NewAge, November 7, 2007. Dhaka, Bangladesh
The World Bank president, Robert Zoellick, during his two-day visit of Bangladesh, which ended Sunday evening, said loan conditionalities – one of the major reasons of discontent across the world – were in fact needed to ensure that the bank’s was not ‘stolen’. He insisted that procurement regulations had to be followed by way of examples. This was quite evidently to counter the suggestions of civil society representatives who had met Zoellick during his visit. Civil society has rightly questioned the necessity of lending agency funds being pegged with conditionalities as these are seen to have a debilitating effect on the economy while it erodes and in fact undermines the government’s sovereignty in policymaking. It has been a long standing demand of activists and a large section of academics that the adherence to certain prescriptions should not be the basis for receiving lending agency funds. Instead the basis should be achievement of certain development indicators such as disparity, literacy, calorie intake, and child mortality.
As such, it is demanded that the lending agencies allow their clients a free hand in developing their own policies with meaningful public involvement which is the only means to ensure complete ownership of the development strategy. It would then be more useful and effective than coercing countries to formulate their poverty reduction strategy ‘guided’ by the lending agencies and authored by quarters faithful to the preferred to school of neoliberal economics dictating free market, liberalisation and privatisation. We stress that it should not be the concern of the lending agencies whether the school or the hospital is under private ownership or run by the state as long as the students are educated and patients cured.
But these matters are seldom questioned by quarters that should be actively engaging the lending agencies in strong negotiations as governments across the world do. Although the finance adviser to the military-driven interim government criticised the people’s tribunal against multilateral lending agencies, he has earned quite the notoriety for accepting prescriptions handed down by lending agencies with unquestioning loyalty. The finance adviser brought sweeping changes to the tariff structure reducing import tariffs for luxury goods, increasing tariffs for industrial raw materials and capital machinery, and decided to follow a precautionary monetary policy despite the fact that the local business community and economists had advised to the contrary.
We do not believe that wholesale privatisation and drastic liberalisation benefits the people. If anything these policies, advocated by the lending agencies, have actually exacerbated the current state of inflation, worsened disparity and increased unemployment to such an extent that the economy is facing stagflation. If this is the result of conditionalities, then we would be better off without the meagre assistance that the lending agencies shell out for Bangladesh.