Transcript Position Paper English

Second PRSP and World Bank, IMF PrescriptionS
Urging for commitment in establishment of sovereignty
in poverty reduction planning.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Process lacking in preparing of 1st and 2nd PRSP
Preparation of PRSP during the
political government
Preparation of PRSP during the
Caretaker government
A committee was formed for preparing Committee is formed comprising only
the PRSP with involvement of civil
bureaucrat/senior government officials.
society and bureaucrat/senior
government and NGO officials.
Draft PRSP was discussed and
consulted with different level of
stakeholders in 5 divisions.
Draft 2nd PRSP is consulted in only
Dhaka and Barisal .
The draft PRSP has been sent to all
parliament members for consultation
Discuss and consultation is confined
among the advisors.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Some major policy features in 2nd PRSP
- The 2nd phase PRSP (2009-2011) is prepared without any performance
evaluation of 1st PRSP.
- There are no policy directives for government's direct investment in
reducing the poverty and creation of necessary employment.
- This PRSP has emphasized to privatization policies in all development
sphere rather than necessity of state regulation of economy.
- Preparing the PRSP has ignored the country’s reality and development
needs which is not relevant to long-term poverty reduction strategy.
- Emphasized the implementation of IMF, WB’s conditionalities of wholesale
privatization and liberalization and have been more focused in the 2nd
PRSP comparing with the 1st.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Result of 1st PRSP
Implemented of IMF, WB’s conditions:
- Emphasized contractionary monetary policy
- Implementation of structural Adjustment Policy
- Government has denationalized the State Owned Enterprises.
- Import liberalization is done and Tax has been reducing @25% from
300%.
Implementation of fiscal policies:
- Broadening the tax base and also planned in 2nd PRSP to bring the
agriculture under tax net
- Government has decreased her actual budgetary allocation in service
sectors like health, education and also promoting the private sector giving
different facilities, comparing to the inflation rate.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Pro poor development issues of policy matrix of 1st PRSP has not
implemented;
- Capacity building of State Owned Enterprises those could play a
significant role to accelerate the growth.
- Government didn’t implement the policy of increasing investment in real
terms especially in pro poor development sectors i.e. education, health
and agriculture. Rather these sectors had to face reducing budgetary
allocation in every year.
- Government didn’t follow the policy of reducing the borrowing trend from
domestic and foreign sources.
- Towards agriculture development government didn’t implement the policy
to strengthen the BADC (Bangladesh Agriculture Development Corporation)
activities especially for quality seed production and fair fertilizer
distribution.
- The policy was outlined to ensure the quality in Health and Education
sector that’s yet to be implemented.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Impact of 1st PRSP:
- During 1st PRSP (2005-2007) domestic investment has been reduced
drastically @16.7% from35% of GDP due to implementation of
contractionary monetary policy.
- Near 04 million people have gone down the poverty line (Source: BHES2005)
- Income inequality has been raised. According BHES information the
income inequality was 0.38 in 2000 and 0.46 in 2005.
- Government budget deficit is increasing and raised up to 4.9% of GDP in
2008-09 fiscal year from 3.8% in 2005.
- Extreme inflation (14.7% according government report) had to face
country which has made hardship of livelihood of people.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Policy Matrix-01: Macro Economic Management
Policy Issues:
- Government has to keep the budget deficit within a level of 5% of GDP
- Debt liability of the government shall not exceed 60% of GDP and outstanding of
external debt shall not exceed 40% of GDP
Our concern:
- The 2nd PRSP didn’t specify the issue on what will be the exact monetary policy to
be follow by government. This important policy issue has cautiously avoided and
given a scope to donors (IMF, WB) the unexpected intervention of controlling
our policy.
- Adopting the policy of external debt stock provides the legality to government to
borrow the external loan from donors. Because the 2nd PRSP didn’t clear the
government borrowing strategy for expected development outcome.
- This Macro economic management policy ultimately impacted the increasing of
budget deficit and also non-implementation of the pro poor issues as like as
past.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Policy Matrix-1.6: Accelerating Growth towards poverty reduction
Policy Issues:
-Increase the volume of private sector investment
-Access the poor to credit sector in free mode
-Pro poor investment will be @ 8.5% of GDP
-Broadening the tax base by bringing the agriculture and its sub sectors
under tax net.
