BANGLADESH EXPERIENCE PUBLIC FINANCIAL MANAGEMENT AND PR OCUREMENT A presentation for Concurrent Session on Public Financial Management and Procurement

Contents Financial Management: Public Financial Management Reforms Lessons Learnt Harmonization, Alignment and Simplification- broad picture Future Challenges Procurement  Procurement Reform  Lessons Learned & Contributions to Harmonization Use of Country Systems: Procurement in relation to PFM Future Challenges

PFM Reforms Joint Diagnostic studies : Committee on Reforms in Budgeting and Expenditure Control ( CORBEC) – DFID and GOB; Way Forward for FM Reform in Bangladesh- DFID and GoB Country Financial Accountability Assessment (CFAA)- World Bank, UNDP and GoB PFM indicators as a part of on-going Joint Public Expenditure,Procurement and Financial Management Review -DFID, WB & GOB

PFM Reforms (continued) Major PFM Reforms: Policy & Operational Reforms in Budgeting and Expenditure Control (RIBEC), Financial Management Academy ( FIMA), Reforms in Govt Audit ( RIGA)- DFID Strengthening the Office of Comptroller and Auditor General (STAG) – UNDP ISMOF & EEFM- ADB Strengthening GOB’s FM Capacity and Building Institutional Capacity of the Office of the C & AG - World Bank Development Support Credit I, II and III- World Bank ROSC Fiscal Transparency – IMF and Financial Management Reform Program –FMRP (DFID & Dutch)

PFM -Lessons from Harmonization Lack of common understanding and proper coordination among various Ministries and Govt Departments Differing Development Assistance Strategy by Donors PFM priorities often not synchronized and lost

Harmonization- Broad Picture PEDP II: 10 donors under one implementation Framework- ADB leads Common PFM system (Reporting and Auditing) Multi- lateral donors like WB and ADB harmonized individual requirements ( Common Withdrawal Application, audit reporting period) Agreed FM Improvement Plan

Harmonization- Broad Picture (continued) HNPSP: Pool and Non Pool Donors under common PFM system - WB leads NO PIUs ; No Special Account Govt spent first including donors share Agreed Audit TOR with C & AG Common Audit and Reporting Strengthen FM Framework including improvement plan for the Sector Alignment of donor assistance on PFM along with GoB priority plans, PRSP, ROSC, CAS, PER PFM Task Force – a common platform by donors and Govt led by MOF An Aid Governance Group (ERD) consisting of Donor and Govt – Country Harmonization Action Plan

Challenges : DPs and GOB work under an uniform development assistance strategy for PFM Progress Monitoring mechanism and timely adjustments of action plan More Flexibility and Simplification of DPs FM policy and procedures to achieve better country outcome More awareness on the value addition on Harmonization and Alignment Approaches More delegation of responsibility and authority at country level

Procurement Reform: background Low Level of public procurement performance constrained national development The Country Procurement Assessment Report (CPAR) identified Key deficiencies in the public procurement system

CPAR Findings & Recommendations (2001): Opaque public procurement practices are the single most serious issue affecting whole public sector’s activities Set up a Public Procurement Policy Unit Issue Public Procurement Rules Streamline Proc. Process & Financial Delegation Develop Procurement Management Capacity Publish Contract Awards Introduce Appeal Procedures

Proc. Reform & Achievements DSC II & DSC III Procurement Law & Performance triggers IDA Credit :August 2002 / ~ $5 million/ 3 years Bangladesh now has a transparent public procurement regulations, accepted by most DPs Established permanent procurement policy unit Mandated harmonized procurement regulations & STDs Publishing contract awards Mandated annual procurement review (audit) Mandated independent appeal procedures for protests Streamlined financial powers & proc. approval process Developed national trainers & Institutionalizing capacity

Lessons from Harmonization Joint effort of the Government and DPs Participatory Approach, Flexibility/Adaptability of new reform Procedures Country Ownership Agreed CPAR (DPs & GOB) GOB’s political commitment for proc. Reform Implementation of all CPAR recommendations Implementation of reform with credit (NOT grant) Permanent policy unit with Government resources Critical mass of national trainers (40 p) Institutionalize proc. capacity with local institute MIS for monitoring reform outcomes/performance

Contributions to Harmonization Aid Governance Group- ( ERD) Harmonizing Govt and Donors procurement requirement along the Procurement Regulations Primary Education Development Program II Country’s own harmonized procurement regulations for all local procurement (10 DPs & GOB agreed) Local- 85% of procurement in PEDP II. All local procurement from common pool (DPs) Annual procurement review (audit) as per GOB Proc. Regulations (by independent consultant) HNPSP: Harmonized Procurement Procedures & agreed plan for all local procurement

Contributions to Harmonization Seven IDA funded projects including other DPS using Government Regulations for all local procurement Piloting use of PFM framework for procurement as part of PFM baseline and performance indicators Integrated analytical review of procurement with PFM and Public Expenditure group- World Bank, DFID and ADB Centralized MIS in CPTU/IMED (using above indicators) for effective monitoring of procurement outcomes and performance (CPTU Website: cptu.gov.bd)

Future Challenges Compliance Monitoring of Procurement Reform Roll out the capacity building across the country institutions including private sector Piloting E-procurement Mindset and Behavioral change by all parties and Sustainability of already established CPTU and corresponding strengthening of IMED.