A. Process of Policy Ownership

1.1 The process of policy ownership, as has been adopted in Bangladesh, aims at providing a well-prioritized national strategy for economic growth, poverty reduction, and social development. Social development captures inter-related issues of human development, gender equality, social deprivations and environmental sustainability. For this, the process has combined policymaking and broad-based consultations with different stakeholders. Moreover, the strategy has been worked out based on the rich experience of existing poverty research and participatory poverty assessments, impact and outcomes of past strategies and policies, and assessment of development and reform issues.

1.2 The planning and policy-making agencies of the Government, including the Planning Commission and the relevant Ministries, have been involved in the process. Along with using structured proforma, detailed interaction with Government functionaries was used to get their perception on cross-cutting and sectoral needs and issues, factors behind past successes and failures, and views and suggestions on how the situation can be improved. An Inter-Ministerial Task Force was formed to ensure close interaction and coordination. For operational purposes, the strategy paper will form the core of the Three-Year Rolling Plan (TYRP) providing the basis for the annual budget which will help maintain consistency between the development strategy and the Plan, on the one hand, and between the Plan and the Annual Development Program (ADP) on the other. The Three-Year Rolling Plan would be formulated within the framework of a long-term Perspective Plan.

1.3 In addition, while formulating the strategies, past achievements and failures in specific areas of both income poverty and human poverty were considered in combination with future imperatives like achieving the Millennium Development Goals (MDGs) and the targets set in the Partnership Agreement on Poverty Reduction (PAPR) with the Asian Development Bank (ADB). Additional inputs for preparing the strategy paper were gathered through commissioning a number of studies in key poverty related areas such as economic, social, and infrastructure development; public expenditure analysis; poverty diagnostics; and governance issues.

1.4 Consultations with different stakeholders has been a key element for ensuring right priorities on competing claims based on needs and demands of the poor and reaching a broad-based consensus for establishing national ownership of the poverty reduction agenda. The process of consultations was conceived in two stages and separately for different stakeholders.

1.5 At the first stage, twenty-one preparatory consultations have been conducted at upazila, division and national levels. In each division of the country, consultations were organized at the upazila level with the poor including women and men, members of non government organizations (NGOs), and various occupational groups. Similar consultations were also organized with field-level functionaries of the Government Ministries and Agencies, NGOs, women’s groups, local and religious leaders, local government representatives, and cross-section of the civil society. This was followed by consultations at the divisional level with Government officials, representatives of the civil society, professional and women’s groups and NGOs. A separate consultation with the urban poor in Dhaka city was also organized. Finally, three separate consultations were held at the national level involving the Government officials, representatives of professional groups and the civil society, and the development partners. Along with the expectations of different stakeholders, the consultations provided important platforms to share ground realities, assess deficiencies of past efforts and factors behind slow achievements, and measures needed to achieve faster poverty reduction and social development. The consultations were organized and facilitated by the Bangladesh Rural Advancement Committee (BRAC), a leading NGO of the country.

1.6 At the second stage, after the preparation of the draft strategy paper in April 2002, twelve mid-term consultations with a wider cross-section of stakeholders were organized to solicit their views, incorporate suggested changes, and validate the proposed strategy. A major focus at this stage was to achieve and deepen the ‘ownership of the strategy by the development machinery’ of the Government, involving all line Ministries. Written comments and suggestions on the draft were received from virtually all the Ministries following which extensive consultations, dialogues, and exchange of views were organized. In addition, separate stakeholder dialogues were organized with specific civil society groups such as activists from the women organizations and advocacy groups, representatives from NGOs and civil society organizations (CSOs), business leaders from the various Chambers of Commerce and Industry, economists and social scientists, and social leaders and key development practitioners. The dialogue process reviewed both diagnostic and prescriptive aspects of the poverty reduction efforts proposed in the draft document. These dialogues helped identify the specific policies in different sectors as well as in bringing out to the forefront the available strategic options needed to implement the poverty reduction agenda. The consistency among the poverty reduction strategy, the medium-term policy framework, and the social targets was closely examined during the dialogue process. The importance of the strategy dialogue process goes beyond the current exercise.

1.7 The Government would like to make such consultations a part of the planning process of the country and continue efforts for fuller participation of the stakeholders in formulation, implementation, and monitoring and evaluation of the poverty reduction agenda both at the level of sectoral and sub-sectoral policy and in the screening of development projects and programs. Apart from being a planning tool, consultations with different stakeholders including the poor, women, and socially disadvantaged groups would be used as a diagnostic tool, i.e., for monitoring social weather and gathering storms, pin-pointing the burning issues, devising social response mechanisms to crisis-points, and deploying rapid action initiatives to combat negative tendencies in development and preventing social atrophies.

B. Silent Ascent

1.8 On many counts, Bangladesh’s performance has been better than the initial anticipations after the country’s political independence. The predominant theme at the time was one of negative images. The account of progress achieved by the country, however, shows rapid improvements in many indicators.

1.9 First, Bangladesh has achieved impressive success in the area of population control. Total fertility rate (TFR) declined from 6.3 in 1975 to 3.3 in 1997–99. Accordingly, the population growth rate has come down from 2.9 per cent per annum in the mid-seventies to 1.5 per cent in the late-nineties. The remarkable feature of this rapid decline was that it had been achieved not only at a low level of income but also at a low level of literacy.

1.10 Second, mortality is often considered as the criterion for judging economic success and failure of nations. Bangladesh has displayed considerable success in this respect, especially in reducing infant and child mortality. The infant mortality rate also declined from 153 deaths per thousand live births in 1975 to 94 deaths in 1990, dropping further to 66 in 2000. The pace of progress in infant and under-five mortality reduction during the nineties was among the fastest in the developing world.¹

1.11 Third, Bangladesh witnessed significant success in disaster preparedness and in overcoming the phenomena of mass starvation and the threat of famine syndrome in the backdrop of endemic vulnerability to natural disasters. At the aggregate level, the country has achieved the desirable objective of near self-sufficiency in rice production with a declining cultivated area.² The production of cereals increased at a trend growth rate of 2.4 per cent per year between the early eighties and the late nineties. This was mainly achieved through the expansion of rice areas under high-yielding varieties (HYVs). Although the overall issue of food security remains the next decade’s challenge, increased disaster preparedness combined with expanded capacity to implement lean-season targeted wage-employment and transfer programs have played an important role in ensuring minimum food entitlements for the poorest during the times of crisis.

1.12 Fourth, Bangladesh has made impressive gains in reducing child malnutrition rates during the last 15 years. According to Bangladesh Bureau of Statistics (BBS) data, the rate of stunting for children in the age group of 6–71 months which was 69 per cent in 1985/86 dropped to 49 per cent in 2000. The proportion of underweight children has gone down from 72 per cent in 1985/86 to 51 per cent in 2000. The Demographic and Health Survey (DHS) data available for the second half of the nineties show a faster decline. The rate of stunting for the age group of 0–59 months has gone down from 55 to 45 per cent during 1996–2000 and, that for underweight, from 56 to 48 per cent during the same period.

1.13 Fifth, Bangladesh has achieved considerable success in mainstreaming women into the development process. Bangladeshi women have played an important role in the success of microcredit, ready-made garment exports, reducing population growth, increasing child nutrition, and in the spread of primary education. The country has achieved gender parity in primary education and nearly removed gender gap in secondary education. Recent evidence also suggests that the country is close to achieving parity in life expectancy at birth as well. While significant gender gaps still persist, the role of women in all walks of life has become increasingly visible and would be instrumental in bringing about wider social and economic changes in future.

1.14 Sixth, low-income countries are typically marked not only by ‘weak’ state, but also weak civic and grass-roots movements and activism. Bangladesh was an instructive outlier in this regard. The advances made by the NGOs and CSOs as alternative delivery mechanisms as well as vocal civic institutions have played a significant role in the reversal of fortunes. The emergence of these actors played a partially compensatory role in the backdrop of weak state and market institutions. Social entrepreneurialism through catalyzing the developmental roles of the organizations of the poor such as community based organizations (CBOs) and organizations for the poor (NGOs and CSOs) has been an important strategic element in the poverty reduction strategy. These social enterprises will continue to play an important role in developing a pro-poor development agenda in Bangladesh.

1.15 Seventh, Bangladesh has achieved significant progress towards a viable democratic transition. Ensuring free and fair elections through non-partisan caretaker government has been a noteworthy political innovation in the backdrop of weak democratic institutions in the country. There have also been important gains in terms of increased political and electoral participation of women, enhanced press freedom, and increasingly active civic movements. Although the process of democratization is yet to take deeper roots, the success achieved so far was not inconsequential prompting many observers to term Bangladesh’s experience as a role model of “moderate Muslim democracy”.³

C. Progress in Cross-Country Perspectives

1.16 Bangladesh’s progress also stands out in cross-country comparisons. This supports the proposition that higher social/ human development outcomes can be achieved even at a lower level of per capita national income. Bangladesh’s growth performance was relatively modest with a per capita GDP growth of about 2 per cent per annum (Annex Table 1). The growth performance started to improve only in the nineties. Similarly, the pace of income-poverty reduction was very slow. During the period between early eighties and early nineties, the incidence of income-poverty declined by 0.8 per cent per year in Bangladesh compared with 1.9 per cent for India, 1.4 per cent in Pakistan and 3.6 per cent in Sri Lanka.⁴

1.17 Notwithstanding the relatively slow income growth and modest pace of income poverty reduction, Bangladesh’s achievements in the broad area of human development were faster and, in some respects, remarkable.⁵ Although the level of social deprivations in Bangladesh is still high, the pace of improvement has been encouraging. Indeed, the pace of progress in reducing TFR, bringing down the level of under-five mortality, and lowering the prevalence of child malnutrition is not only higher than the average progress recorded in LDCs, but also stands out in the overall context of South Asia.⁶

1.18 The relatively higher social progress at a low level of income is also vindicated by the comparison of predicted (for a given level of per capita income) with the actual values of social indicators achieved by the country (Table 1). Compared with the predicted values, the actual progress recorded has been higher for the contraceptive prevalence rate, lower for population growth rate as well as for TFR and CBR, higher for life expectancy at birth and child immunization coverage, and lower for IMR. While there has been considerable progress in the expansion of literacy, the pace needs to be accelerated.⁷

Table 1

Social Development in Bangladesh: Predicted vs. Actual Values

Note: The term ‘predicted value’ is an estimated value for the present (benchmark) level of national income. The figure is derived from the implied functional relationship between the indicators of interest (as given in the Table) and the level of per capita national income, the parameters of the relationship being estimated from the cross-country data. Source: Based on available data of 163 countries out of 210 obtained from ‘World Development Indicators, 1999’ published by the World Bank.

Table 1

Social Development in Bangladesh: Predicted vs. Actual Values

	Indicators	Predicted values	Actual values
1.	Population growth rate (annual %)	2.45	1.59
2.	Total fertility rate (TFR) (births per women)	4.68	3.20
3.	Contraceptive prevalence rate (% of women aged 15–49)	23.16	53.00
4.	Crude birth rate (CBR)	35.26	23.40
5.	Crude death rate (CDR)	11.49	8.40
6.	Infant mortality rate (IMR) (per 1000 live births)	70.78	66.00
7.	Life expectancy at birth, female (years)	59.50	60.8
8.	Life expectancy at birth, male (years)	56.19	60.4

Note: The term ‘predicted value’ is an estimated value for the present (benchmark) level of national income. The figure is derived from the implied functional relationship between the indicators of interest (as given in the Table) and the level of per capita national income, the parameters of the relationship being estimated from the cross-country data. Source: Based on available data of 163 countries out of 210 obtained from ‘World Development Indicators, 1999’ published by the World Bank.

View Table

Table 1

Social Development in Bangladesh: Predicted vs. Actual Values

	Indicators	Predicted values	Actual values
1.	Population growth rate (annual %)	2.45	1.59
2.	Total fertility rate (TFR) (births per women)	4.68	3.20
3.	Contraceptive prevalence rate (% of women aged 15–49)	23.16	53.00
4.	Crude birth rate (CBR)	35.26	23.40
5.	Crude death rate (CDR)	11.49	8.40
6.	Infant mortality rate (IMR) (per 1000 live births)	70.78	66.00
7.	Life expectancy at birth, female (years)	59.50	60.8
8.	Life expectancy at birth, male (years)	56.19	60.4

Note: The term ‘predicted value’ is an estimated value for the present (benchmark) level of national income. The figure is derived from the implied functional relationship between the indicators of interest (as given in the Table) and the level of per capita national income, the parameters of the relationship being estimated from the cross-country data. Source: Based on available data of 163 countries out of 210 obtained from ‘World Development Indicators, 1999’ published by the World Bank.

1.19 The notable success achieved by the country at a relatively low level of income is, however, not a source of self-complacency for setting out the agenda for the poverty reduction strategy. For years, the country suffered from an overblown negative image. Bangladesh’s growth potential was assessed at best as modest with little scope for modernization and structural change. A brief account of the successes at the beginning will help restore some balance in the distorted self-negating perception about our history conditioned partly by an aid discourse characterized by dependence and influence. This is also necessary to draw attention to the realm of the possibilities amidst conceivable odds and adversities, that all is not lost, that a break-through is achievable even in the most trying of circumstances.

D. Structure of the Paper

1.20 The paper is divided into seven chapters, each addressing a lead question. The first chapter addresses the question as to “what are the broad lessons from the past development experience”. It captures the salient features of social progress notwithstanding the challenging odds facing the country. The second chapter addresses the question as to “where we stand now in terms of poverty and social indicators”. It reviews the trends of poverty to set the benchmark for the subsequent discussion on poverty targets as well as anti-poverty policy and institutional actions necessary to achieve the targets. The third chapter addresses the question as to “what do the voices of the citizens suggest”. It discusses the key messages and concerns—focusing on the progressive gains and regressive moments emerging from the broad-based consultations with various stakeholders. The fourth chapter addresses the question as to “where we would like to go by the year 2015”. It sets the major targets and goal posts sketching a transition path for Bangladesh. The fifth chapter addresses the question as to “how we are going to reach the social targets”. It highlights major policies and institutional measures required to achieve the long-term poverty reduction and social development objectives. The sixth chapter addresses the question as to “what would be the macroeconomic framework for poverty reduction strategy in the medium-term”. It proposes a financing plan, outlines the broad parameters of the macroeconomy, sets the fiscal targets, and projects the growth parameters consistent with the long-term goal of poverty reduction and social progress. The seventh and final chapter addresses the question as to “how do we know that we are reaching our targets”. It presents an institutional framework for monitoring and evaluating the poverty reduction targets and social development goals.

E. Summary Points

1.21 Bangladesh had adverse initial conditions at the start of its journey three decades ago. With one of the most vulnerable economies of the world characterized by extremely high population density, low resource base, high incidence of natural disasters, and extremely adverse initial circumstances associated with the inheritance of a war-ravaged economy, the implications for long-term savings, investment, and growth were deemed extremely bleak. Notwithstanding the early negative predictions, Bangladesh has achieved considerable success in several spheres such as population control, reduction in child mortality and child malnutrition, disaster mitigation, mainstreaming women into the development process, catalyzing grass-roots activism through NGOs and CBOs, and in making democratic transition. The growth performance and income-poverty reduction have also improved in the decade of the nineties compared with the previous decades, though much leaves to be desired in these areas. These successes show the importance of undertaking public action (through the Government and non-government sectors) at low-income level to realize higher social possibilities. These signs of improvement indicate that development is possible even in the most trying of circumstances. Bangladesh which was once termed ‘the test case of development’ may indeed represent a learning site for keeping the hopes alive for other equally less fortunate post-colonial societies with adverse initial conditions. This would be especially important in the context of overcoming the persistent economic pessimism and hopelessness—‘Afro-pessimism’ is a case in point—that is often cited in relation to the most disadvantaged parts of the developing world.

A. Broad Trends over Last Decades

2.2 In this section, poverty trends are reviewed in terms of income-poverty and human-poverty.

Trends in Income-Poverty

2.3 Bangladesh made notable progress in income-poverty reduction since Independence.¹ The income-poverty trends since the early nineties based on the unit-record data of the Household Income and Expenditure Survey (HIES) show the following pattern. Between 1991/92 and 2000, the incidence of national poverty declined from 58.8 to 49.8 per cent, indicating a modest reduction rate of 1 percentage point per year. The declining trend remains valid for other poverty measures as well (Table 2). The results further show that progress on reducing the head-count index of poverty was better in urban areas. However, rural areas displayed better progress in reducing the depth and severity of poverty, as captured by trends in poverty gap and squared poverty gap, respectively.

Table 2

Trends in Poverty and Inequality in the Nineties

Source: BBS, Preliminary Report of Household Income and Expenditure Survey 2000, Dhaka, 2001 and World Bank, op. cit.

