Published in The Bangladesh Post on Saturday, 26 May 2018
Enhanced citizen engagement in project monitoring a must
Dr Khondaker Golam Moazzam, Research Director, CPD suggests
Promila Kanya
Bangladesh economy is expanding and its budget is gradually increasing in size. The number of projects is also increasing every year. Implementation, Monitoring and Evaluation Division (IMED) alone is not able to timely monitor and assess implementation of all projects.
There could be other independent bodies or even private organisations accredited by the government to monitor, assess and finally submit reports on execution of projects. The projects these days are quite complex which requires complex knowledge or technical assistance and it will become difficult for only IMED to monitor all of them.
Another thing is that, in case of monitoring, citizen’s engagement should be enhanced. Private parties or the beneficiaries can be engaged in project implementation. This will increase transparency between the private and the public parties and also create a notion of accountability between them.
Dr Khondaker Golam Moazzam, Research Director, Centre for Policy Dialogue (CPD) said this in an exclusive interview with Bangladesh Post correspondent Promila Kanya.
The following is the excerpts of the interview.
Bangladesh Post: The present fiscal’s budget had a sizeable allocation for development programmes. Do you think this is going to be implemented fully?
Dr Khondaker Golam Moazzam: Last year, while budget was announced, we pointed out some weaknesses in the budgetary frame. One was weakness in revenue generation. The implementation of budget as well as economic growth mostly depends on meeting resource mobilisation target, which is not seen till now.
Usually revenue growth at 14-16 percent is a good growth for a country like Bangladesh, but revenue growth target at 43 percent is quite a mismatch. We earlier warned the government that there would be a large gap between revenue target and actual collection.
The background behind this is that the government wanted to implement new VAT law but unfortunately it had to back track from this plan due to mounting pressure from the businessmen. This is true that once enforced, the new VAT law would lead to higher revenue growth but not as high as 43 percent. As a consequence, the revenue shortfall against the target might be Tk 50,000 crore. In case of deficit financing, foreign loan plays a major role and the government had announced that they would receive a foreign loan of almost $7 billion. But we brought this to the government’s notice that in the country’s growth history, we never received such a high amount of loan. Foreign loans usually remain within $2 to 3 billion. But this year we received quite a substantial amount in foreign loans.
Another weakness in the budgetary frame is that while formulating budget, the government first decides its expenditure, then deficit and finally the income. As we all know, the system is to first fix the income and then the expenditure. So this reverse process faces inconsistencies especially while deciding the source of income. This actually weakens the budgetary disciplines.
As per our data, 76 percent of current year’s budget was implemented so far. This means one-fourth of the total budget could not be implemented yet. If such a huge amount of unimplemented structure remains in the budgetary frame, it will increase mismatches in resource allocation and distribution. These mismatches could have been narrowed down had they been discovered earlier. This year, we saw that foreign resource based projects were better implemented than locally-funded projects because the government faced fund constraint while allocation resources for those. Usually the government tries to handle deficit financing through selling NSD certificates and taking bank loans but this year the banks suffered liquidity crisis. Therefore, last year’s budget became rather costly for the government.
Bangladesh Post: The budget for the coming fiscal will have highest allocation for transport and energy sectors. What are your thoughts on such a decision?
Dr Khondaker Golam Moazzam: This is natural that infrastructure development would require high allocation for a country such as Bangladesh. But the question is how long should the government keep pouring money? These investments are usually lumpy and drain away large chunks of resources. As a result, other smaller social projects which may have given better returns cannot be invested on.
However, due to investments in large projects during last 10 years, there were noticeable changes in the energy sector. Although road infrastructure has improved, congestions are the probable results of increased demand against supply. This is the time to gradually shift these infrastructure investments for the projects which are too expensive and cannot be completed even undertaken. On a more positive note, recently the planning ministry has decided to monitor whether costs of these projects are feasible in terms of return and other indicators. Since the election is approaching, we fear the number of small projects will increase this year. In order to please voters, infrastructure changes which are tangible, may also thus increase.
Bangladesh Post: How important do you believe is effective monitoring of budget implementation?
Dr Khondaker Golam Moazzam: Unfortunately, in our country monitoring means spending and then earning from it. In other countries, returns from projects are also part of the budget. In developed countries such as New Zealand and Australia, whatever they plan in the project documents such as probable rate of return, project cost, timeline etc are all regarded as part of budget implementation. Budget implementation usually has two consequences — project success and economic success. Project success is whether with the stated expenditure, the projects were completed within the stated time. In most cases here, we are failing to achieve project success. In case of economic success, since it requires more time and money, the rate of return of a project in reality becomes much lower than that written on documents.
As our economy is expanding, budget is increasing in size and the number of projects is also increasing. IMED (Implementation, Monitoring and Evaluation Division) alone is not able to timely monitor and assess all of them. There could be other independent bodies or even private organisations who will receive accreditation from the government to monitor, assess and finally submit reports on the projects. The projects these days are quite complex which requires complex knowledge or technical assistance and it will become difficult for only IMED to monitor all of them. If needed, IMED could be the sub-contractor.
Another thing is that, in case of monitoring, local engagement should be increased. Private parties or the beneficiaries need to be engaged for project implementation. This will increase transparency between the private and the public parties and also create a notion of accountability between them.
Bangladesh Post: Do you think next fiscal’s budget should include a policy statement on estimated fund for Rohingya refugees in coming years?
Dr Khondaker Golam Moazzam: The government has taken a project for rehabilitating 1 lakh Rohingyas at Bhashan Char and work is already going on. CPD has estimated that in 2019, USD 1 billion will be required to help the Rohingyas. The fund invested for Ruhingyas so far is not sufficient. Canada and Switzerland have already said that they will allocate fund for the Rohingyas and our government will also have to allocate some in the budget for helping the refugees. The government may need to finance some areas where foreign funds will not be available. It is quite unfortunate that the government is unable to spend on immediate social causes but has to spend on these unwanted areas. In the long-run, Rohingyas can be given separate identity cards, trainings etc so that they can fend for themselves.