Our concern:
- Policy of Pro poor investment have been reduced @ 0.5% comparing 1st
PRSP target.
-Bringing the agriculture and its sub sectors under tax net will hamper the
effort of attaining self sufficiency in food and marginal farmers will be looser.
- The policy didn’t the strategies on how the pro poor investment will be
materialized.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Policy Matrix-02: Resource Mobilization
Policy Issues:
-Tax policy unit will be separated from Tax administration and tagged with
ministry of Finance
-More import liberalization and reducing the import sensitive list is under
active consideration
- The Padma and Jamuna Oil company (State Owned Enterprises) will be
denationalized through sale in private sector
Our concern:
-Policy of separating the tax unit will create a scope for IMF to further
intervention in controlling the tax policy
-Thus IMF may pressure to govt. for reducing the corporate tax as well as
increase and broadening the individual other indirect tax
- Government will compelled to make more liberal her import policy that will
hamper the domestic investment and employment
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Policy Matrix-05: Development private sector
Policy Issues:
-Expediting the process of privatization govt. will denationalize new 26 no of
SoE (State Owned Enterprise).
-Existing Private sector investment policy will be revised and make more
easier.
Our concern:
- Govt. has denationalized 34 no of SoE during 1st PRSP period. That’s why
0.15 million labor force have been unemployed.
- According to new plan of denationalization of 26 SoE will unemployed more
0.2 million of labor newly.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Policy Matrix- 11: Agriculture growth towards poverty reduction
Policy Issues:
-Government will promote the organic food production and marketing
- Facilities will provide to develop of Bio Technology and its research
- Pro market policy for irrigation will be given emphasis
- Private sector participation will be facilitated to produce seed and
marketing
Our concern:
-Government has been promoting the commercialization of agriculture
instead of increasing necessary investment and strengthen the agriculture
related State owned Enterprises.
-This resulted as endanger our food security and also our marginal farmers
will faces the loss ultimately.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Our Position
- Due to the PRSP process our own process of preparing national plan of has
been deterred. In fact as it is the IMF prescriptions to prepare PRSP, in
fact the process has became the space for integration of WB and IMF
conditionalities. This is being resulting more indebt ness (debt servicing is
17 % of revenue budget in last year) and more reduce level (annual debt
servicing in more than $ 800 millions which is less then annual health
budget which is less then $ 700 millions) of public investment in public
service sector.
- Present global crisis is sufficient enoug to tell that IMF and WB policies
have proved as failure in the economy and they maintain double standard
in respect of advice. In this context while the whole world especially the
developed countries taking efforts to regulate market and nationalization,
but our government in second PRSP outlined the policies of more import
tariff reductions, reduction of sensitive list etc. which in fact will foreclose
the growth of domestic industries and reduce scope of employment.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
Our Position
- In view of present global crisis, as because of policy failures of IMF, WB /
or existing global financial architecture, the UN has taken an initiative of
reform ie, to bring democracy in global financial governance with the
participation of all countries of the world. But avoiding this UN process, US
president Bush has called a meeting of G20 in Washington on 15th
November on the issue, which is nothing in reform rather avoidance to the
democratic initiatives and to uphold the previous characters of WB and
IMF. Our leaders and the Government of Bangladesh must protest and line
with UN initiatives.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Second PRSP and World Bank, IMF Prescription
We demanding:
- The second PRSP has to declare as scrape and poverty reduction plan has
to develop with our own national planning process, through a participatory,
political and parliamentary process. And all above without any involvement
of WB and IMF.
- Poverty reduction plan is also a political agenda and this will have to clear
cut mention in election manifesto of political parties.
- Bureaucratic dominancy has to be reduce in development planning.
Because in absence of democratic and political participation the vested
interest group like IMF, WB have scopes to control over the issues.
Equity and Justice Working Group (Equitybd)
www.equitybd.org
Thank You
Equity and Justice Working Group (Equitybd)
www.equitybd.org