US embassy cable - 05DHAKA5698

UNCLAS SECTION 01 OF 02 DHAKA 005698 
 
SIPDIS 
 
FOR SA AND ANE-MARK WARD/MICHAEL METZLER 
 
E.O. 12958: N/A 
TAGS: EAID, PREL, PGOV, ECON, BG, Conferences 
SUBJECT: BANGLADESH DONORS CONFERENCE 
 
 1. Summary. The BDG and donor community, aka Local 
Consultative Group (LCG), met under the chair of the BDG 
Minister of Finance on November 15-17.  This was the annual 
development forum meeting with three key changes.  First, the 
BDG chaired whereas in the pass they co-chaired with the 
World Bank.  Second, the focus was the country's recently 
approved poverty reduction strategy report (PRSP).  And 
third, for the first time, the USG was elected the LCG chair 
and coordinated the donor community inputs.  The BDG renamed 
the forum to PRS Implementation Forum (PIFM) and set five 
agenda topics: a) Implementation of the PRSP Agenda for the 
next three years; b) Social Development, Empowering the Poor 
and the Vulnerable; c) Enhancing Competitiveness for 
Promoting Trade, Investment and Private Sector Development; 
d) Promoting Good Governance; and e) Aid Harmonization and 
Aid Effectiveness.  Keynote papers were prepared for each 
session by BDG officials with response from LCG-selected 
members.  In the end, there were 11 commitments and 
timeframes agreed to for the next 12 month period, and an 
agreement these meetings will occur annually.  The full 
account of the events, including speeches, session papers, 
and agreements, is located on the LCG website at 
www.lcgbangladesh.org in an area in the lower center of the 
site under PRS Implementation Forum 15-17 November.  End 
Summary. 
 
2. For the first time in Bangladesh, the BDG chaired the 
annual donor development forum dialogue.  This was decided 
earlier this year when the BDG felt they were now capable of 
managing the annual dialogue.  The External Resources 
Division (ERD) of the Ministry of Finance was the lead 
agency, interacting with the LCG.  Also, in mid-October, the 
National Economic Council, chaired by the Prime Minister, 
approved their PRSP, setting the way forward for their 
mid-term vision on poverty reduction.  The agenda focused on 
the PRSP, with an emphasis on implementation and addressing 
constraints.  The BDG keynote speakers were selected for 
their familiarity with the subject matter and in 
consultation.  LCG members were selected to be the lead 
respondent. 
 
3. PIFM began with the Prime Minister, Minister of Finance, 
Vice President World Bank (WB), Director, South Asia Asian 
Development Bank (ADB), and Vice President, International 
Monetary Fund (IMF).  Most speakers focused on the leadership 
role the BDG has taken in arranging and conducting the forum, 
with the donor group highlighting the need to focus on 
implementation, addressing poor performance in governance, 
and extremism.  At the inaugural dinner, the LCG Chair, USAID 
Mission Director, tabled the LCG statement following the 
themes of the earlier donor speeches. 
 
4. November 16 and 17 were devoted to discussions on the five 
agenda items.  The LCG prepared presentations, identified 
five points to be tabled, and indicated appropriate actions 
to be taken to deal with these points.  From this list of 
five, three were selected for in-depth presentations by LCG 
members. 
 
5. The topics selected ranged from the need to have a more 
rigorous monitoring and evaluation plan in place, and since 
the donors are being asked to align programs with the PRSP, 
then this should be a joint effort.  The need to link budgets 
with the implementation plans in the PRSP to ensure 
sufficient resources allocated to priority areas.  Extend the 
medium term budget format (MTBF) for the resource request and 
allocation that was piloted in four ministries to six more 
next budget cycle and then to all ministries.  Work towards 
stronger local governments with increased resource allocating 
and training to improve local government capacity to 
accountably manage resources.  Staff regulatory commissions, 
energy, telecom, and security and exchange, and move to being 
fully operational in the near term.  Implement the Public 
Procurement Regulations after being passed into law. 
Identify areas to initiate anti-corruption interventions, 
collect information on existing conditions and lay out 
approaches to address. 
 
6. The BDG and LCG members agreed to 11 action items. 
Following is a summary of the agreements: a) implementation 
plan and joint committee established by December 2005; b) PRS 
will guide budget allocation process; c) MTBF extended six 
more ministries; d) local government block grants increased; 
e) fill vacant commissioner positions for energy, 
telecommunications and security commissions; f) implement 
procurement law; g) link annual development plan to PRSP; h) 
build capacity of bureau of statistics; i) initiate civil 
service reform; j) review SME policies; and k) review policy 
on empowerment and development of women. 
 
7. Feedback on the forum was positive and the outcome of 11 
agreements exceeded expectations.  Considering the upcoming 
elections, LCG members felt prospects for many agreements 
were limited and expected four or five at the most.  The BDG 
did not react negatively with LCG tabled concerns such as 
rise of extremism, detrimental impact of corruption, setbacks 
from political gridlock and increased confrontational nature 
of politics.  LCG remains cautious on the extent to which the 
BDG will fulfill its commitments and are prepared to push on 
a number of key issue areas.  While the BDG agreed to and did 
open up participation in the meeting to civil society and the 
private sector, invitations were limited to only a few, from 
those invited attendance was dismal, and participation was 
close to non-existent.  LCG members will continue to press 
for broad participation. 
CHAMMAS