Table 2

Trends in Poverty and Inequality in the Nineties

		1991/92	2000	Change per year (%)
Headcount Rate
	National	58.8	49.8	-1.8
	Urban	44.9	36.6	-2.2
	Rural	61.2	53.0	-1.6
Poverty Gap
	National	17.2	12.9	-2.9
	Urban	12.0	9.5	-2.5
	Rural	18.1	13.8	-2.8
Squared Poverty Gap
	National	6.8	4.6	-3.8
	Urban	4.4	3.4	-2.7
	Rural	7.2	4.9	-3.8
Gini Index of Inequality
	National	0.259	0.306	2.1
	Urban	0.307	0.368	2.3
	Rural	0.243	0.271	1.4

Source: BBS, Preliminary Report of Household Income and Expenditure Survey 2000, Dhaka, 2001 and World Bank, op. cit.

View Table

Table 2

Trends in Poverty and Inequality in the Nineties

		1991/92	2000	Change per year (%)
Headcount Rate
	National	58.8	49.8	-1.8
	Urban	44.9	36.6	-2.2
	Rural	61.2	53.0	-1.6
Poverty Gap
	National	17.2	12.9	-2.9
	Urban	12.0	9.5	-2.5
	Rural	18.1	13.8	-2.8
Squared Poverty Gap
	National	6.8	4.6	-3.8
	Urban	4.4	3.4	-2.7
	Rural	7.2	4.9	-3.8
Gini Index of Inequality
	National	0.259	0.306	2.1
	Urban	0.307	0.368	2.3
	Rural	0.243	0.271	1.4

Source: BBS, Preliminary Report of Household Income and Expenditure Survey 2000, Dhaka, 2001 and World Bank, op. cit.

2.4 Additional evidence from the Bangladesh poverty literature based on HIES grouped distribution data maps the progress in poverty reduction since the early eighties (see Annex Tables 3 and 4). The results broadly indicate that the progress was faster during the nineties compared with the eighties. The faster pace of poverty reduction in the nineties is attributable to the accelerated growth in consumption expenditure (income).² The comparative progress was uneven between rural and urban areas. The pace of rural poverty reduction was slow in the eighties, but became faster in the nineties. The reverse is true for the urban areas.

2.5 Poverty trends are influenced by the contemporaneous changes in inequality. Inter-decade contrasts are noticeable in this respect as well. Thus, the level of inequality, as measured by consumption expenditure distribution, showed very little change during the eighties (Annex Table 4). The picture changed during the nineties as the Gini coefficient rose considerably, with urban inequality rising much more than rural inequality. Thus, during the period between 1991/92 and 2000, the level of consumption expenditure inequality increased from 30.7 to 36.8 per cent in urban areas, and from 24.3 to 27.1 per cent in rural areas (Table 2). The rising trends in inequality is possibly one important reason as to why the poverty reducing effects of accelerated growth were not translated in full in the nineties. The analysis based on the ‘growth incidence curve’ shows that growth in rural areas was broad-based while urban growth mainly benefited the relatively affluent.³ Even though average growth in mean per capita expenditures over the nineties was lower in rural areas than urban areas (1.7 per cent vs. 2.3 per cent per year), it was more evenly distributed across different expenditure groups. In contrast to the rural areas, the difference in growth rates across the income distribution in urban areas is striking: the average growth rate for the bottom 20 per cent was less than one-third the rate for the top 20 per cent of the urban population (0.8 per cent vs. 2.9 per cent per year). The sources of rising inequality are linked with the uneven spread of economic and social opportunities, unequal distribution of assets especially in respect of human capital and financial capital, growing disparity between urban and rural areas as well as between developed and underdeveloped areas.⁴

2.6 In addition to sectoral variation, considerable regional variation in poverty is noticeable. Dhaka and Khulna (including Barisal) divisions have much lower incidence of poverty than Rajshahi. Progress in poverty reduction over the nineties has been unequal across regions, with rapid progress in Dhaka division and very little change in Chittagong (including Sylhet) division. There is considerable district-level variation in poverty, as suggested by the district level agricultural wage data as well as various indicators of social deprivations such as illiteracy and child mortality. Regional variation in poverty is also influenced by the incidence of natural hazards and tends to be higher in disaster-prone areas. The level of poverty is typically higher for the landless, especially those who have agricultural wage labor as their principal occupation, and for those who are engaged in marginal occupations and skills. Poverty and social deprivations tend to be higher in case of the hill people of the Chittagong Hill Tracts (CHT) and for tribal population residing in other parts of the country.

2.7 Income (consumption) differentials between the poor and the poorest are important aspects of the poverty reality in Bangladesh. The estimate can vary depending on the definition of ‘extreme poverty’ used.⁵ Whatever the definition adopted, it appears that at least about 45 per cent of the poor population of Bangladesh currently subsist in extreme poverty. The progress in tackling the incidence of extreme poverty has not been satisfactory and needs to be taken up as a priority area within the context of the proposed strategy. Several layers of economic and social deprivations can be identified under the broad rubric of extreme poverty, including the persistence of specific chronic poverty groups. The latter includes a heterogeneous mix of identities, including elderly poor, disabled people, the shelterless, the child-headed households, the female destitutes, socially marginalised ethnic groups, deprived castes, and those engaged in dying occupational groups, to name a few. There is a considerable interface between the persistence of chronic poverty and unfavorable agricultural environments (e.g. salinity-prone, flood-prone, river-erosion prone, drought-prone areas). Multiple and overlapping vulnerabilities such as the longer duration in poverty often spanning generations, adverse interplay between vulnerable ecology and chronic social disadvantages, and very high level of consumption short-falls and high food insecurity (with frequent exposure to starvation) make a compelling case for giving priority to the extreme poor in designing social policy agenda under the proposed strategy.

2.8 Significant gender disparity also exists in income-poverty. This is evidenced by several indicators.⁶ First, the incidence of extreme poverty (however defined) is generally higher for the female-headed, female-managed, and female-supported households. Second, both Labor Force Survey (LFS) and micro-level household surveys point out that female workers earn considerably less than the male workers. Third, lower average consumption for females is also evident from the persistent gender inequality in severe malnutrition, mortality, and morbidity.

B. Trends in Rural Poverty

2.10 Available evidence indicates faster progress in rural poverty reduction in the nineties compared with the eighties. According to HIES data, the incidence of rural poverty, which declined by only 0.9 percentage point between 1983/84 and 1991/92, has gone down by 9.3 percentage points between 1991/92 and 2000 (Annex Table 3). The higher progress in the nineties is also indicated by alternative source of data such as the 62-village panel data generated by BIDS. Thus, the incidence of rural poverty marginally increased from 57.5 per cent in 1987/88 to 59.3 per cent in 1989/90; poverty situation improved in the subsequent period as the rural head-count declined to 51.7 per cent in 1994. Even though the pace of poverty reduction has accelerated in the nineties, the overall pace of reduction has been modest. This modest poverty reduction rate has been expressed as being restricted to about “I percentage point decline per year”. This is borne out by virtually all survey data for the nineties, including HIES and micro-level panel surveys. A recent update of the BEDS panel survey available for a sub-set of 16 villages shows a decline in the incidence of rural poverty from 64.8 per cent in 1987/88 to 53.9 per cent in 1999/00.⁸ Data collected from the Poverty Monitoring Survey (PMS) carried out by BBS with support from the MIMAP-Bangladesh Project also show similar modest rate of rural poverty reduction: from 47.9 per cent in 1996 to 44.9 per cent in 1999.⁹

2.11 The immediate question that springs up is—what explains the relatively modest progress in rural poverty reduction in the nineties? The slow progress in rural poverty reduction is especially intriguing in the backdrop of higher agricultural growth witnessed during the second half of the nineties. One possible explanation is that much of the agricultural growth came from the expansion of HYV rice production, especially during the winter season. The increase in productivity in rice cultivation has, however, not been translated into higher farm incomes due to slower increase in paddy prices compared to the wage rate and fertilizer prices. The nominal wage rate increased almost at par with the consumer price index, but because of the slow increase in the nominal price of paddy, the entitlement of staple food for the land-poor households improved substantially. It is possible that increase in rice production benefited the land-poor labor-selling households more through the effects of low staple prices than the rice farmer households because of the relatively small farm size in the country and the unfavorable terms of trade of rice. Thus, the improvement in rice technology can make only a modest contribution to increase in household income and hence, the rate of reduction of income-poverty in rural areas. It appears, therefore, that while agricultural growth will continue to play a major role in rural poverty reduction process, its quantitative impact on poverty reduction would be contingent on diversifying to high-value added crops as well as non-crop agriculture such as poultry, livestock and fishery sectors. The same applies to the prospects for non-farm economy in rural poverty reduction where the key challenge would be to link the poor producers with high value-added non-farm activities.

C. Trends in Urban Poverty

2.12 The head-count index of urban poverty declined from 34 per cent in 1991/92 to 26 per cent in 2000. According to HIES data, the entire decrease in urban poverty during the nineties have taken place during the first half of the nineties while the second half experienced deterioration in urban poverty situation. The worsening of urban poverty situation during the second half of the nineties was almost entirely driven by negative growth in per capita real consumption.

2.13 Available information from other sources, however, provides conflicting evidence. The national accounts data for the period show that real per capita national private consumption increased by about 14 per cent between 1995/96 and 2000 and it is more likely that per capita urban private consumption growth was higher compared with that for rural areas.

2.14 The PMS indicates that, between April 1996 and May 1999, the urban poverty gap index—a distributionally sensitive measure of poverty—declined from 14.2 per cent to 11.2 per cent. The squared poverty gap index for urban areas also declined from 6.1 to 4.2 per cent indicating improvement in the conditions of the poorest of the poor in urban areas. The incidence of urban head-count shows a very small decrease—from 44.4 to 43.3 per cent.

2.15 The evidence from the Nutritional Surveillance Project (NSP) of Helen Keller International (HKI) in urban slums of Dhaka, Chittagong, and Khulna shows that there has been an overall improvement in the nutritional status of under-five children residing in urban slums in all three cities between 1996 and 2000.

2.16 In short, these alternative evidence casts some doubt on negative per capita real consumption expenditure growth in urban areas during the late nineties as indicated by the HIES 2000. This suggests that the HIES has possibly overestimated growth in urban per capita consumption expenditure between 1991/92 and 1995/96 and underestimated similar growth between 1995/96 and 2000.

D. Dimensions of Human Poverty

2.17 Three broad dimensions of human poverty are considered: (a) deprivation in health, (b) deprivation in education, and (c) deprivation in nutrition (including food insecurity).

Inequality in Malnutrition

2.24 Socioeconomic inequalities in malnutrition—as measured by standard anthropometric measures—appear to be much higher than in case of mortality. While the poor/rich ratio was 1.76–1.85 for infant and child mortality, it was 2.15 for stunting and underweight. This is especially true in case of child malnutrition as high initial malnutrition adversely affects child health, child schooling performance, and child’s likelihood of getting high productivity jobs, having implications for the future productivity of the nation.

Table 3

Rates of Child Malnutrition among Under-five Children

Note: ^* 0-59 months, ^** 6-71 months, ^*** 6-59 months.

Table 3

Rates of Child Malnutrition among Under-five Children

Nutrition Status Indicator		DHS*		CNS**		HKI Rural***			HKI Slum**
		1996-97	1999-00	1992	2000	1992	1996	2000	1992	1996	2000
Underweight (weight-for-age)
	Moderate or severe	56	48	68	48	71	65	59	78	67	60
Stunting (height-for-age)
	Moderate or severe	55	45	64	45	69	60	52	76	65	60
Wasting (weight-for-age)
	Moderate or severe	18	10	17	10	15.1	14.6	14.5	16.9	12.7	13.2

Note: ^* 0-59 months, ^** 6-71 months, ^*** 6-59 months.

View Table

Table 3

Rates of Child Malnutrition among Under-five Children

Nutrition Status Indicator		DHS*		CNS**		HKI Rural***			HKI Slum**
		1996-97	1999-00	1992	2000	1992	1996	2000	1992	1996	2000
Underweight (weight-for-age)
	Moderate or severe	56	48	68	48	71	65	59	78	67	60
Stunting (height-for-age)
	Moderate or severe	55	45	64	45	69	60	52	76	65	60
Wasting (weight-for-age)
	Moderate or severe	18	10	17	10	15.1	14.6	14.5	16.9	12.7	13.2

Note: ^* 0-59 months, ^** 6-71 months, ^*** 6-59 months.

2.25 Notwithstanding the general improvement in the child nutritional status over the nineties, the female disadvantage in malnutrition continues not only to persist, but has also increased over the period. The DHS for 1996/97 and 1999/00 show that girls are more likely to be stunted and underweight than boys. The female-male gap for the severely stunted (percentage below-3 SD) increased from 10 per cent in 1996/97 to 16 per cent in 1999/00. Similarly, the gap for the severely underweight (percentage below-3 SD) increased from 19 per cent to 26 per cent over the same period. The gender inequality is sharper in case of severe malnutrition compared with moderate malnutrition—a striking similarity to what has been observed with respect to greater feminization of extreme poverty. As expected, child malnutrition is considerably higher in rural areas than in urban areas. The 1999/00 DHS shows 47 per cent of rural children as stunted and 49 per cent as underweight compared with the urban figures of 35 per cent as stunted and 40 per cent as underweight.

2.26 Maternal malnutrition, as proxied by body-mass index (BMI) less than the critical value of 18.5, turns out to be very high in Bangladesh. Applying this criterion, DHS estimates the proportion of malnourished mothers at 45 per cent in 1999/00, showing some improvement over 52 per cent estimated for 1996/97. The rural-urban gap in maternal malnutrition, as measured by BMI, has increased during the period—from 50 to 63 per cent. The high rate of malnourished mothers in the poor households has adverse implications for poverty reduction. A high priority needs to be assigned to reducing maternal malnutrition in the country. Such programs should give priority to mothers from the poor households due to existing high degree of inequality in maternal nutrition.

E. Summary Points

• Bangladesh has achieved considerable progress in reducing income-poverty and human-poverty since Independence. The progress on human poverty reduction front was faster than in case of income-poverty.

• The rate of income-poverty reduction was slower in the eighties compared to the nineties. However, the overall pace of decline in income-poverty has been modest, being restricted to the reduction rate of 1 percentage point per year.

• The rising trends in income (consumption) inequality in both rural and urban areas are disturbing and need to be tackled as an independent area of policy and institutional concerns.

• Considerable regional variation in income-poverty and social indicators is noticeable.

• Significant gaps exist between the poor and the poorest, making the case of the ‘extreme poor’ as a priority issue in the social policy agenda.

• Even though the pace of improvement in social indicators has been impressive, this has not often accompanied by gender equality. A significant gender disparity persists in both income and human poverty, especially at the lower end of the income distribution. The female disadvantage in child mortality (1–4 years) has remained persistent, while the female-male gap in acute malnutrition (as represented by severe stunting and wasting) has increased.

A. Positive Achievements

3.2 The grass-roots consultations point to general improvement in several quantitative indicators. These include: increase in educational and health facilities, increase in enrollment at primary and secondary levels, reduction in gender inequality in education, better access to preventive health care, greater awareness about diseases and environmental health, and improvement in child nutrition status. The consultations indicate the general favorable effects of government-supported targeted cash/food programs such as old-age pension schemes, vulnerable group development (VGD), food-for-education (FFE), and food-for-works (FFW). The consultations also reveal the potentials for further improvement in each area both in terms of equity and efficiency through ensuring closer monitoring, coordination and accountability of relevant development agencies at the field level.

3.3 The grass-roots consultations indicate important changes in market arrangements having implications for the livelihoods of the poor. Considerable labor market dynamism has been noted with pronounced role for seasonal migration, tightening of the labor market and discernible shift from casual to contract labor, and generally rising agricultural wages. The consultations suggest the growing role of remittances, and faster expansion of non-crop (especially, poultry and fishery) and non-farm (especially, transport, trade, and services) activities. A perceptible increase in employment opportunities both within and outside of agriculture in the rural areas has been noted with rising share of peri-urban employment and seasonal migration. The consultations also indicate considerable change in the tenancy market, with gradual shift from share-cropping to fixed cash tenancy in case of HYV cultivation during the winter (boro) season. Remarkable change has been noted in the credit market, with a generally declining importance of the role of traditional moneylenders and attendant extra-economic coercion. The credit access on the part of land-poor—especially for emergency purposes—appears to have increased, with women playing an increasingly important role both as small savers and small lenders.

3.4 On the well-being dimensions, acute deprivations measured in terms of food and income entitlements seem to have improved. Enhanced access of the poor can be noted in terms of some basic non-income dimensions of poverty such as schooling and health care and access to water supply and sanitation. Visibility and voice of women in intra-household and extra-household contexts have also increased. Perhaps, the singular idea that emerges from the participatory consultations at all levels relates to the deep sense of awareness relating to under-performance relative to potentials in every respect. There seems to exist a general agreement that through improved governance and better coordination among the government, the private sector and the civil society, the major development impasses facing the country can be overcome.

