger and more accountable local governance system.
Started in 2006, Local Governance Support Project was the first national program to provide block grants to Union Parishads to utilize at their own discretion through a participatory process and after undergoing rigorous audit processes.
With World Bank support, fiscal transfers to Union Parashads for discretionary spending has increased from Taka 0.2 million in FY2007 to Taka 2.23 million per Union Parashad in FY2016, an 11-fold increase.
Now into its third phase, Local Governance Support Project 3 will ramp up the institutionalization of formula-based fiscal transfers to the Union Parishads and mainstream the annual financial audits of all Union Parishad accounts.
The government has made a very important commitment. This means that starting from the fourth year of the project, the government will fully finance the Union Parishad block grants out of its national budgetary allocations.
Local Governance Support Project 3 will also pilot the processes and principles underlying the Union Parishad grants in 16 Pourashavas (municipalities) having a population of 60,000 or less. Through the enhanced block grants, Pourashavas will have additional resources on top of their annual Government Development Program allocations to respond to local service delivery priorities and needs.
Further, web-based monitoring of Union Parishad functions, developed under Local Governance Support Project 2, will be made fully functional under Local Governance Support Project 3. Union Parishads will receive enhanced resources directly into their respective bank accounts, with the discretion on investment decisions through a participatory process.
Union Parishads will continue to remain accountable for utilizing their block grants through a number of measures, such as regular annual audits of their accounts, public disclosure of their budgets and other activities, as well as mandatory reporting of these higher government spending bodies.
A predictable and transparent fiscal transfer system will help the Union Parishads and participating Pourashavas to further improve planning, participatory budgeting, public finance management and accountability.
Ultimately, this project will help to deliver better services by local authorities to the citizens with efficiency and accountability.
I would like to thank the Ministry for Local Government, Rural Development and Cooperatives for its partnership with us in the decentralization agenda. Indeed, the ministry has been our key partner in our joint efforts to reduce poverty in Bangladesh. With the local government ministry alone, the World Bank has an ongoing program of close to $3 billion in 11 projects. This includes improving rural connectivity, water supply and sanitation, disaster risk management and safety nets. Local Governance Support Project 3 will add to that large and expanding partnership.
Ladies and Gentlemen, as you know, the World Bank was among the first development partners to support Bangladesh following its independence. Since then, the World Bank has committed more than $24 billion grants and interest-free credits to Bangladesh.
In recent years, Bangladesh has been the largest recipient of the World Bank’s interest-free credits. The World Bank also remains Bangladesh’s largest development partner, and our financing accounts for 25 to 30 percent of the country’s total external development financing annually. In the last five years, our support to Bangladesh has nearly doubled. We expect our support to Bangladesh to continue to increase significantly in the coming years.
I want to thank both the government and World Bank teams that prepared this project in a very short period of time. The preparation experience of this project also shows that when there is strong ownership, commitment and close follow-up by both sides, projects can be prepared well and quickly. We look forward to the early effectiveness of Local Governance Support Project 3.
I wish you all the best in the implementation of this important project and of the government’s broad decentralization agenda.