The government of Bangladesh (GoB) and the World Bank (WB) have developed a strained relationship over the issue of the Padma bridge project (PBP). Though the WB was earlier expected to be the single largest financier of the project with US$1.2 billion soft-term credit, the funding-support was finally terminated with a lot of drama, amid the withdrawal of the request by the GoB for reconsideration of the WB's cancellation of its soft-term credit on grounds of alleged corruption.
But several questions still linger in many circles about this issue. Are Bangladesh and other developing countries helpless without the WB assistance or support of other international organisations? Did the cancellation of the WB fund on corruption charges, at Bangladesh's request, humiliate the nation? How the government handled its dealings with the WB following the snags over the PBP funding deserves a thorough analysis. It is necessary to understand the scope for development of infrastructures without assistance from such large multilateral organisations as the WB.
The WB is one of four institutions created at the Bretton Woods Conference in 1944, headquartered in Washington, D.C. The then powerful countries including the United Kingdom and the United States of America, especially the latter, dominate its policy-making from the very beginning. The WB comprises two institutions named the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD aims at providing development support in the form of loans on commercial terms, to the middle-income and creditworthy lower income countries, while the IDA works exclusively for the world's poorest countries. The funding of the PBP was linked with the IDA which provides soft-term concessional loans, instead of commercial 'loans', only with a small 0.75 per cent service charge and apparently no interest. The government of Bangladesh (GoB) would not have any obligation to start payment within the first 10 years after disbursement but have to pay off the loan in 40 years.
In retrospect, the conditions were highly favourable in consideration of the financing terms. The bridge was supposed to reduce distance to Dhaka by about 100km connecting 19 districts, facilitating easy movement of 30 million people and boosting the GDP by 1.2 per cent per year (according to the finding by Asian Development Bank). But allegation of 'corruption conspiracy' caused the cancellation of WB funding support to the PPP.
The PBP is very significant from infrastructural viewpoint as the bridge has the potential to accelerate growth and transform lives in southwest Bangladesh and across the nation. It was a highly weighted electoral pledge of the Awami League (AL)-led government. So, it is almost obvious that the AL has to take any action for implementation of the PBP at any cost to approach voters in the next election in 2014. But it procrastinated with this issue and killed valuable time. It had called upon the WB again to reinstate its financing but did not meet all the conditions put by the WB. Rather, the WB was castigated through many public statements.
The local and international media were very critical on the issue of the 'corruption conspiracy' and many international newspapers had described Bangladesh as a corrupt nation. As a result, we have lost the best option of financing, precious time and have our image tarnished as a nation. The main alleged offender was a Minister, who was actually kept out of every major investigation initiated by the government through the Anti-Corruption Commission (ACC). However, the WB claimed that it had presented evidence of corruption in the PBP to the government of Bangladesh in September 2011 and April 2012 but it is under obligation to each member government including that of Bangladesh to maintain confidentiality of referral reports. The GoB could disclose these reports and related correspondences but it did not. Hence, many believe that the GoB has missed the best option for the PBP while trying to protect a particular person. Since the government is the most powerful institution of a country, it should have the best people at the helm of its decision-making, diplomacy and negotiation but the incumbents failed to handle the post-conflict situation with the WB. Now the WB is out of our reach and we need the best option to see the PBP implemented. Bangladesh can build the bridge from its own fund but it may lead to an uncomfortable situation in the economy. About three-fourths of the cost of the project will have to be paid in foreign currency and it is not sustainable by self-financing as some other areas of the economy are not doing well such as stock market and banks' capacity remains limited to lend and so forth. The next option is public-private partnership (PPP) which is perhaps the only option available. In making contracts with the private firms, the GoB should have a serious look into the options for long-term benefits and a win-win situation.
The standoff with the WB has apparently delivered a message to the Bangladeshis that without its assistance, this kind of infrastructural development is impossible. In most cases, the developing countries require funding from well-known international agencies but there are also other examples as well. Malaysia once rejected an International Monetary Fund (IMF) offer of funding owing to its unfavourable terms. Recently, China also refused to accept the WB assistance in constructing a bridge over the Hoang Ho river.
Against this backdrop, the task of implementing the PBP is really challenging for the GoB and the economy. If the country succeeds in developing such an infrastructure on its own, it will take it to a great height and enable local engineers and construction experts to gather skills, logistics and expertise, which may not be possible with the WB funding. However, all the positive stances do not necessarily mean that some corrupt people will enjoy immunity and every time the GoB will save the influential persons by sacrificing the nation's best interests. The Transparency International, Bangladesh (TIB) executive director said quite rightly: "We have bestowed the World Bank with a show-piece. The WB will use the Padma bridge graft as a show-piece for any corruption in the world."
The ongoing decade is a window of opportunity for Bangladesh to get into the list of middle income countries. To keep the pace of its GDP (gross domestic product) growth rate at over 6.0 per cent, the PBP is a much-needed infrastructure and it should be built at any cost.
We have given the mandate to the government to govern the country and serve its best interests but the government is expected not to sacrifice the nation's dignity at any cost. To become short-term gainer often exposes the risks of being a long-term loser. Hence, the government should make the proper cost-benefit analysis and simultaneously uphold our dignity among the nations by overcoming the narrow partisan interest of saving the alleged offenders. Let history be our guide, the Bangladeshis have successfully proved their resilience always.
Still we want to believe that every cloud has a silver lining.
The Financial Express [Views & Opinion, May 08/2013]
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