B. Areas of Key Concerns

3.5 The grass-roots consultations have also revealed several key concerns that represent powerful negative tendencies in the development experience of the nineties². As one participant—a day laborer in Rupsha thana—puts it, “positive developments in our lives have been precariously counterbalanced by equally powerful negative tendencies”.

C. Summary Points

3.25 Broad-based consultations around the issue of poverty reduction strategy have confirmed several aspects of progressive gains in the broad sphere of poverty reduction and social development over the past two decades. However, these have also indicated the fragility of the past success, suggested the points of worrying slippage and underscored the salient moments of regress. The latter relates to the following areas of citizen concerns: lack of physical infrastructure; law and order situation amidst incidence of organized crimes, extortion and economic violence; lack of effective local government and decentralization; poor quality of education, health, safe water supply and environmental sanitation, and other social services; lack of coordination among development agencies and institutions operating at the local level; lack of remunerative employment and economic opportunities; lack of social capital at the community level resulting in low-level of collective action; and lack of democratization of political processes.

A. The Vision

4.1 With the Constitutional obligation of developing and sustaining a society in which the basic needs of all people are met and every person can prosper in freedom and cherish the ideals and values of a free society, the vision of Bangladesh’s poverty reduction strategy is to substantially reduce poverty within the next generation. For this, poverty reduction (with special focus on the removal of hunger and chronic poverty) and social development (with particular emphasis on gender equality) have been made the overarching independent strategic goals. The vision proposed here adopts a comprehensive approach premised on a rights-based framework, which highlights the need for progressive realization of rights in the shortest possible time. It also takes into consideration Bangladesh’s previous official commitment to achieve the MDGs as well as social targets set in the PAPR with the ADB. Through adopting a comprehensive approach and by taking into account the country’s past international commitments and evolving national realities, the Strategy visualizes that, by the year 2015, Bangladesh would achieve the following goals/targets:

• (i) Remove the ‘ugly faces’ of poverty by eradicating hunger, chronic food-insecurity, and extreme destitution;

• (ii) Reduce the proportion of people living below the poverty line by 50 per cent;

• (iii) Attain universal primary education for all girls and boys of primary school age;

• (iv) Eliminate gender disparity in primary and secondary education;

• (v) Reduce infant and under five mortality rates by 65 per cent, and eliminate gender disparity in child mortality;

• (vi) Reduce the proportion of malnourished children under five by 50 per cent and eliminate gender disparity in child malnutrition;

• (vii) Reduce maternal mortality rate by 75 per cent;

• (viii) Ensure access of reproductive health services to all;

• (ix) Reduce substantially, if not eliminate totally, social violence against the poor and the disadvantaged groups, especially violence against women and children; and

• (x) Ensure comprehensive disaster risk management, environmental sustainability and mainstreaming of these concerns into the national development process.

B. Feasibility of Target Attainment

4.2 The poverty targets and social development goals are presented in Table 4. Given the pattern of economic growth, which is accompanied by rising inequality, the growth elasticity of poverty reduction for rural areas is estimated at -0.73, while the figure for urban areas is -0.64.¹ Using these elasticities, the results, as presented in Annex Table 6, show that the 2015 only if the per capita rural consumption expenditure grows at a rate of at least 4 per cent per year. The calculations show that if the goal of reducing the incidence of national poverty prevailing the year 2000 by half is to be achieved by 2015 then Bangladesh needs to sustain a GDP growth rate of about 7 per cent per year over the next 15 years.² It may be noted that the MDGs have been set within a time-frame of 25-year period with 1990 as the benchmark. This implies that Bangladesh can adopt a more feasible target setting in the light of MDGs by using 1990 as the benchmark year (as shown in Annex Table 7). However, the Government has made a conscious choice in favor of an accelerated development strategy for attaining poverty and social development goals in the shortest possible time. Major goal posts worked out in Table 4 by taking the 2000 figures as the benchmark estimates are premised on this vision. The question is: are these targets realistic?

Table 4

Major Goal Posts in Poverty and Social Indicators under an Accelerated Social Development Strategy with 2000 as the Benchmark Year for Target Setting

Source of Benchmark Data: In come-Poverty (Table 2); Adult Literacy (BHDR 2000); Primary Enrollment (HIES 2000); Secondary Enrollment (HIES 2000); Tertiary Enrollment (HIES 2000); IMR (BDHS 1999/00); Under-Five Mortality (BDHS 1999/00); MMR (NIPORT/ Macro International); Life Expectancy (BHDR 2000); Population growth (BBS); Children Underweight (CNS 2000). Source of 1990 Data; Income-Poverty (Table 2); Adult Literacy (Population Census 1991); Primary Enrollment (APT 1990); Secondary Enrollment (APT 1990); IMR (SYB of BBS); Under-Five Mortality (SYB of BBS); MMR (SYB of BBS); Life Expectancy (SYB of BBS); Population growth (SYB of BBS); Children Underweight (BBS 1989/90). Note to the Table; 1. The data for 2000 have been considered as the benchmark for making projections for the subsequent period in the light of MDG goals as well as development experience of the recent decade. The projections are based on the premise of ‘progressive realization of rights’ in the shortest possible time. A more modest projection based on 1990 as the benchmark data is given in the Annex Table 8. 2. Primary and secondary enrollment rates are age-specific (net) enrollment rates as estimated from die survey data. Accordingly, they differ from gross enrollment rates estimated from secondary data showing higher level of educational attainment (official estimate being over 90 per cent). 3. The estimate of literacy rate is not uncontroversial as it can vary depending on how literacy is defined. Accordingly, the benchmark estimate for literacy varies from 45 per cent (can both read and write letter) to 64 per cent (as defined under the ‘total literacy movement’). Ideally, the Census 2001 results can provide a definitive light on the issue. 4. The estimate of children underweight for 1999 refers Lo the Child Nutrition Survey carried out by BBS in 1989/90 and refers to children aged 6–71 months. The recent estimates are available from two sources, namely, CNS 2000 and the DHS 1999/00. The DHS figure relates to children aged 0–59 months, while that for CNS refers to children aged 6–71 months. The draft strategy report in April 2002 used the DHS figure. However, for the sake of comparison with the 1990 survey, we have switched to the CNS data to represent the benchmark figure. 5. Extreme poverty corresponds to population consuming less than 1800 kcal/person/day as per direct calorie method. Note that the incidence of so-called ‘very poor’ estimated by the World Bank method of setting ‘lower poverty line’ gives a much higher figure than the direct calorie method (34 vs. 20 per cent nationally in 2000). Given the large divergence, we have used the direct calorie measure, especially in the context of wider concern over the incidence of “hungry poor”.

Table 4

Major Goal Posts in Poverty and Social Indicators under an Accelerated Social Development Strategy with 2000 as the Benchmark Year for Target Setting

Indicators		1990	2000 (Bench-mark data)	Annual progress over 1990-00 (%)	2004	2006	2010	2015	Annual progress over 2000-15 (%)
Income-Poverty		59	50	-1.5	45	43	35	25	-3.3
Extreme Poverty		28	19	-3.2	15	13	9	5	-4.9
Adult Literacy		35	56	6.0	64	69	79	90	4.0
Primary Enrollment		56	75	3.4	81	84	92	100	2.2
Secondary Enrollment		28	65	13.2	71	80	85	95	3.1
Infant Mortality Rate (IMR)		94	66	-3.0	56	48	37	22	4.4
Under-Five Mortality Rate		108	94	-1.3	80	70	52	31	4.5
Maternal Mortality Rate		480	320	-3.3	295	275	240	147	-3.6
(MMR)
Life Expectancy		56	61	0.9	64	66	69	73	1.3
Population Growth		2.1	1.6	…	1.5	1.5	1.4	1.3	…
% Children Underweight		67	51	-2.4	48	42	34	26	-3.3
Reduction in Gender
Disparity:
	Female (7+) Literacy (% of Male)	80		Eradicate by 2010–2015
	Female Enrollment at Tertiary Level (% of Male)	33
	Female Underweight Moderate or Severe, <5 Years (% of Male)	8
	Female Underweight Severe, <5 Years (% of Male)	26
	Female Mortality, 1–4 Years (% of Male)	133

Source of Benchmark Data: In come-Poverty (Table 2); Adult Literacy (BHDR 2000); Primary Enrollment (HIES 2000); Secondary Enrollment (HIES 2000); Tertiary Enrollment (HIES 2000); IMR (BDHS 1999/00); Under-Five Mortality (BDHS 1999/00); MMR (NIPORT/ Macro International); Life Expectancy (BHDR 2000); Population growth (BBS); Children Underweight (CNS 2000). Source of 1990 Data; Income-Poverty (Table 2); Adult Literacy (Population Census 1991); Primary Enrollment (APT 1990); Secondary Enrollment (APT 1990); IMR (SYB of BBS); Under-Five Mortality (SYB of BBS); MMR (SYB of BBS); Life Expectancy (SYB of BBS); Population growth (SYB of BBS); Children Underweight (BBS 1989/90). Note to the Table; 1. The data for 2000 have been considered as the benchmark for making projections for the subsequent period in the light of MDG goals as well as development experience of the recent decade. The projections are based on the premise of ‘progressive realization of rights’ in the shortest possible time. A more modest projection based on 1990 as the benchmark data is given in the Annex Table 8. 2. Primary and secondary enrollment rates are age-specific (net) enrollment rates as estimated from die survey data. Accordingly, they differ from gross enrollment rates estimated from secondary data showing higher level of educational attainment (official estimate being over 90 per cent). 3. The estimate of literacy rate is not uncontroversial as it can vary depending on how literacy is defined. Accordingly, the benchmark estimate for literacy varies from 45 per cent (can both read and write letter) to 64 per cent (as defined under the ‘total literacy movement’). Ideally, the Census 2001 results can provide a definitive light on the issue. 4. The estimate of children underweight for 1999 refers Lo the Child Nutrition Survey carried out by BBS in 1989/90 and refers to children aged 6–71 months. The recent estimates are available from two sources, namely, CNS 2000 and the DHS 1999/00. The DHS figure relates to children aged 0–59 months, while that for CNS refers to children aged 6–71 months. The draft strategy report in April 2002 used the DHS figure. However, for the sake of comparison with the 1990 survey, we have switched to the CNS data to represent the benchmark figure. 5. Extreme poverty corresponds to population consuming less than 1800 kcal/person/day as per direct calorie method. Note that the incidence of so-called ‘very poor’ estimated by the World Bank method of setting ‘lower poverty line’ gives a much higher figure than the direct calorie method (34 vs. 20 per cent nationally in 2000). Given the large divergence, we have used the direct calorie measure, especially in the context of wider concern over the incidence of “hungry poor”.

View Table

Table 4

Major Goal Posts in Poverty and Social Indicators under an Accelerated Social Development Strategy with 2000 as the Benchmark Year for Target Setting

Indicators		1990	2000 (Bench-mark data)	Annual progress over 1990-00 (%)	2004	2006	2010	2015	Annual progress over 2000-15 (%)
Income-Poverty		59	50	-1.5	45	43	35	25	-3.3
Extreme Poverty		28	19	-3.2	15	13	9	5	-4.9
Adult Literacy		35	56	6.0	64	69	79	90	4.0
Primary Enrollment		56	75	3.4	81	84	92	100	2.2
Secondary Enrollment		28	65	13.2	71	80	85	95	3.1
Infant Mortality Rate (IMR)		94	66	-3.0	56	48	37	22	4.4
Under-Five Mortality Rate		108	94	-1.3	80	70	52	31	4.5
Maternal Mortality Rate		480	320	-3.3	295	275	240	147	-3.6
(MMR)
Life Expectancy		56	61	0.9	64	66	69	73	1.3
Population Growth		2.1	1.6	…	1.5	1.5	1.4	1.3	…
% Children Underweight		67	51	-2.4	48	42	34	26	-3.3
Reduction in Gender
Disparity:
	Female (7+) Literacy (% of Male)	80		Eradicate by 2010–2015
	Female Enrollment at Tertiary Level (% of Male)	33
	Female Underweight Moderate or Severe, <5 Years (% of Male)	8
	Female Underweight Severe, <5 Years (% of Male)	26
	Female Mortality, 1–4 Years (% of Male)	133

Source of Benchmark Data: In come-Poverty (Table 2); Adult Literacy (BHDR 2000); Primary Enrollment (HIES 2000); Secondary Enrollment (HIES 2000); Tertiary Enrollment (HIES 2000); IMR (BDHS 1999/00); Under-Five Mortality (BDHS 1999/00); MMR (NIPORT/ Macro International); Life Expectancy (BHDR 2000); Population growth (BBS); Children Underweight (CNS 2000). Source of 1990 Data; Income-Poverty (Table 2); Adult Literacy (Population Census 1991); Primary Enrollment (APT 1990); Secondary Enrollment (APT 1990); IMR (SYB of BBS); Under-Five Mortality (SYB of BBS); MMR (SYB of BBS); Life Expectancy (SYB of BBS); Population growth (SYB of BBS); Children Underweight (BBS 1989/90). Note to the Table; 1. The data for 2000 have been considered as the benchmark for making projections for the subsequent period in the light of MDG goals as well as development experience of the recent decade. The projections are based on the premise of ‘progressive realization of rights’ in the shortest possible time. A more modest projection based on 1990 as the benchmark data is given in the Annex Table 8. 2. Primary and secondary enrollment rates are age-specific (net) enrollment rates as estimated from die survey data. Accordingly, they differ from gross enrollment rates estimated from secondary data showing higher level of educational attainment (official estimate being over 90 per cent). 3. The estimate of literacy rate is not uncontroversial as it can vary depending on how literacy is defined. Accordingly, the benchmark estimate for literacy varies from 45 per cent (can both read and write letter) to 64 per cent (as defined under the ‘total literacy movement’). Ideally, the Census 2001 results can provide a definitive light on the issue. 4. The estimate of children underweight for 1999 refers Lo the Child Nutrition Survey carried out by BBS in 1989/90 and refers to children aged 6–71 months. The recent estimates are available from two sources, namely, CNS 2000 and the DHS 1999/00. The DHS figure relates to children aged 0–59 months, while that for CNS refers to children aged 6–71 months. The draft strategy report in April 2002 used the DHS figure. However, for the sake of comparison with the 1990 survey, we have switched to the CNS data to represent the benchmark figure. 5. Extreme poverty corresponds to population consuming less than 1800 kcal/person/day as per direct calorie method. Note that the incidence of so-called ‘very poor’ estimated by the World Bank method of setting ‘lower poverty line’ gives a much higher figure than the direct calorie method (34 vs. 20 per cent nationally in 2000). Given the large divergence, we have used the direct calorie measure, especially in the context of wider concern over the incidence of “hungry poor”.

4.3 A comparison of the projected targets with the actual pace of progress achieved during the nineties shows that for some indicators, while being higher than the historical trends, these are not far off the mark. Thus, the projected reduction rate for child mortality and child malnutrition is only slightly higher than the average progress recorded in the nineties. Given the renewed emphasis on population control, primary health care, and National Nutrition Program (NNP) and the possible added synergies expected from the incremental social benefits from greater investments in girl’s education and in general rising social awareness about public health, these targets in the area of child mortality and malnutrition are within the feasible range of attainment. The only possible exception is the target of lowering the overall incidence of income-poverty by half, which requires that Bangladesh accelerates the pace of reduction from 1.5 per cent per year observed for the 1990s to 3.3 per cent for the period 2000–15. Again, this is not a tall order given the past record of accelerating progress in reducing poverty in the nineties compared with the eighties. The target for extreme poverty reduction is statistically less daunting, but may be more socially challenging given the need for re-orienting the allocation of resources towards the most needy poor.

4.4 As regards other indicators, the likelihood of target attainment is higher given the encouraging performance of the nineties in reducing child mortality and child malnutrition as well as success in removing gender inequality at primary and secondary schooling. The available evidence also suggests that the MDG target of halving malnutrition rates by 2015 is not likely to be met through economic growth alone. More effective public actions than in the past will be necessary in attaining the social goals described in Table 4.³ This is especially true of the goal of halving the present level child malnutrition. This would also require the exploitation of important synergies between income and non-income indicators. Many of the social indicators included under the MDGs are influenced by economic growth through the channels of income-poverty reduction and public expenditures on social sectors. As the level of income-poverty gets reduced and private spending on social sectors increases, progress in attaining social development goals will be further stimulated. Better governance of social expenditures along with higher allocations through government and non-government channels, as emphasized under the strategy, would provide additional momentum to the process of social development.

C. Summary Points

4.5 Attainment of the target of poverty reduction by half will require significant additional efforts given the past growth performance. If the goal of reducing the incidence of national poverty by half is to be achieved by 2015, Bangladesh needs to sustain a GDP growth rate of about 7 per cent per year over the next 15 years. As regards other indicators, the likelihood of target attainment is higher given the encouraging performance of the nineties in reducing child mortality and child malnutrition as well as success in removing gender inequality at primary and secondary schooling. However, these targets will not be met through economic growth alone. Pro-active public actions will play a significant role in attaining the national targets set in the light of MDGs and national priorities.

