STRENGTHENING PUBLIC FINANCIAL MANAGEMENT
                                                                                                   PROGRAM TO ENABLE SERVICE DELIVERY




                                                                                                            BETTER FINANCIAL
                                                                                                               MANAGEMENT
                                                                                                          IMPROVES SERVICE
                                                                                                                   DELIVERY

                                                 APPROVAL DATE:             END DATE:           TOTAL COMMITMENT:              IMPLEMENTING AGENCIES:
        BASIC
        INFORMATION
                                                 March 3                    June 30             $170 million                   Ministry of Finance
                                                 2019                       2024


     OVERVIEW
     A sound Public Financial Management (PFM) system is essential for sound macroeconomic management and good governance. Over the past two decades, the government
     has made efforts to improve the Public Financial Management (PFM) systems. These reforms improved the medium-term expenditure framework and financial management
     legislation; strengthened capacity for debt management; developed a fiscal programming framework; introduced a new budget and accounting classification system and
     (BACS); and improvements were made to the integrated budget and accounting system (iBAS++). Additionally, the Institute of Public Finance and the Financial Management
     Academy were developed to build capacity of government officials.

     The Strengthening Public Financial Management Program to Enable Service Delivery (SPFMS) aims to build on past reforms and improve fiscal forecasting, and public
     budget preparation and execution. This will also help improve fiscal discipline, financial reporting, pension and debt management and greater transparency and SOE
     governance. PFM reforms will contribute toward achieving the Sustainable Development Goals and upper middle-income status by 2030.

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CHALLENGE                                                                                                     TOWARDS THE FUTURE
Despite the important improvements in PFM garnered under pass reforms, there is                               The program will create efficiency that frees up resources for
significant room to improve several PFM areas, which are limiting effective delivery of                       service delivery to the citizens. Well-functioning audit committees
services to citizens. Some limitations include: less than optimal budget absorption capacity,                 will help to resolve issues leading to significant fund recoveries.
shortcomings in the revenue forecast and expenditure budgets, insufficient fiscal and                         Improved SOE performance monitoring and reduced financial
performance monitoring of State-owned Enterprises (SOEs), and significant delays in the                       support from government will contribute to additional fiscal
preparation of fiscal reports. These key PFM bottlenecks are affecting the timely availability                resources. The learning hub at the Institute of Public Finance
of resources for service delivery.                                                                            will build capacity of civil servants, enabling them to tackle PFM
                                                                                                              challenges using best practices.


APPROACH
The government is committed to address PFM bottlenecks by strengthening financial
management institutions and systems. In 2018, the government approved a PFM Action Plan
(2018-23), which lays out the g PFM priorities. SPFMS will help the government implement eight
of the 14 components in the Action Plan.

SPFMS uses the World Bank’s Program for Results financing instrument developed with ten
disbursement linked indicators (DLIs). The government will use its own rules and procedures of
the PFM process and systems throughout implementation. This ensures that work processes
are suitable for Bangladesh’s context. Additionally, SPFMS allows the necessary flexibility for
the government to course-correct as needed to achieve reform targets.

The PFM reform leadership, coordination and monitoring will provide the needed program
management, reporting and behavioural change support.




    EXPECTED RESULTS

Informed budget preparation and a                    Improved capacity of Budget                  Accelerated budget release to            Reduced cash held outside of
medium-term debt strategy                            Management Committees                        Disbursing Officers                      the Treasury Single Account

Modernized payment                     Streamlined pension                      Strengthened                     Implemented an effective change management
processes: electronic                  processing and payment                   assessment, disclosure           approach and governance structure for PFM reform,
funds transfer system                  systems                                  and monitoring of SOEs           including the functioning of a PFM Learning Hub
                                                                                                                                      THE WORLD BANK IN BANGLADESH            |     61