A. The Strategy: All Routes Matter

5.1 Bangladesh faces three strategic challenges. First, consolidation of the past successes witnessed during the nineties, as described in Chapters 1 and 2, will not be an easy task. These included improvements in child nutrition, expansion in primary and secondary education, reduction of gender inequality in education, decrease in chronic food shortage and insecurity, enhanced capacity for disaster management, and declining trends in income-poverty. Consolidation of the past efforts would be critical in the attainment of the MDGs consistent with the national priorities, as set in Chapter 4. Second, combating the negative tendencies unfolded over the past decade, as indicated in the participatory consultations discussed in Chapter 3, poses an additional strategic concern. Issues range from the problem of law and order, deteriorating investment climate, economic misgovernance such as persistent “system loss” and avoidable leakages, policy inconsistency and lack of coordination among the development agencies, poor quality of education, health and public services, ill-consequences of polarized politics to name a few. Attacking these economic and social ills will be a priority though admittedly a very difficult task. Third, there are also emerging concerns over managing the risks and uncertainties posed by the changing global economic environment especially with respect to trade, aid, and investment, confronting the new tensions in the wake of MFA withdrawal, growing urbanization, deteriorating environment, and new public health concerns and security threats. Sustaining the past positive trends over the next decade while overcoming the accumulated negative trends and facing up to the new agenda posed by globalization would be the central task of the poverty reduction strategy. This task would dictate new ways of managing the development process, demanding a new mix of poverty reduction strategies and policy priorities, and inviting a new ensemble of change-agents both within and outside the government. This would require taking initiatives on all fronts.

5.2 With many roots and multidimensional characteristics, all routes matter for the poverty reduction strategy. These routes will combine measures to address underlying causes and practical interventions to mitigate poverty. The strategic elements of anti-poverty policies and institutions will cover five broad avenues. The first set of policies would accelerate and expand the scope for pro-poor economic growth for increasing income and employment of the poor. The second set would foster human development of the poor for raising their capability through education, health, nutrition, employment-oriented skill training and social interventions. The third set of policies would support women’s advancement and closing of gender gaps in development. The fourth set of policies would provide social protection to the poor against anticipated and unanticipated income/consumption shocks and vulnerabilities to disasters through targeted and other efforts. Environmental sustainability will be a key factor here as a cross-cutting issue. The fifth set would favorably influence participatory governance, enhance the voice of the poor, and improve non-material dimensions of well-being including security, power and social inclusion by improving the performance of anti-poverty and disaster preparedness and mitigation institutions and removing institutional hurdles to social mobility.

5.3 The above interventions will have maximum impact on poverty, especially in minimizing the severity of poverty, when these are targeted to the poor regions and with special focus on the needs of the most disadvantaged population and ethnic groups. Policies and institutional actions delineated under the poverty reduction strategy will be designed to reach out to the poorest and the remote rural areas, which are vulnerable to adverse ecological processes (including cyclone-prone coastal regions, chars and river erosion affected areas) and those with high concentrations of socially disadvantaged and marginal ethnic groups. Special attention will be given to the development problems of the hill people of CHT and tribal population residing in other parts of the country.

5.4 While the strategy adopts a comprehensive approach covering all routes, the important task would be to spell out appropriate prioritization and sequencing of actions needed to replace the business-as-usual scenario with a changed agenda so as to ensure accelerated poverty reduction and achieve the proposed targets. Within the five broad avenues, the present document spells out several policy and sectoral/subsectoral concerns based on the priorities identified by the poor during the consultations and available analysis of the issues. This medium term agenda would be further elaborated while preparing the more specific mix of macroeconomic, sectoral and governance policies and programs through participatory interactions with the poor and other stakeholders during the process of formulating the full-blown strategy.

B. Accelerating Pro-poor Economic Growth

5.7 Accelerating pro-poor economic growth will be one of the key elements in achieving success of the Strategy. The sources of increased growth would involve several areas: (i) higher private investment in all sectors and increased inflow of foreign direct investments (FDIs) through ensuring good governance and installing measures to reduce transaction costs and promote investment-friendly environment; (ii) increased efficiency and technological progress across the economy including promotion of information and communication technologies (ICTs) and biotechnology; (iii) expanded growth of industry (particularly small and medium enterprises) and service sectors; (iv) diversification in crop production and non-farm (e.g. livestock) sector growth; and (v) expansion and diversification of the export sector. The aim would be to increase GDP growth to around 7 per cent per year, on an average, during the next decade along with a rapid expansion of the rural economy. For ensuring such growth, priorities, sequencing and interrelationships of macro and sector policies would be taken into account. Within the medium term framework, priorities would be given to ensure the following: (i) stable macroeconomic balances; (ii) strong institutions and improved governance; (iii) private sector-led and outward oriented growth; (iv) Government-private sector (including NGOs) partnership; and (v) gender sensitive macro and policy framework and the national budget. The priorities of sectoral and sub-sectoral activities will be worked out in such a way that the growth elasticity of poverty reduction can be increased. For the purpose, emphasis will be given to the activities that contribute to a lowering of the incremental capital-output ratio across the economy. Such a strategy would favor more labor-intensive sectors and sub-sectors, which would simultaneously contribute to higher GDP growth and higher employment elasticity of growth leading to higher growth elasticity of poverty reduction.

5.8 Accelerating growth and bringing a pro-poor orientation in the growth process with special emphasis on the most disadvantaged social groups including women would be achieved through emphasizing four priority areas: (i) accelerated growth in rural areas and development of agriculture and non-farm economic activities; (ii) small and medium manufacturing enterprises; (iii) rural electrification, roads, water supply and sanitation, and supportive infrastructure including measures to reduce natural and human induced shocks; and (iv) information and communication technologies. The rural growth strategy would be driven by policies to intensify rice production and spur crop diversification and nonfarm production requiring more effective water management, improved rural infrastructure and institutions, strengthened research and development efforts, enhanced credit access, and expanded domestic/export marketing and distribution channels. To catalyze growth of non-farm activities and small enterprises, expansion of infrastructure facilities and supportive policies would be given priority. The rural growth policies would address environmental problems ranging from widespread resource depletion and ecological degradation, arsenic contamination of water, and vulnerability to natural disasters to ensure sustainability of the outcomes. The development of ICTs would be used as an expanding source of growth of the economy. For the purpose, appropriate strategies would be adopted to harness the employment generation and welfare-enhancement potential of ICTs by creating an enabling environment for comprehensive technology acquisition and its diffusion through developing required infrastructure, creating legislative and policy framework, supporting entrepreneurial activities, facilitating and fostering community initiatives, and developing partnerships among public-private institutions. In all these efforts, the private sector would play a key role. To facilitate the process, a strong and competitive private sector would be fostered, infrastructure capacity (especially power, telecommunications, roads and ports) would be expanded, financial markets would be strengthened, environment for foreign investment would be improved, quality of the labor force would be raised, administrative and legal systems would be reformed, law and order situation would be improved, and public transparency and accountability would be increased. Similarly, the potentials of tourism will be exploited for employment generation and poverty reduction following the guidelines suggested in the National Tourism Policy 1992.

C. Fostering Human Development of the Poor

5.60 In the medium term, policies that have a direct bearing on the basic capability and human development of the poor will be emphasized. Three main elements of human development will be targeted: education, health and nutrition.

5.61 The development of human capital has strong poverty reducing effects in Bangladesh. Several aspects of human development will be given priority. First, while there has been considerable quantitative expansion of education, health and nutrition remain relatively neglected. Within the health sector, although some success has been achieved in preventive health care, a small proportion of poor people has access to public health care services. In short, addressing the pro-poor concerns in health remains an unfinished task and the sector needs to be given the priority it deserves. Developing a pro-poor agenda within the rubric of a sector-wide approach to health represents the biggest institutional challenge in this regard.

5.62 Second, the control of communicable diseases and improved maternal and child health to reduce high child and maternal mortality remains the highest public priorities. The main causes of avoidable deaths in the low-income countries including Bangladesh are tuberculosis, childhood infectious diseases, maternal and perinatal conditions, micronutrient deficiencies, and malaria and tobacco-related illnesses. The epidemiological evidence from Bangladesh and elsewhere conveys a crucial message: the vast majority of the excess disease burden is the result of a relatively small number of identifiable conditions, each with a set of existing health interventions that can dramatically improve health. The problem is that these interventions do not adequately reach the poor. A package of essential health interventions with enhanced programs of family planning catered to the needs of the poor would have strong poverty reducing effects as the improvements in health would translate into higher quality of children, lower income erosion due to health shocks, higher productivity, and higher economic growth. Implementation and access of current essential service package (ESP) under the sector-wide approach need to be ensured with special focus on the health needs of the poorest and the most vulnerable both in rural and urban areas. Even though the priority focus is currently on communicable diseases and maternal and perinatal health, non-communicable diseases (NCDs) are also of great significance. Many of these non-communicable diseases, including cardiovascular disease, diabetes, mental illnesses, and cancers, can be effectively addressed by relatively low-cost interventions, especially using preventive actions relating to diet, smoking, and lifestyle. The coverage of current ESP needs to be broadened to include some of the key NCDs as well. Subsidized provisions in the supply of birth-control technologies especially for the poor women would be continued Emerging public health problems such as arsenic and dengue would receive priority attention in the medium term period. Adequate measures would be taken to check the prevalence of HIV/AIDS as well as enhance the capacity to address the problem. Enhancing the capability of the public health sectors to address past slippage and manage new threats to health of the population would be a crucial part of the new strategy. A new policy statement on the health sector for the next phase of health sector development is currently underway.

5.63 Third, such a re-orientation towards wider coverage of the poorest as well as broadening of the scope of essential health package will have considerable resource implications. According to the recent estimate by the WHO Commission on Macroeconomics and Health 2001 the set of essential interventions costs, on average, about $34 per person per year, which is much higher than the current level of public spending of around $5 recorded for Bangladesh. The huge resource gap in financing the health needs of the poor cannot be met without additional resource mobilization from external resources. The key recommendation of the WHO Commission on Macroeconomics and Health is that the world’s low-income countries, in partnership with high-income countries, should scale up the access of the world’s poor to essential health services, including a focus on specific interventions. This issue merits consideration under the proposed poverty reduction strategy. A plea for higher resource allocation for the health sector should, however, accompany strong commitments to substantially improve the present level of health sector governance within the shortest possible time. Generic prescription for good governance may not be good enough for the poor unless a more disaggregated view is taken of the handicaps of various groups (especially of the chronic poor as well specific health needs of as women) among them. In addition, major program interventions in the form of decentralized service delivery, increased local participation, particularly of the poor and women, access to modem health services, increased inputs for dealing with diseases and adverse health conditions that make the poor most vulnerable, and adequate capacity would be designed and implemented. The NGOs can emerge as an important actor in this regard by delivering high-quality health care services, especially at primary and secondary levels (see Annex 7 for strategic issues in health sector development).

5.64 Fourth, malnutrition in Bangladesh remains high despite some improvement in the last decade. Such a high degree of undernourishment has adverse implications for future poverty reduction. The introduction of NNP to address the malnutrition of children under two as well as pregnant and lactating mothers through the provision of food supplements, nutrition and health counseling is a positive step to address the problem. These programs will be strengthened institutionally, with special focus on poor areas and communities. Existing food-targeting programs such as VGD and RMP (Rural Maintenance Program) will also be used to reach the poorest and the most vulnerable with nutrition-support package.

5.65 Fifth, even in basic educational indicator such as enrollment, the country is yet to achieve complete enrollment at the primary level. The combined dropout and non-enrollment rate is estimated at 35 per cent at the primary level, with poverty being the most proximate cause. Incentives that are currently provided for enrollment of children from the poor households as well as for girl’s education will be strengthened in the future. Special emphasis will be given to technical and vocational education of women.

5.66 Sixth, the issue of quality cuts across all the above components of human development. As for education, this implies that mere graduation from the primary level would not give the desired results on the skill level. At the secondary level, more emphasis will be given to vocational and technical education, including dissemination of improved agricultural practices. The quality of tertiary level education also needs to be improved given the rising demand for higher order skills in the context of globalization. A high-quality educational system at all levels will also have additional resource implications. The current pattern of public spending on education in the order of 2.2 per cent of GDP appears inadequate in the light of suitable international comparisons and merits increase to at least 4.5 per cent by 2010, as has been suggested by the National Education Policy 2000. However, desired progress in raising the quality of education can be achieved provided a radically improved system of governance (including the reform of the examination system) within the education sector is in place. Addressing the issue of widening “quality divide” in education between the rich and the poor as well as ensuring the enhanced access of the poor to various levels of education represent two critical areas where much improvements need to take place under the proposed poverty reduction strategy. NGOs can be involved in providing high-quality education in the country along with the government and private sector.

5.67 Seventh, the mis-match between the development needs of the society and basic form, content and orientation of the education system is obvious from the fact that even a large section of the educated people is unemployed. The success rate in the combined result of all public examinations held in 2000 was about 41.6 per cent (SSC 41.1 per cent, HSC 39.6 per cent and at the tertiary level 46 per cent) indicating a colossal system loss of around 58 per cent in the education sector. Further, 35 per cent of the enrolled students at the primary level do not complete the full cycle and less than 2 per cent of those who complete pass the relevant competency test. Thus a realistic estimate of system loss in the education sector will be much higher because the weight of students at the primary level is greater and failure to complete the full cycle and pass the competency test is quite high. It needs to be realized that education is both a process and a system. The inputs of one stage are fed into the next and completors of a certain stage of education get involved as providers of knowledge for earlier stages. The unsatisfactory performance of primary education vitiates the whole education system and contributes to the colossal system loss in the education sector as a whole. For Bangladesh, the priority need to be given to improving the quality of primary education and making it universal, and then prepare adequately to expand secondary and tertiary education by substantially increasing investments in these levels.

D. Women’s Advancement and Removing Gender Gaps

5.68 The strategy has attempted to factor the gender concerns into both diagnostic and prescriptive modules concerning economic growth, poverty reduction and social development. To this end, gender concerns have been identified both at sectoral and sub-sectroral levels. This section provides the salient summary points of the proposed strategy as applied to the specific development objective of promoting gender equality.

5.69 The burden of poverty continues to fall disproportionately on women. The underlying factors are low literacy rate, low nutrition, low income with discriminating wage differentials compared to men, low life expectancy, and high morbidity. Empowering the women is crucial both for its intrinsic value as a development goal and as instrument for bringing about favorable social and economic change. Bangladesh has made considerable progress to bring about greater women’s empowerment, which, in turn, led to significant development effects. Most of the micro-success stories of Bangladesh are associated with the pronounced role of women in economic and social spheres. The strengthening of these measures would further contribute to decline in fertility rate, improvement in child and maternal nutrition and greater welfare for the women themselves. Improvement in the well-being of women and children will have wider beneficial effects for the society as a whole.

5.70 While the gender-gap is closing in Bangladesh for most social indicators, the overall level of empowerment measured in terms of literacy, work force participation, property rights, and credit access leaves much to be desired. A related institutional issue is to increase the political voice of women, especially poor women, which will further enhance their agency role and hence, contribute to faster progress in the well being of children and women. Several areas of critical importance will be emphasized for furthering women’s advancement. These include: policies and institutional actions to combat continuing negative sex ratios, violence against women, high maternal mortality, restrictions on women’s employment and economic opportunities, policies to ensure formal equality, supporting affirmative actions at all levels and in all spheres, creating women-friendly institutional environment, and generating gender-disaggregated statistics.³

5.71 In light of the above, programs and projects will be considered under the strategy and the TYRP which would include, but not be restricted to, the following: (a) reviewing existing policies and institutional measures, which have influenced entitlements and undertaking priority projects to improve entitlements, (b) setting up of women producer’s marketing centers from the grassroots to the national level, (c) enhancing and easing women’s access to banking services; (d) developing micro enterprises training, production and networking centers, (e) establishing linkages and enhancing capacity of women entrepreneurs for the export market, (f) establishing employment information and skill development network centers for the urban migrant female labor and international migrant female labor. Specific affirmative measures such as child care and safe transport facilities will be initiated for sustaining and supporting women’s employment.

5.72 The Government would actively promote policies for increasing women’s participation in all spheres of development under the poverty reduction strategy. These policies outlined earlier in various chapters of this paper (including the ones described in Annex 8 which detail out the major concerns and thrusts of the strategy and should be seen as an integral part of the strategy) would be further concretized in the context of preparing the full-blown strategy and the TYRP.

E. Strengthening Social Protection

5.73 Four sets of policies would be emphasized for the poor to cope better with various income (consumption) shocks. These policies would help increase the crisis-coping capability and form important risks-insurance policies for the poor. Besides, a significant aspect of Bangladesh’s growth process, which will be given greater attention in poverty reduction, is the continuing gap between employment creation and increase in labor supply. While anti-poverty and employment-oriented growth that increases income opportunities for the poor in both rural and urban areas would be given priority, direct interventions will be used to make the process more employment friendly in the short run. By addressing the critical needs, well-executed and well-targeted direct interventions would be used to significantly improve the welfare of the poor.

5.74 The first set of policies will focus on the social safety net for the poor through works and income transfer programs. These include various food-assisted and cash-assisted programs such as VGD/IG-VGD, FFW/TR, old-age pension schemes in rural areas, support for the female destitutes, and traditional relief programs. There is a critical need to address the specific problems of chronic poverty and socially disadvantaged groups (street children, elderly poor, the disabled population, to name a few). The second set of policies will address the vulnerabilities of the ‘new poor’ like the retrenched workers. This will form an increasingly important component of the social protection policies in the backdrop of privatization, labor restructuring, market reforms and globalization. The third set of policies will put emphasis on the development of social solidarity. This is a relatively new area but would be used as an increasingly important route for social interventions. The newly set up umbrella support organization such as the Social Development Foundation (SDF) will play an important role in fostering social capital formation by promoting CBOs and local associations in building and maintenance of small-scale community infrastructures. Encouraging the bonding and bridging across self-help groups under GOs and NGOs at the local level will be an important area of intervention. The fourth set of policies will relate to risks insurance. Policies for preventing and/or mitigating risks will cover four categories. First, providing access to credit to the poor in times of emergency to ease the burden of shocks, reduce distress sales and “negative” methods of coping. Second, ensuring good public health services to reduce health hazard related income and consumption shocks. This would be particularly relevant in the context of emergency health care provisioning (as in the case of health hazards due to injuries and accidents) as well as major public health problems such as arsenic and dengue fever. Third, strengthening disaster preventing and mitigating mechanisms to enhance the coping capability of the poor in times of natural disasters. This is important from the perspective of averting large-scale entitlement failure, which may result in as a consequence of severe natural disasters (including river erosion). The GO-NGO-local community collaboration can play an important role in enhancing disaster management capacity and reduce the adverse effects of such disasters on the poor (as evidenced from the experience of the 1998 flood). Early warning system needs to be further strengthened through better topographical mapping and effective information sharing between the neighboring countries. Fourth, the poor, especially women, often suffer more from violence and personal insecurity. Costs of coping with such shocks impose enormous burden on the poor. Counterveiling measures will be adopted through a broad-based action program including improvement of law and order, accountability of police administration, ensuring better human rights, decentralizing and democratizing the functioning of state institutions to reduce harassment and transaction costs, simplifications of rules and procedures, legal and judiciary reforms to reduce high coping costs involving legal/ court expenses, supporting citizen actions against gross violations of human rights, and ensuring the freedom of the press and the media.

5.75 Reduction of vulnerability to natural disasters would be an integral aspect of the national strategies for poverty reduction. The major policy thrust would be strengthening of the coping mechanisms of the poor through enhancement of community resilience and empowerment. This task can be achieved through a comprehensive approach that unites the government, the communities, NGOs and the private sector in a joint strategy for effective risk reduction. Marginalised groups would be specifically targeted with a view to minimising the personal negative consequences of disaster impacts. The importance of a comprehensive approach that encompasses all aspects of vulnerability reduction and risk management will be emphasized under the strategy. Disaster risk management would be integrated within the mainstream development planning and program/project design validation processes.⁴

F. Supporting Local Government and Broadening Participation

5.76 Policies and institutional measures for broadening participatory governance and enhancing the “voice” and “influence” of the poor would involve several actions. The policy and institutional measures would mainly relate to strengthening the system of good governance, especially decentralization at the local level. Decentralization and devolution of power will be regarded as an essential pre-condition for good governance. Policy consultations on poverty reduction strategy at the grass-roots level have unequivocally favored the creation of a multitier ensemble of effective local government bodies at union, thana, and district levels. The consensus view emerging from the consultation supported the idea of a strong (with adequate financial and administrative power) and popular (elected with people’s mandate) local government. Local government was seen as one of the key instruments for ensuring improved quality and enhanced accountability of public services both in rural and urban areas. The local bodies would be given adequate budget allocations on a matching grant basis keeping in view the poverty ranking of the area. There would also be emphasis on capacity building at the local level. Measures would be taken to ensure women’s effective participation in local government bodies.

5.77 An additional group of measures would emphasize building grassroots level initiatives—outside the domain of local government—to create a demand-driven receiving mechanism “from below” to act as a pressure mechanism on the quality of governance. To this end enabling environment needs to be created for the development of local-level democracy through the promotion of grass-roots organizations of men and women as well as fostering community activities that encourage greater social solidarity. Functioning local level democracy will help combat the negative influence of special interest groups as well as minimize the risks of ‘elite-capture’ of local level bodies and development activities.

G. Policies and Institutions for Reducing Inequality

5.78 Along with economic growth, policies would be emphasized to promote improved distribution of assets and income in favor of the poor, including women. Just preventing any serious worsening of income distribution to ensure poverty reduction as average income increases would not be enough for meeting the MDGs set out in the strategy. For the purpose, one important avenue would be to ensure broad-based asset access to the poor. While traditional asset (e.g. land) distribution has limited scope in Bangladesh, other measures for reducing inequality will be emphasized. The poor can get access to land through the tenancy market and benefit considerably through enforcement of better terms and conditions for tenancy. Moreover, the problem of reducing inequality will be addressed in terms of a broad asset framework. Since the access to physical capital is technically constrained by limited availability, access to other assets on the part of the poor will be considered. Notwithstanding the limited availability of re-distributable land, several aspects of more equitable land-use pattern would be encouraged. First, special emphasis will be given to effective distribution of khas (state-owned) lands and ponds to the landless families. This will require considerable social mobilzation and support from the grassroots and class organizations of the poor, especially landless and women, with support from the national level CSOs and NGOs. Second, land would be allocated for supporting a pro-poor rural housing policy, possibly on the model of compact cluster housing. Third, the urban land-use policy would be reviewed to stop indiscriminate utilization of public lands for private housing purposes. This would be an important area of intervention as public lands earmarked for spaces such as low lying areas, lakes, parks, and playgrounds are increasingly being illegally brought under the private housing plan, leading to environmental problems and low quality civic life. Fourth, measures will be undertaken for ensuring tenurial security, especially for the poor farmers. Fifth, measures would be taken for substantive improvements in the prevailing system of land administration including computerization of the land record system thereby reducing the endemic burden of land disputes, with adverse implications for the poor.

5.79 Providing access to human assets such as basic education and higher level of skills will help the poor to access better employment and income. Similarly, ensuring expanded access to financial assets via microcredit would help the poor to undertake income-generating activities. Access to natural assets such as common property resources would help the poor in mitigating risk in times of distress. Access to social assets will be expanded by building grassroots organizations of the poor at the village level, leading to better networking capacity and act as a risks-insurance mechanism. Finally, the access to political assets—greater empowerment—would help the poor to ensure a fair share in public resources and benefits of development.

5.80 Further, the efforts would emphasize policies to further democratize and strengthen the organizations for the poor (such as NGOs and CSOs) as well as the organizations of the poor (such as CBOs). This will create an environment whereby social entrepreneurs can play a role. Social entrepreneurs will include a range of actors including NGOs/CBOs, corporate bodies, trusts with social charity initiatives, and individuals with philanthropic motives. This will also include socially motivated class of managers specialized in serving the organizations of the poor. The purpose will be to involve the NGOs/CBOs into a permanent collaborative framework with the government in all relevant spheres of poverty and vulnerability reduction which will not be limited, as at present, to the traditional roles of delivery agents in the sphere of microcredit and safety net.

5.81 As the economy expands under the open market system, there is a general risk that the poor would be left out on the margin unless appropriate and effective public policies are targeted towards them. The policies would be directed to developing institutional capability of the poor for making the agencies accountable to the poor. All pro-poor agencies including large and small NGOs/ CBOs would be encouraged to remain accountable to the poor much the same way that corporate bodies are accountable to their shareholders. A faster pace of poverty reduction would require greater voices of the poor.⁵ Greater voices would be ensured through moving beyond the narrow domain of micro-empowerment measures such as access to credit. For greater agency role of the poor, measures would be taken for building institutions for the poor at sectoral, sub-national and national levels with emphasis on developing new institutional ways and means for their collective empowerment. This would be needed not just for catalyzing the active pressure group function of the poor, but also for increasing their aggregate claims in the distribution of overall benefits of economic growth and social progress.

5.82 Measures would be taken for removing existing legal and institutional barriers for free entry and effective functioning of social entrepreneurs and the organizations of the poor. Fostering social entrepreneurialism and developing institutional capability of the poor would be promoted through changing the “institutional rules of the game”, e.g. enacting appropriate legal and institutional reforms.

H. Caring for Environment

5.83 The link between environment and poverty can hardly be overemphasized. Factors influencing poverty like inadequate access to physical asset bases, preponderance of risks, uncertainties and vulnerabilities and spatial problems affecting livelihoods and crisis coping capacities do indeed originate from environmental factors and one can, therefore, find certain linkages between the two. The more visible environmental problems are mostly associated with regenerative resources, which are in danger of exhaustion from excessive use. These resources include not only animal, bird, plant and fish populations, but also land, water and air. They can complement other goods and services and can also supplement income at time of stress. So depletion of many of these environmental resources can make some categories of people destitute even when an economy is growing. That there is an intimate relationship between environmental degradation and an accentuation of destitution is recognized under the strategy. Women and children are particular victims of environmental degradation and the poor are not necessarily polluters. They are mostly forced to face an adverse environment (e.g. shrinking opportunities of gathering water, inadequate access to local commons) with significant implications for deprivation. Their workload goes up and sources of income dwindle. They then suffer from malnutrition and ill health with further impact on income erosion.

5.84 degraded environment implies that there are less resources available not only for the present but also for the future generations meaning greater risk of unsustainability. It creates adverse impact on both production and consumption activities of the poor. Bangladesh is still an agrarian country and the livelihoods of the poor depend largely on agriculture, forests, and fisheries. Indeed around 80 per cent of the total population depend to some extent on the utilization of natural resources or on processing of the resultant products which can be categorized as environmental resources. So the policies would strike a realistic balance between the existing livelihood requirements of the people and sound environmental resource management that can ensure sustainability. A special emphasis will be given to addressing the problems of river erosion affected areas.

5.85 Under the strategy, environmental conservation would be integrated into national poverty alleviation strategies. Given the large number of environmental problems across various ecological zones, some target groups of people are always at high risk of exposure to poverty and environmental degradation. They would be identified clearly. The nexus among poverty and environment as well as with development and population policies would then be understood in a holistic manner. Isolated poverty alleviation strategies will not be effective if these are not environmentally sound, participatory in nature and focused on building local and national capacities for self-reliance. Incorporating people’s knowledge, perception and attitudes in planning and implementation will be taken as vital for environment friendly development. The environment strategy will draw upon the Environmental Policy 1992, the Dhaka Declaration 2000, the National Environmental Management Plan (NEMAP), and the Declaration of the World Summit on Sustainable Development 2002 with support from national CSOs and NGOs working in the area of environment.

I. Summary Points

• There are five main avenues of the poverty reduction strategy. These are: pro-poor economic growth for increasing income and employment of the poor; human development of the poor for raising their capability through education, health, nutrition and social interventions; women’s advancement and closing of gender gaps in development; social protection measures for the poor, especially women, against anticipated and unanticipated income/consumption shocks through targeted and other efforts; and participatory governance for enhancing voice of the poor and improving non-material dimensions of well-being including security, power and social inclusion by improving the performance of anti-poverty institutions and removing institutional hurdles to social mobility.

• Policies and institutional actions delineated under the poverty reduction strategy will be designed to reach out to the poorest and the remote rural areas, which are vulnerable to adverse ecological processes (including chars and river erosion affected areas) and those with high concentrations of socially disadvantaged and marginal ethnic groups. Special attention will be given to the development problems of the hill people of CHT and tribal population residing in other parts of the country.

A. Policy Matrix for National Poverty Reduction Strategy

6.13 A broad outline of the major policy initiatives necessary to implement the poverty reduction agenda is given in Table 6. Several of these measures have been elaborated in the text as well as in accompanying annexes. These will be further elaborated as the process moves towards preparing a full-blown poverty reduction strategy. The logic of the policy matrix has been to identify an appropriate macroeconomic framework consistent with the challenges at the present stage of development of the country. For the purpose, four central blocks of policies have been identified. These are: (a) macro and trade reforms, (b) governance reforms, (c) sectoral reforms and (d) reforms to ensure social protection.. However, the proposed policy matrix does not include all possible reforms needed to take the economy to a higher stage of development. Here, the focus is mainly on the ‘triggers’ and the ‘drivers’ i.e. measures that are critical to address the most pressing development challenges. In the context of preparing the full-blown strategy and the three-year rolling plan, the policy matrix will be further disaggregated to provide sectoral/ sub-sectoral policies and programs and projects along with their detailed costing.

Table 6

BANGLADESH MEDIUM-TERM POLICY MATRIX

Table 6

BANGLADESH MEDIUM-TERM POLICY MATRIX

Strategic Goals/Policy Objectives	Actions Already Taken	Medium Term Agenda
		July 2003-June 2004	July 2004-June 2006
PILLAR 1: MACROECONOMIC STABILITY: TO ACCELERATE PRO-POOR ECONOMIC GROWTH
A. FISCAL MANAGEMENT: Achieve Fiscal Discipline and Fiseal Sustainability
Restoring Fiscal Discipline	An estimated fiscal deficit of 6.2 percent of Central Government Operations for FY02 was contained to 4.3% through a combination of revenue enhancing measures and pruning of non-essential expenditures. Estimated budget deficit for FY03 is also kept around 3.9% of GDP. Measures adopted in the budget of FY03 to sustain and further improve macroeconomic stability achieved in FY02, and improve growth prospects in the light of the proposed MTMF. A Public Expenditure Review Commission (PERC) has been set up in June 2002 to review expenditure decisions, improve budget preparation, integration and implementation, introduce a transparent and quality budgeting process with multi-stakeholder participation, strengthen internal control and rationalization along with effective performance audit and evaluation. The focus of the Commission would be on rationalizing public expenditure, including both revenue and development budget. PERC is expected to submit an interim report in December 2002. Separation of accounts from audit has been implemented from 1 July 2002. This entailed certain institutional restructuring including creation of offices of CAOs (Chief Accounts Officer) in each ministry directly reporting to respective Secretaries and CGA reporting to Finance Secretary. The Auditor General will be left with auditing functions only.	Based on the criteria developed by the PERC, undertake a detailed pruning exercise by the Planning Commission. The exercise should be directed to improve the quality of public expenditure, reduce wastage, and re-direct public expenditure towards more poverty-focused and growth- oriented sectors and activities. Based on these exercises by PERC and Planning Commission, undertake a Mid-Term Review of current year’s public expenditure by March 2003. Adopt programs to implement comprehensive medium term stabilization and ‘second generation’ reform measures within MTMF emphasizing (i) rationalized and improved quality of public expenditure; (ii) increased domestic resource mobilization; (iii) prudent monetary policy; (iv) financial sector reforms; and (v) improved external sector management. (March 2003). Operationalize the Poverty Focal Point in the General Economics Division (GED) of the Planning Commission with commensurate status, technical capability and inter-ministerial linkages and strengthen the Unit with technical support and manpower capacity. The key task of the Focal Point would be to coordinate preparation of the full-blown poverty reduction strategy and the 3-year rolling plan. (June, 2003)	Attain fiscal sustainability and generate enough resources so that about 5.1% of GDP can be spent on poverty reduction programs by FY06. Generate adequate resources for investment with a view to accelerating economic growth to reach 7% by FY06.
4. Enhance quality of fiscal data and enhance analytical capability. 5. Promote efficiency in the use of resources in development budget. 6. Improve public financial management through performance auditing.	A number of measures have been adopted to improve quality and timeliness of financial data and monitoring and analysis of fiscal information including government’s day-to-day business. Actions have been initiated to develop the analytical capacity in budget and expenditure monitoring in the Finance Division and a number of line ministries. Fund release procedures in respect of development expenditure have been strengthened to ensure improve financial discipline and appropriate utilization of development funds. Up to date Audit Manuals and Codes have been prepared, auditors trained and quality of audit reports have been improved in a few Audit Directorates. Performance Audit Manuals prepared and selected performance audits are being done.	Short and medium term programs of reforms will be undertaken to further improve reconciliation of accounts, and strengthen internal control. Downstream automation of compilation of accounts in district level accounts offices will be implemented. The capacity of a number of line ministries will be strengthened to improve their financial management procedures and systems. Internal controls will be intensified in these line ministries.	Full reconciliation of expenditures will be established across the government. Quality and timeliness of expenditure will be achieved. Selected expenditure tracking studies will be completed. A Macroeconomic Policy Analysis Unit will be established in the Finance Division. Public debt management capacity of Finance Division will be improved. Remaining Audit Manuals will be updated and Performance Audits strengthened. Adequate support will be provided to the Public Accounts Committee. Backlog of audit will be reduced by 80%. Systems will be put in place for effective follow up of audit findings and PAC recommendations.
B. Reform Tax System to Improve Efficiency in Resource Mobilization.
Mobilization of revenue resources	A Commission on Reforming the Public Revenue System has been set up in order to find out ways to improve the taxation system and further augment domestic resource mobilization. Government has taken up two TA projects to modernize Customs Administration, VAT and Income Tax. Through these projects the capability of NBR is being enhanced to control revenue leakage, augment revenues, develop professional skills of NBR and improve service delivery. Government is currently implementing financial management reforms through improvements in tax administration and rationalizing prices of public utilities and services. Measures have been taken to improve tax policy and tax administration. Numerous revenue enhancing measures announced in the budget of FY03 including lowering of the personal income tax exemption limit, an increase in the minimum income tax of individuals, containment of tax holidays, additional tax on undisturbed profits of listed companies, reduction in corporate tax rate by 5 percent, inclusion of all sources of NGO incomes into the tax net with the exception of income from their micro-credit operations, abolition of zero duty rate on many imports, withdrawal of several VAT exemptions and extension of VAT to additional areas of activity, and increase in travel and motor vehicle taxes. All projects financed by suppliers’ credit not fulfilling adopted criteria have been put on hold. Government has appointed a number of independent audit firms to check tax evasion and widen the tax base. Non-tax revenue will contribute significantly to the total domestic resource mobilization.	Based on the recommendations of the Revenue Reforms Commission, measures will be taken to further modernize and rationalize the taxation system with effect from next year budget. The share of direct tax and VAT will be significantly increased. Modern techniques will be in place in NBR for revenue collection and for developing equitable taxation policies. Non-tax revenue rates on various items have been enhanced by 100 to 500 percent to augment domestic revenue resource mobilization.	Over the Program period, revenue-GDP ratio, it is envisaged, would increase to at least 12% of GDP. Reforms and revenue enhancing measures will continue.
C. External Sector: Redress imbalances in the Balance of Payment.
	Processing of workers’ remittances through official channels has been streamlined through establishing banks/exchange houses at different strategic places or the world and setting up remittance cells in all nationalized banks. Anti-money laundering surveillance procedures have been prescribed by Bangladesh Bank in terms of the newly enacted Money Laundering Prevention Act 2002 to purge any handling of money originating from or associated with criminal activities. Actions initiated to enhance the capability in the area of trade policy by strengthening the WTO Cell in the Ministry of Commerce and the Tariff Commission.	Anti money laundering surveillance will be further strengthened. Further actions will be taken to increase remittances through official channel. Comprehensive and effective measures will be taken to reduce informal trade. Efforts will continue to strengthen the WTO Cell for effective trade negotiation.	Follow-up measures to continue to encourage flow of remittances through the legal channel. Actions will be continued for strengthening of anti money laundering surveillance. Measures will continue to further strengthen the WTO Cell.
Improve Export Performance by Reducing Anti-export Bias of Trade Policy
	To promote the export of small and medium enterprises and non-traditional items the government in combination with the banking sector has provided various incentives including credit and cash incentives. New skill based training for entrepreneurship development is being imparted to promote small and medium enterprises. Bank rate has been lowered to reduce the interest rates. The trade regime has been further liberalized by reducing the maximum tariff rate by 5 percentage points (to 32.5 percent). There has been significant rationalization in the structure of supplementary duties, with the number of rates reduced from 31 to 5, and Import license fee on all imports has been withdrawn. The importation of sugar has been liberalized	Promote exports by expanding access to export markets, technology, imported inputs and capital goods. An Action Plan will be adopted to remove anti-export bias through institutional reforms. Efforts will made to lower the present four tier tariff structure to a three-tier structure, i.e. 30%, 15% & 10%, keeping in conformity with the rates prevailing in the neighboring countries. Get the garment sector ready for annulment of MFA. Further rationalize the import policy. Design a careful blending of trade, investment, macro and sectoral reforms to maximize gains from increased outward orientation.	Export promoting and diversification efforts will continue. The Action Plan will be implemented gradually. Rationalization efforts will be continued Actions will be continued to maximize gains from outward orientation.
D. Freeing Market and Strengthening Bangladesh Bank.
	The Boards of NCBs and SDBs have been reconstituted. Some of the powers of the Finance Division have been delegated to the Board and decentralization of powers has been implemented amongst different layers of management New incentive scheme has been introduced for improving performance including collection of NPLs. Loan recovery departments have been strengthened. Prudential regulations and banking supervision have been strengthened. Powers and responsibilities of Banks and management have been clearly spelt out including fit and proper tests for chief executives of private commercial banks have been introduced. Effective internal control system is being set up. Capital adequacy requirements increased from 8% to 9% on risk-weighted basis Minimum capital requirement for banks is being increased from TK. 200 million to 1,000 million Dividend declaration by bank in excess of 20% allowed only if an equivalent amount is set aside for reserve A single borrower limit have been reduced by half Regulations have been issued by the Bangladesh Bank to control loan default. Closing down of continually loss making Nationalized Commercial Bank (NCB) branches the programs for closing down continually loss making NCB branches, taken up in 2002 has so far resulted in closing down of 58 branches and financial performance turnaround of 37 branches A Committee on Default Loans (Khelapi Rin Sankranta Committed) has been set up to suggest measures for reducing the burden of debt default and suggest measures for improved loan management performance of the banking sector.	Amendments to the Bangladesh Bank Order 1972, the Bangladesh Bank (Nationalization) Order 1972 and the Bank Company Act 1991 are expected to be placed before the Parliament by February, 2003. Enhance autonomy and regulatory power of Bangladesh Bank, improve governance of public financial institutions, and remove deficiency of legal framework. (March, 2003). Fit and proper test for banks’ directors would be issued and maximum number of directors be reduced for greater efficiency New risk analysis, lending policies, loan follow up and loan recovery processes would be introduced. A suitable strategy for restructuring the financial sector will be developed and implemented on the basis of the Bank-Fund FSAP mission recommendations as well as the recommendations of the Committee on resolution of loan default problems. Implement measures for improved performance of the banking sector.	Enhancement of skills of examiners and supervisors of Bangladesh Bank would continue. Enhancement and more demanding accounting disclosure requirements for banks would be pursued. Pursue the program towards closing down of remaining continually loss making NCB branches. Full implementation of the banking sector reform strategy will be achieved. Continue implementation of banking sector reform measures.
E. Privatization and Deregulation
Reform SOEs to reduce losses and strengthen their efficiency and competitiveness	Performance orientation in SOE activities has been reinforced. Budgetary transfer to SOEs has been controlled and NCBs are not providing new loans to defaulting SOEs SOEs activities are being closely monitored New Privatization Policy has been adopted. Adamjee Jute Mill and 16 (sixteen) mills have been closed One SOE has been privatized and another 8 (eight) in the process TCB, part of BADC, BSF1C, BSC are being closed down. 100 SOEs have been decided to be privatized including 53 SOEs have been earmarked for privatization in 2003. Long overdue increase in the prices of petroleum, gas and power implemented.	Rationalization of administered prices would be continued. SOEs identified for privatization would be sold or closed down. Additional SOEs would be identified for privatization An economic pricing framework for utilities would be developed.	SOE losses would be significantly reduced and private sector will be further promoted. Rurgetary transfer to the SOEs will be brought down significantly.
Rationalization of Power Sector	Ashugonj Power Station has already been corporatized. Hariput Gas Turbine Power Station has been converted into SBU. The transfers of transmission lines, according to the action plan, are being gradually handed over to PGCB. BPDB and DESA each prepared a list of the largest 1000 numbers of defaulting consumers and the disconnection process is going on. Tariff has been increased by 5% with effect from August 1, 2002 for all categories of consumers. The proposal of West Zone Power Distribution Company has been approved by the Finance Committee of the Cabinet on July 7, 2002. West Zone Power Distribution System Company Ltd. is likely to be incorporated as a Company under the Company Act, 1994 soon. The whole process of handing over will be completed by December, 2002. The draft “Bangladesh Electricity Reform Act 2002” was prepared and approved by the Cabinet on 11 February, 2002. The field offices of DESA and BPDB are taking actions against the delinquent consumers as a continuous process in collecting revenues. For increasing revenue earnings, many consumers have been allowed payment of arrears by installments. Both the agencies are trying to resolve the problem of high accounts receivables through a policy of persuasion and legal measures.	Government has decided to combine the drafts “Bangladesh Electricity Reform Act, 2002” and “Gas Act” together. The combined Draft Act renamed as “The Energy Regulatory Commission Act. 2002” has been prepared by the Ministry of Law, Justice and Parliamentary Affairs, which is under examination in the Power Division as well as Energy and Mineral Resources Division and will be placed in the Cabinet for approval. After approval by the Cabinet and enactment by the Parliament, an Energy Regulatory Commission will be formed under the said Act. Draft Pricing Policy has been prepared and it is under consideration of the Government.	Continue implementation of power sector rationalization measures to create an efficient energy sector as a critical input to growth.
PILLAR 2: IMPROVING GOVERNANCE: FOR SUSTAINING GROWTH AND POVERTY REDUCTION
Governance	Government order to separate audit and accounting functions was made on 1st July, 2002. For each Ministry/Division offices of the Chief Accounts Officers have been set up and accounting functions have been placed under the Finance Division. The C&AG will look after audit functions only. Steps are already underway to: Appoint an Ombudsman On January 6, 2002 a gazette notification was published to give effect to the Ombudsman Act, 1980. Thereafter, a draft bill was prepared by the Ministry of Law, Justice and Parliamentary Affairs to bring certain amendments to the Act in respect to authority and mode of appointment of the Ombudsman. The Bill is under consideration of the Cabinet Committee. Set up a National Human Rights Commission The Bill is now under consideration of the Cabinet Committee. Separate judiciary from the executive The Government is hopeful that the matter will be finalized in time. And then the Judiciary of Bangladesh will be institutionally separated. The Government is working on the implementation of the orders of the Supreme Court (July, 2003). In order to improve law and order situation defense forces along with civilian forces are working together to recover illegal arms and curb terrorism through arrest of identified terrorists. Defense forces engaged in exercise will be withdrawn at appropriate time. Speedy Trial Act has been passed and speedy trial courts set up. Acid Control Act and Acid Offense Curbing Act have been enacted to prevent acid throwing.	Strengthen the role of the Parliament and the Parliamentary Committees especially Public Accounts Committee, and Public Estimate and Undertaking Committees. The interface of these Committees with the activities of the line ministries is made effective. The continuity of these committees will be ensured and recommendations acted upon. The role of these committees is critical in the context of developing the full-blown strategy. Ensure effective and independent role of C&AG office as an institution accountable to the Parliament. Implement the judicial reform program, separate the judiciary from the executive, and establish Judicial Service Commission and Judicial Pay Commission. Introduce comprehensive reform in the police service, establish the office of the Ombudsman and an independent Anti-Corruption Commission, draw-up action plan for phased implementation of relevant recommendations of PARC and PERC, use informatics to improve governance, improve public purchase and procurement systems, promote unhindered flow of information. Create facilitating environment for private sector led and outward oriented growth and Government-private sector (including NGOs) partnership by improving investment climate through governance -improving measures, designing appropriate incentive structure and sectoral reforms. The strength of Police, BDR and Ansars will be enhanced through recruitment of additional staff and their training. Action would be taken to modernize the legal system through implementation of a World Bank aided TA Project. Educational institutions will be freed from violence and disorder.	Continue the implementation of measures to strengthen good governance in order to set strengthened pillars in place to reap growth potentials and institute unhindered democratic norms at all stages of life. Implement the Action Plan. Undertake reforms to strengthen government-private sector partnership in relevant areas and create environment for private sector led growth. Government will continue to implement a well laid out plan of action to improve law and order situation.
B. Supporting Local Government and Broadening Participation.
3. Widen participatory governance.	Strengthening of local government institutions and, in particular, holding of elections at various tiers is a subject of priority of the government. The Local Government Division examined these matters, case by case, and succeeded in removing most of the impediments. Elections of major City Corporations in Chittagong, Dhaka, Khulna and Rajshahi were held as well as in some Paurasabhas. Elections in other Paurasabhas have been completed	UP election will be held soon. Decision on further decentralization and tiers of local government will be taken. Decisions will be taken on required tiers of local government and the decisions will be implemented. Encourage building of the poor’s institutional capability by way of promoting organizations of the poor (CBOs) and organizations for the poor (CSOs, NGOs) to ensure equitable access to public services and strengthen ability to influence policy. Ensure the independent role of mass media including press and television channels as well as the civic and human rights organizations as independent monitoring institutions for ensuring transparency and accountability.	Ensure decentralization and devolution of power through effective local government institutions, appropriately define the functions of these institutions and take empowerment measures accordingly through appropriate fiscal, administrative and other relevant decentralization/ devolution measures.
C. Reform in Civil Service
4. Improve the performance of the civil service by restoring integrity, efficiency, and adoption of modern personnel and management practices	To reduce the size of the Public Administration Government set an embargo on new recruitment and this ban is still in force except exceptional circumstances. Two Committees have been set up by the Government to rationalize government’s manpower and relocate existing manpower, if needed. A merit-based system of promotion has been introduced. To develop expertise and professional skills the ministries have been distributed into 5 clusters, which will be manned by officials with relevant specialized skills. A Career Planning Cell has been set up recently in Ministry of Establishment. A Secretary level committee has been set up to examine and recommend implementation of the PARC report	Civil Service would be reconstituted on absolutely merit, performance and integrity basis. An Action Plan will be developed to implement relevant and appropriate recommendation of PERC on the basis of the report of the Secretaries’ Committee. Action will be in place to right size the Government. Merit based system of recruitment and promotion will be institutionalized.	Government would continue with the implementation of civil service reform programs in the light of recommendations of PARC and new needs of present day business in order to ensure a civil service based on the principles of meritocracy and professionalism. Continue efforts to develop expertise and professional skills by implementing the Action Plan and strengthening the Career Planning Cell.
PILLAR 3: INVESTING IN HUMAN DEVELOPMENT: TO ENHANCE HUMAN CAPABILITIES
Education	Al the primary level of education teachers of government schools are recruited through an open competition using thana quota. Appointment and deployment system of primary teachers is being decentralized al the district level. Sixty per cent teaching positions are reserved for female candidates. Financial Management system under RIB EC of the finance Division has been initiated in the primary education sub-sector. School-wise expenditure statement has been collected while conducting Children education and Literacy Survey 2002. This will be linked to performance Children and Education Survey is conducted for primary education every alternate year. Map of each school catchment area is prepared by the respective school authority. Already school catchment area map has been prepared and distributed to schools in 35 districts. There are four on-going female stipend projects at the secondary level and one female stipend project at the higher secondary level. All rural Thanas are covered under the stipend program. Secondary Education Sector Improvement Project (SESIP) is being implemented. Different areas of education reforms have been included in this project. The main components are; decentralized management, teachers training, academic supervision etc. Creation of a separate Teaching Service Commission for recruitment of teachers of non-govt. schools, colleges and madrashas is in progress. The draft will be placed before the Cabinet soon. Directorate of Inspection and Audit of the Ministry of Education looks after the accountability of public expenditure in schools, colleges, and madrashas. This process is being strengthened under SESIP. University Grants Commission coordinates the activities of the universities and has initiated reform programs for the university sector. NCTB activities have been reviewed. Quality control issue of textbooks is being looked after by the NCTB up to higher secondary level. All textbooks except English and Bengali at higher secondary level are published and distributed by the private sector. Higher education in degree colleges, universities and BIT’s is being reviewed for formulation of a strategic plan in the light of the expert committee report, which will be placed for the consideration of the Cabinet soon.	Implement social sector policies to improve access to the poor and enhance quality Preparation of GIS based educational institution map is underway for 17 districts (on experimental basis) A separate project is being taken for the metropolitan areas. In the rural areas, all girl students are covered subject to the fulfillment of some criteria, In the metropolitan areas, targeting approach is adopted and female students belonging to the poor income-groups will get stipend. Budgetary allocation to the Education sector will be significantly enhanced. Strategy for further reforms will be adopted on the basis of the Expert Committee set up by the Government. Quality of education and priority to vocational and technical training will be the main focus of educational reforms.	Education is the long-run primary force behind growth and it would be shape and designed in such a fashion. Share of the educational sector in Government’s budget allocation will continue to increase. Expenditure tracking studies will be made to evaluate impact of reforms. Coverage and quality of education will significantly improve through reform actions. Public-private partnership will be encouraged in this area. Education reform strategy will be continually pursued and education outcomes monitored.
Health	In the health sector, Health and Population Sector Program (HPSP) achieved some success in certain areas, while it also faced operational problems in some others. In order to make this program effective, the Government has commissioned a full review of the operational strengths and weaknesses of this new approach. Health sector allocations have been increased. The government is committed to the sector-wide health sector reform and development program.	Actions will be taken pursuant to the outcomes of the review to design and implement the next phase. Vacant posts of doctors and nursed will be filled in and required number of additional posts will be created. The operational and maintenance budget of this sector will be increased.	Next phase of restructured sector wide program will be implemented for development of the health, population and nutrition sector. Expenditure tracking studies will be made.
Telecommunication	A Telecommunication Regulatory Commission has been established.	In telecommunications, create policy and regulatory environment with separate policymaking, regulatory and operation functions; introduce reforms in BTTB to provide quality and competitive services.	Continue reforms to make the sector more efficient and cost effective.
Technology Policy	A Task Force on ICT has been set up and is operational.	Adopt a comprehensive technology policy and draw up action plan Lo implement it.	Continue to implement the technology policy. Enhance technological capability in the public sector and remove barriers in the private sector through a well-defined institutional infrastructure for delivery and adoption of new technology.
Ensure Integrated and Pro-poor Growth of employment and output.
Sectoral Policies Formulate sectoral policies in support of growth and poverty reduction agenda.	Sectoral policies have been formulated and thrust areas identified.	Work out details in the context of the full-blown strategy and the three-year rolling plan within the MTMF framework particularly in the areas of health, education, social protection and others emphasized in the strategy.	Implement relevant sectoral policies through formulating time-bound action plans.
PILLAR 4: SOCIAL PROTECTION: FOR REDUCING VULNERALABILITIES AND IMPROVING INCOME GENERATING OPPORTUNITIES
Women’s Advancement and Removing Gender Gaps	Women have reserved quota for recruitment in government service. Gender considerations get priority in policy formulation.	Factor the gender concerns into both diagnostic and prescriptive modules of the strategy including both sectoral and sub -sectoral levels.	Undertake analytical and policy oriented work to explicitly factor gender and similar concerns into macro and policy framework. Review existing policies/institutional measures and adopt specific measures (as suggested in the strategy) for increasing women’s participation in all spheres of development.
Strengthening Social Protection	The targeted programs like FFW, VGD, TR, GR, VGF get priority in budgetary allocations. Some of the programs are being monetized lo prevent leakage. A system of new programs for mitigating sudden economic shocks and for acid-burnt and physically handicapped people has been adopted. Allocation for distressed and widowed women and old age people has been increased.	Adopt policies/programs and strengthen current programs of proving social safety nets to the poor. Address vulnerabilities of the new poor (like retrenched workers). Micro-credit and credit for SME development will be extended.	Develop and implement programs for strengthening social solidarity and help accumulate social capital Adopt policies/programs for preventing and mitigating risks of different categories of the poor through various measures such as credit, public health services, disaster prevention and mitigation, and measures to address violence and personal insecurity.
Policies and institutions for Reducing Inequality	Micro-credit programs of the government as well as of other agencies and NGO’s have been strengthened. Along with micro-credit priority has been given to extension of credit to small enterprise development projects.	Design programs to assist in broad-based asset access to the poor like reforms in land tenancy market, effective distribution of khas land and ponds to landless families, providing basic education and skills, micro-credit.	Continue efforts to ensure greater access to assets by the poor. Redefine the present nature of financial interventions involving issues like credit upscaling, interest rate practices, vertical integration, loan packaging, higher access to knowledge, greater use of savings instruments, and insurance provision against risks and uncertainties. Support pro-poor rural housing policy, urban land use policy, improve land administration, and strengthen organization of the poor.
Caring for Environment	Production and marketing of polythene shopping bags have been completely banned through out the country. Most of two-stroke three wheelers are out of roads now and the remaining ones will follow suit soon.	Implement the environment strategy drawing upon Environment Policy 1992, Dhaka Declaration 2000 and the NEMAP.	Integrate environmental conservation into the national development strategy

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Table 6

BANGLADESH MEDIUM-TERM POLICY MATRIX

Strategic Goals/Policy Objectives	Actions Already Taken	Medium Term Agenda
		July 2003-June 2004	July 2004-June 2006
PILLAR 1: MACROECONOMIC STABILITY: TO ACCELERATE PRO-POOR ECONOMIC GROWTH
A. FISCAL MANAGEMENT: Achieve Fiscal Discipline and Fiseal Sustainability
Restoring Fiscal Discipline	An estimated fiscal deficit of 6.2 percent of Central Government Operations for FY02 was contained to 4.3% through a combination of revenue enhancing measures and pruning of non-essential expenditures. Estimated budget deficit for FY03 is also kept around 3.9% of GDP. Measures adopted in the budget of FY03 to sustain and further improve macroeconomic stability achieved in FY02, and improve growth prospects in the light of the proposed MTMF. A Public Expenditure Review Commission (PERC) has been set up in June 2002 to review expenditure decisions, improve budget preparation, integration and implementation, introduce a transparent and quality budgeting process with multi-stakeholder participation, strengthen internal control and rationalization along with effective performance audit and evaluation. The focus of the Commission would be on rationalizing public expenditure, including both revenue and development budget. PERC is expected to submit an interim report in December 2002. Separation of accounts from audit has been implemented from 1 July 2002. This entailed certain institutional restructuring including creation of offices of CAOs (Chief Accounts Officer) in each ministry directly reporting to respective Secretaries and CGA reporting to Finance Secretary. The Auditor General will be left with auditing functions only.	Based on the criteria developed by the PERC, undertake a detailed pruning exercise by the Planning Commission. The exercise should be directed to improve the quality of public expenditure, reduce wastage, and re-direct public expenditure towards more poverty-focused and growth- oriented sectors and activities. Based on these exercises by PERC and Planning Commission, undertake a Mid-Term Review of current year’s public expenditure by March 2003. Adopt programs to implement comprehensive medium term stabilization and ‘second generation’ reform measures within MTMF emphasizing (i) rationalized and improved quality of public expenditure; (ii) increased domestic resource mobilization; (iii) prudent monetary policy; (iv) financial sector reforms; and (v) improved external sector management. (March 2003). Operationalize the Poverty Focal Point in the General Economics Division (GED) of the Planning Commission with commensurate status, technical capability and inter-ministerial linkages and strengthen the Unit with technical support and manpower capacity. The key task of the Focal Point would be to coordinate preparation of the full-blown poverty reduction strategy and the 3-year rolling plan. (June, 2003)	Attain fiscal sustainability and generate enough resources so that about 5.1% of GDP can be spent on poverty reduction programs by FY06. Generate adequate resources for investment with a view to accelerating economic growth to reach 7% by FY06.
4. Enhance quality of fiscal data and enhance analytical capability. 5. Promote efficiency in the use of resources in development budget. 6. Improve public financial management through performance auditing.	A number of measures have been adopted to improve quality and timeliness of financial data and monitoring and analysis of fiscal information including government’s day-to-day business. Actions have been initiated to develop the analytical capacity in budget and expenditure monitoring in the Finance Division and a number of line ministries. Fund release procedures in respect of development expenditure have been strengthened to ensure improve financial discipline and appropriate utilization of development funds. Up to date Audit Manuals and Codes have been prepared, auditors trained and quality of audit reports have been improved in a few Audit Directorates. Performance Audit Manuals prepared and selected performance audits are being done.	Short and medium term programs of reforms will be undertaken to further improve reconciliation of accounts, and strengthen internal control. Downstream automation of compilation of accounts in district level accounts offices will be implemented. The capacity of a number of line ministries will be strengthened to improve their financial management procedures and systems. Internal controls will be intensified in these line ministries.	Full reconciliation of expenditures will be established across the government. Quality and timeliness of expenditure will be achieved. Selected expenditure tracking studies will be completed. A Macroeconomic Policy Analysis Unit will be established in the Finance Division. Public debt management capacity of Finance Division will be improved. Remaining Audit Manuals will be updated and Performance Audits strengthened. Adequate support will be provided to the Public Accounts Committee. Backlog of audit will be reduced by 80%. Systems will be put in place for effective follow up of audit findings and PAC recommendations.
B. Reform Tax System to Improve Efficiency in Resource Mobilization.
Mobilization of revenue resources	A Commission on Reforming the Public Revenue System has been set up in order to find out ways to improve the taxation system and further augment domestic resource mobilization. Government has taken up two TA projects to modernize Customs Administration, VAT and Income Tax. Through these projects the capability of NBR is being enhanced to control revenue leakage, augment revenues, develop professional skills of NBR and improve service delivery. Government is currently implementing financial management reforms through improvements in tax administration and rationalizing prices of public utilities and services. Measures have been taken to improve tax policy and tax administration. Numerous revenue enhancing measures announced in the budget of FY03 including lowering of the personal income tax exemption limit, an increase in the minimum income tax of individuals, containment of tax holidays, additional tax on undisturbed profits of listed companies, reduction in corporate tax rate by 5 percent, inclusion of all sources of NGO incomes into the tax net with the exception of income from their micro-credit operations, abolition of zero duty rate on many imports, withdrawal of several VAT exemptions and extension of VAT to additional areas of activity, and increase in travel and motor vehicle taxes. All projects financed by suppliers’ credit not fulfilling adopted criteria have been put on hold. Government has appointed a number of independent audit firms to check tax evasion and widen the tax base. Non-tax revenue will contribute significantly to the total domestic resource mobilization.	Based on the recommendations of the Revenue Reforms Commission, measures will be taken to further modernize and rationalize the taxation system with effect from next year budget. The share of direct tax and VAT will be significantly increased. Modern techniques will be in place in NBR for revenue collection and for developing equitable taxation policies. Non-tax revenue rates on various items have been enhanced by 100 to 500 percent to augment domestic revenue resource mobilization.	Over the Program period, revenue-GDP ratio, it is envisaged, would increase to at least 12% of GDP. Reforms and revenue enhancing measures will continue.
C. External Sector: Redress imbalances in the Balance of Payment.
	Processing of workers’ remittances through official channels has been streamlined through establishing banks/exchange houses at different strategic places or the world and setting up remittance cells in all nationalized banks. Anti-money laundering surveillance procedures have been prescribed by Bangladesh Bank in terms of the newly enacted Money Laundering Prevention Act 2002 to purge any handling of money originating from or associated with criminal activities. Actions initiated to enhance the capability in the area of trade policy by strengthening the WTO Cell in the Ministry of Commerce and the Tariff Commission.	Anti money laundering surveillance will be further strengthened. Further actions will be taken to increase remittances through official channel. Comprehensive and effective measures will be taken to reduce informal trade. Efforts will continue to strengthen the WTO Cell for effective trade negotiation.	Follow-up measures to continue to encourage flow of remittances through the legal channel. Actions will be continued for strengthening of anti money laundering surveillance. Measures will continue to further strengthen the WTO Cell.
Improve Export Performance by Reducing Anti-export Bias of Trade Policy
	To promote the export of small and medium enterprises and non-traditional items the government in combination with the banking sector has provided various incentives including credit and cash incentives. New skill based training for entrepreneurship development is being imparted to promote small and medium enterprises. Bank rate has been lowered to reduce the interest rates. The trade regime has been further liberalized by reducing the maximum tariff rate by 5 percentage points (to 32.5 percent). There has been significant rationalization in the structure of supplementary duties, with the number of rates reduced from 31 to 5, and Import license fee on all imports has been withdrawn. The importation of sugar has been liberalized	Promote exports by expanding access to export markets, technology, imported inputs and capital goods. An Action Plan will be adopted to remove anti-export bias through institutional reforms. Efforts will made to lower the present four tier tariff structure to a three-tier structure, i.e. 30%, 15% & 10%, keeping in conformity with the rates prevailing in the neighboring countries. Get the garment sector ready for annulment of MFA. Further rationalize the import policy. Design a careful blending of trade, investment, macro and sectoral reforms to maximize gains from increased outward orientation.	Export promoting and diversification efforts will continue. The Action Plan will be implemented gradually. Rationalization efforts will be continued Actions will be continued to maximize gains from outward orientation.
D. Freeing Market and Strengthening Bangladesh Bank.
	The Boards of NCBs and SDBs have been reconstituted. Some of the powers of the Finance Division have been delegated to the Board and decentralization of powers has been implemented amongst different layers of management New incentive scheme has been introduced for improving performance including collection of NPLs. Loan recovery departments have been strengthened. Prudential regulations and banking supervision have been strengthened. Powers and responsibilities of Banks and management have been clearly spelt out including fit and proper tests for chief executives of private commercial banks have been introduced. Effective internal control system is being set up. Capital adequacy requirements increased from 8% to 9% on risk-weighted basis Minimum capital requirement for banks is being increased from TK. 200 million to 1,000 million Dividend declaration by bank in excess of 20% allowed only if an equivalent amount is set aside for reserve A single borrower limit have been reduced by half Regulations have been issued by the Bangladesh Bank to control loan default. Closing down of continually loss making Nationalized Commercial Bank (NCB) branches the programs for closing down continually loss making NCB branches, taken up in 2002 has so far resulted in closing down of 58 branches and financial performance turnaround of 37 branches A Committee on Default Loans (Khelapi Rin Sankranta Committed) has been set up to suggest measures for reducing the burden of debt default and suggest measures for improved loan management performance of the banking sector.	Amendments to the Bangladesh Bank Order 1972, the Bangladesh Bank (Nationalization) Order 1972 and the Bank Company Act 1991 are expected to be placed before the Parliament by February, 2003. Enhance autonomy and regulatory power of Bangladesh Bank, improve governance of public financial institutions, and remove deficiency of legal framework. (March, 2003). Fit and proper test for banks’ directors would be issued and maximum number of directors be reduced for greater efficiency New risk analysis, lending policies, loan follow up and loan recovery processes would be introduced. A suitable strategy for restructuring the financial sector will be developed and implemented on the basis of the Bank-Fund FSAP mission recommendations as well as the recommendations of the Committee on resolution of loan default problems. Implement measures for improved performance of the banking sector.	Enhancement of skills of examiners and supervisors of Bangladesh Bank would continue. Enhancement and more demanding accounting disclosure requirements for banks would be pursued. Pursue the program towards closing down of remaining continually loss making NCB branches. Full implementation of the banking sector reform strategy will be achieved. Continue implementation of banking sector reform measures.
E. Privatization and Deregulation
Reform SOEs to reduce losses and strengthen their efficiency and competitiveness	Performance orientation in SOE activities has been reinforced. Budgetary transfer to SOEs has been controlled and NCBs are not providing new loans to defaulting SOEs SOEs activities are being closely monitored New Privatization Policy has been adopted. Adamjee Jute Mill and 16 (sixteen) mills have been closed One SOE has been privatized and another 8 (eight) in the process TCB, part of BADC, BSF1C, BSC are being closed down. 100 SOEs have been decided to be privatized including 53 SOEs have been earmarked for privatization in 2003. Long overdue increase in the prices of petroleum, gas and power implemented.	Rationalization of administered prices would be continued. SOEs identified for privatization would be sold or closed down. Additional SOEs would be identified for privatization An economic pricing framework for utilities would be developed.	SOE losses would be significantly reduced and private sector will be further promoted. Rurgetary transfer to the SOEs will be brought down significantly.
Rationalization of Power Sector	Ashugonj Power Station has already been corporatized. Hariput Gas Turbine Power Station has been converted into SBU. The transfers of transmission lines, according to the action plan, are being gradually handed over to PGCB. BPDB and DESA each prepared a list of the largest 1000 numbers of defaulting consumers and the disconnection process is going on. Tariff has been increased by 5% with effect from August 1, 2002 for all categories of consumers. The proposal of West Zone Power Distribution Company has been approved by the Finance Committee of the Cabinet on July 7, 2002. West Zone Power Distribution System Company Ltd. is likely to be incorporated as a Company under the Company Act, 1994 soon. The whole process of handing over will be completed by December, 2002. The draft “Bangladesh Electricity Reform Act 2002” was prepared and approved by the Cabinet on 11 February, 2002. The field offices of DESA and BPDB are taking actions against the delinquent consumers as a continuous process in collecting revenues. For increasing revenue earnings, many consumers have been allowed payment of arrears by installments. Both the agencies are trying to resolve the problem of high accounts receivables through a policy of persuasion and legal measures.	Government has decided to combine the drafts “Bangladesh Electricity Reform Act, 2002” and “Gas Act” together. The combined Draft Act renamed as “The Energy Regulatory Commission Act. 2002” has been prepared by the Ministry of Law, Justice and Parliamentary Affairs, which is under examination in the Power Division as well as Energy and Mineral Resources Division and will be placed in the Cabinet for approval. After approval by the Cabinet and enactment by the Parliament, an Energy Regulatory Commission will be formed under the said Act. Draft Pricing Policy has been prepared and it is under consideration of the Government.	Continue implementation of power sector rationalization measures to create an efficient energy sector as a critical input to growth.
PILLAR 2: IMPROVING GOVERNANCE: FOR SUSTAINING GROWTH AND POVERTY REDUCTION
Governance	Government order to separate audit and accounting functions was made on 1st July, 2002. For each Ministry/Division offices of the Chief Accounts Officers have been set up and accounting functions have been placed under the Finance Division. The C&AG will look after audit functions only. Steps are already underway to: Appoint an Ombudsman On January 6, 2002 a gazette notification was published to give effect to the Ombudsman Act, 1980. Thereafter, a draft bill was prepared by the Ministry of Law, Justice and Parliamentary Affairs to bring certain amendments to the Act in respect to authority and mode of appointment of the Ombudsman. The Bill is under consideration of the Cabinet Committee. Set up a National Human Rights Commission The Bill is now under consideration of the Cabinet Committee. Separate judiciary from the executive The Government is hopeful that the matter will be finalized in time. And then the Judiciary of Bangladesh will be institutionally separated. The Government is working on the implementation of the orders of the Supreme Court (July, 2003). In order to improve law and order situation defense forces along with civilian forces are working together to recover illegal arms and curb terrorism through arrest of identified terrorists. Defense forces engaged in exercise will be withdrawn at appropriate time. Speedy Trial Act has been passed and speedy trial courts set up. Acid Control Act and Acid Offense Curbing Act have been enacted to prevent acid throwing.	Strengthen the role of the Parliament and the Parliamentary Committees especially Public Accounts Committee, and Public Estimate and Undertaking Committees. The interface of these Committees with the activities of the line ministries is made effective. The continuity of these committees will be ensured and recommendations acted upon. The role of these committees is critical in the context of developing the full-blown strategy. Ensure effective and independent role of C&AG office as an institution accountable to the Parliament. Implement the judicial reform program, separate the judiciary from the executive, and establish Judicial Service Commission and Judicial Pay Commission. Introduce comprehensive reform in the police service, establish the office of the Ombudsman and an independent Anti-Corruption Commission, draw-up action plan for phased implementation of relevant recommendations of PARC and PERC, use informatics to improve governance, improve public purchase and procurement systems, promote unhindered flow of information. Create facilitating environment for private sector led and outward oriented growth and Government-private sector (including NGOs) partnership by improving investment climate through governance -improving measures, designing appropriate incentive structure and sectoral reforms. The strength of Police, BDR and Ansars will be enhanced through recruitment of additional staff and their training. Action would be taken to modernize the legal system through implementation of a World Bank aided TA Project. Educational institutions will be freed from violence and disorder.	Continue the implementation of measures to strengthen good governance in order to set strengthened pillars in place to reap growth potentials and institute unhindered democratic norms at all stages of life. Implement the Action Plan. Undertake reforms to strengthen government-private sector partnership in relevant areas and create environment for private sector led growth. Government will continue to implement a well laid out plan of action to improve law and order situation.
B. Supporting Local Government and Broadening Participation.
3. Widen participatory governance.	Strengthening of local government institutions and, in particular, holding of elections at various tiers is a subject of priority of the government. The Local Government Division examined these matters, case by case, and succeeded in removing most of the impediments. Elections of major City Corporations in Chittagong, Dhaka, Khulna and Rajshahi were held as well as in some Paurasabhas. Elections in other Paurasabhas have been completed	UP election will be held soon. Decision on further decentralization and tiers of local government will be taken. Decisions will be taken on required tiers of local government and the decisions will be implemented. Encourage building of the poor’s institutional capability by way of promoting organizations of the poor (CBOs) and organizations for the poor (CSOs, NGOs) to ensure equitable access to public services and strengthen ability to influence policy. Ensure the independent role of mass media including press and television channels as well as the civic and human rights organizations as independent monitoring institutions for ensuring transparency and accountability.	Ensure decentralization and devolution of power through effective local government institutions, appropriately define the functions of these institutions and take empowerment measures accordingly through appropriate fiscal, administrative and other relevant decentralization/ devolution measures.
C. Reform in Civil Service
4. Improve the performance of the civil service by restoring integrity, efficiency, and adoption of modern personnel and management practices	To reduce the size of the Public Administration Government set an embargo on new recruitment and this ban is still in force except exceptional circumstances. Two Committees have been set up by the Government to rationalize government’s manpower and relocate existing manpower, if needed. A merit-based system of promotion has been introduced. To develop expertise and professional skills the ministries have been distributed into 5 clusters, which will be manned by officials with relevant specialized skills. A Career Planning Cell has been set up recently in Ministry of Establishment. A Secretary level committee has been set up to examine and recommend implementation of the PARC report	Civil Service would be reconstituted on absolutely merit, performance and integrity basis. An Action Plan will be developed to implement relevant and appropriate recommendation of PERC on the basis of the report of the Secretaries’ Committee. Action will be in place to right size the Government. Merit based system of recruitment and promotion will be institutionalized.	Government would continue with the implementation of civil service reform programs in the light of recommendations of PARC and new needs of present day business in order to ensure a civil service based on the principles of meritocracy and professionalism. Continue efforts to develop expertise and professional skills by implementing the Action Plan and strengthening the Career Planning Cell.
PILLAR 3: INVESTING IN HUMAN DEVELOPMENT: TO ENHANCE HUMAN CAPABILITIES
Education	Al the primary level of education teachers of government schools are recruited through an open competition using thana quota. Appointment and deployment system of primary teachers is being decentralized al the district level. Sixty per cent teaching positions are reserved for female candidates. Financial Management system under RIB EC of the finance Division has been initiated in the primary education sub-sector. School-wise expenditure statement has been collected while conducting Children education and Literacy Survey 2002. This will be linked to performance Children and Education Survey is conducted for primary education every alternate year. Map of each school catchment area is prepared by the respective school authority. Already school catchment area map has been prepared and distributed to schools in 35 districts. There are four on-going female stipend projects at the secondary level and one female stipend project at the higher secondary level. All rural Thanas are covered under the stipend program. Secondary Education Sector Improvement Project (SESIP) is being implemented. Different areas of education reforms have been included in this project. The main components are; decentralized management, teachers training, academic supervision etc. Creation of a separate Teaching Service Commission for recruitment of teachers of non-govt. schools, colleges and madrashas is in progress. The draft will be placed before the Cabinet soon. Directorate of Inspection and Audit of the Ministry of Education looks after the accountability of public expenditure in schools, colleges, and madrashas. This process is being strengthened under SESIP. University Grants Commission coordinates the activities of the universities and has initiated reform programs for the university sector. NCTB activities have been reviewed. Quality control issue of textbooks is being looked after by the NCTB up to higher secondary level. All textbooks except English and Bengali at higher secondary level are published and distributed by the private sector. Higher education in degree colleges, universities and BIT’s is being reviewed for formulation of a strategic plan in the light of the expert committee report, which will be placed for the consideration of the Cabinet soon.	Implement social sector policies to improve access to the poor and enhance quality Preparation of GIS based educational institution map is underway for 17 districts (on experimental basis) A separate project is being taken for the metropolitan areas. In the rural areas, all girl students are covered subject to the fulfillment of some criteria, In the metropolitan areas, targeting approach is adopted and female students belonging to the poor income-groups will get stipend. Budgetary allocation to the Education sector will be significantly enhanced. Strategy for further reforms will be adopted on the basis of the Expert Committee set up by the Government. Quality of education and priority to vocational and technical training will be the main focus of educational reforms.	Education is the long-run primary force behind growth and it would be shape and designed in such a fashion. Share of the educational sector in Government’s budget allocation will continue to increase. Expenditure tracking studies will be made to evaluate impact of reforms. Coverage and quality of education will significantly improve through reform actions. Public-private partnership will be encouraged in this area. Education reform strategy will be continually pursued and education outcomes monitored.
Health	In the health sector, Health and Population Sector Program (HPSP) achieved some success in certain areas, while it also faced operational problems in some others. In order to make this program effective, the Government has commissioned a full review of the operational strengths and weaknesses of this new approach. Health sector allocations have been increased. The government is committed to the sector-wide health sector reform and development program.	Actions will be taken pursuant to the outcomes of the review to design and implement the next phase. Vacant posts of doctors and nursed will be filled in and required number of additional posts will be created. The operational and maintenance budget of this sector will be increased.	Next phase of restructured sector wide program will be implemented for development of the health, population and nutrition sector. Expenditure tracking studies will be made.
Telecommunication	A Telecommunication Regulatory Commission has been established.	In telecommunications, create policy and regulatory environment with separate policymaking, regulatory and operation functions; introduce reforms in BTTB to provide quality and competitive services.	Continue reforms to make the sector more efficient and cost effective.
Technology Policy	A Task Force on ICT has been set up and is operational.	Adopt a comprehensive technology policy and draw up action plan Lo implement it.	Continue to implement the technology policy. Enhance technological capability in the public sector and remove barriers in the private sector through a well-defined institutional infrastructure for delivery and adoption of new technology.
Ensure Integrated and Pro-poor Growth of employment and output.
Sectoral Policies Formulate sectoral policies in support of growth and poverty reduction agenda.	Sectoral policies have been formulated and thrust areas identified.	Work out details in the context of the full-blown strategy and the three-year rolling plan within the MTMF framework particularly in the areas of health, education, social protection and others emphasized in the strategy.	Implement relevant sectoral policies through formulating time-bound action plans.
PILLAR 4: SOCIAL PROTECTION: FOR REDUCING VULNERALABILITIES AND IMPROVING INCOME GENERATING OPPORTUNITIES
Women’s Advancement and Removing Gender Gaps	Women have reserved quota for recruitment in government service. Gender considerations get priority in policy formulation.	Factor the gender concerns into both diagnostic and prescriptive modules of the strategy including both sectoral and sub -sectoral levels.	Undertake analytical and policy oriented work to explicitly factor gender and similar concerns into macro and policy framework. Review existing policies/institutional measures and adopt specific measures (as suggested in the strategy) for increasing women’s participation in all spheres of development.
Strengthening Social Protection	The targeted programs like FFW, VGD, TR, GR, VGF get priority in budgetary allocations. Some of the programs are being monetized lo prevent leakage. A system of new programs for mitigating sudden economic shocks and for acid-burnt and physically handicapped people has been adopted. Allocation for distressed and widowed women and old age people has been increased.	Adopt policies/programs and strengthen current programs of proving social safety nets to the poor. Address vulnerabilities of the new poor (like retrenched workers). Micro-credit and credit for SME development will be extended.	Develop and implement programs for strengthening social solidarity and help accumulate social capital Adopt policies/programs for preventing and mitigating risks of different categories of the poor through various measures such as credit, public health services, disaster prevention and mitigation, and measures to address violence and personal insecurity.
Policies and institutions for Reducing Inequality	Micro-credit programs of the government as well as of other agencies and NGO’s have been strengthened. Along with micro-credit priority has been given to extension of credit to small enterprise development projects.	Design programs to assist in broad-based asset access to the poor like reforms in land tenancy market, effective distribution of khas land and ponds to landless families, providing basic education and skills, micro-credit.	Continue efforts to ensure greater access to assets by the poor. Redefine the present nature of financial interventions involving issues like credit upscaling, interest rate practices, vertical integration, loan packaging, higher access to knowledge, greater use of savings instruments, and insurance provision against risks and uncertainties. Support pro-poor rural housing policy, urban land use policy, improve land administration, and strengthen organization of the poor.
Caring for Environment	Production and marketing of polythene shopping bags have been completely banned through out the country. Most of two-stroke three wheelers are out of roads now and the remaining ones will follow suit soon.	Implement the environment strategy drawing upon Environment Policy 1992, Dhaka Declaration 2000 and the NEMAP.	Integrate environmental conservation into the national development strategy

A. Institutional Mechanisms

7.4 A Poverty Focal Point would be created in the General Economics Division (GED) of the Planning Commission for effective poverty-monitoring and tracking progress in implementing anti-poverty policies and programs envisaged under the national strategy for economic growth and poverty reduction. The focal point will be designed such that it can grow and function as an institutionally effective and technically competent Poverty Monitoring Unit with strong inter-Ministerial linkages and interactions with various types of stakeholders outside the Government. Participatory consultations will be an integral part of the work of the Focal Point both before and after the preparation of the full-blown strategy. The Unit will also act as the key agency in the preparation of the full-blown strategy and periodic revision of the medium term agenda within the framework of the long-term vision set under a Perspective Plan. This would require measures to equip the Unit with adequate capacity and incentives to undertake its stipulated functions and carry out poverty reduction strategy related research and monitoring and evaluation activities.

7.5 A National Poverty Reduction Council (NPRC) chaired by the Prime Minister with participation of Ministers and the Secretaries of the relevant Ministries as well as representatives from the private sector like FBCC1, women’s groups, academia and research institutes like BIDS, NGOs and the civil society will be formed. Since the implementation of the strategy is the central task, the key objective of the Council would be to address comprehensively the problems of implementation. The Council will also address the strategy and policy-related issues arising out of the monitoring and evaluation work of the Poverty Focal Point. The Focal Point will act as the Secretariat for NPRC. The Council would meet at least quarterly.

7.6 One of the key tasks of the Unit would be to monitor progress in the implementation of the national poverty reduction strategy and outcome indicators. The poverty diagnostics, drawing on qualitative and quantitative information, would be used to set medium and long-term outcome-oriented targets for the country. These targets would be linked to macroeconomic, structural and social policies that together comprise a comprehensive strategy for achieving these outcomes. Setting clear targets in line with Millennium Development Goals (MDGs) would add transparency to the process of allocating resources and provide a benchmark against which to monitor the progress.

7.7 The Poverty Monitoring Unit would engage in regular consultations with the civil society including the poor and the women at suitable levels of social and regional disaggregations as part of participatory poverty assessment (PPA) in tracking progress in the implementation of national poverty reduction strategy as well as for identifying new areas of anti-poverty interventions and/or corrective actions.

7.8 The poverty reduction monitoring initiative, however, will not be restricted to the efforts on the part of the Government alone. Civic initiatives for monitoring poverty—similar to the Social Weather Station in the Philippines—would be supported for getting an independent assessment of trends in poverty as well as effectiveness of poverty reduction policies. Such a group of concerned citizens will act not only for poverty-monitoring, but also function as an advocacy group for influencing policy. The activities of the group would help trigger collective action in respective sectors for reducing poverty and vulnerability.

B. Monitoring Indicators

7.9 The matrix of proposed poverty reduction tracking and monitoring indicators is given in Annex-11. A central aspect of poverty and social development monitoring would be to collect information on a wide variety of socially-differentiated, sex-disaggregated and regionally differenced poverty indicators. Evidently, the institutionalization of a comprehensive and efficient mechanism to ensure timely monitoring will require capacity building and coordination among the relevant agencies and departments. The details of the requirements will be worked out along with technical assistance requirements for meeting the needs. A sustainable poverty reduction strategy requires an effective system of managing the macroeconomy. Annex 12 provides a detailed description of tracking and monitoring indicators for macroeconomic management.

C. Road Map to Full Strategy

7.10 The national strategy for economic growth and poverty reduction, as outlined in this paper, may be considered as the equivalent to what is often termed as the Interim Poverty Reduction Strategy Paper (1-PRSP). Three important elements will be considered in transforming Bangladesh’s current approach to anti-poverty policy making into a full-blown poverty reduction strategy: (i) continuous and effective interaction and consultations with all stakeholders to make it ‘dynamic’ with capability to address on-going development and emerging priorities along with consensus to guide and pull poverty reduction efforts of all actors including the Government, NGOs, civil society and development partners in an integrated manner; (ii) devising and implementing specific policies and programs and time-bound action plans to support the strategic thrust of the strategy; and (iii) installing an effective institutional mechanism to monitor the progress and provide regular and timely feed back to articulate actions needed to achieve the proposed targets.

7.11 The poverty reduction strategy, as delineated in the present paper, provides the broad (e.g. national) directions for achieving the poverty reduction goals. The efforts will be to move towards disaggregated targets to facilitate the formulation of specific programs/ projects and detailed costing and its financing by the time the full-blown strategy is designed (Table 7). These sectorally disaggregated targets will be set not only by social and regional distinctions, but also made sensitive, as far as possible, to the emerging gender dimensions. During the period, the institutional framework and monitoring indicators along with their sources, benchmarks, and mechanisms for ensuring regular information flows will also be finalized such that an adequate monitoring and evaluation method becomes operational. The civil initiatives for regular monitoring of poverty and progress towards achieving the goals would also be developed during the period.

Table 7

Time Line for Full Strategy

Table 7

Time Line for Full Strategy

Activity	Completion Date
Consultations with stakeholders and adjustments in the framework	October 2003
Specification of disaggregated targets, programs/ projects, and detailed costing and financing	January 2004
Operationalization of the Poverty Focal Point and civic initiatives	July 2003
Finalization of the full Strategy	December 2004

View Table

Table 7

Time Line for Full Strategy

Activity	Completion Date
Consultations with stakeholders and adjustments in the framework	October 2003
Specification of disaggregated targets, programs/ projects, and detailed costing and financing	January 2004
Operationalization of the Poverty Focal Point and civic initiatives	July 2003
Finalization of the full Strategy	December 2004