Govt’s electronic fund transfers to save Tk 60,000cr in five years

Implementation of an integrated budget and account system (iBAS++) will save Bangladesh an estimated Tk 59,804 crore ($5.4 billion) in the next five years. 

The iBAS++ will enable the savings doing away with wastage and corruption involving processes to avail government services.

The iBAS++ integrated various public financial management by introducing electronic fund transfers for pay fixation, salaries, pensions and social benefits as well as an automated challan system for real-time revenue deposits.

The finance ministry implemented several of such public financial management (PFM) reform programmes with donor support.

It is presently executing a comprehensive initiative called "Strengthening Public Financial Management Program to Enable Service Delivery" with financial backing from World Bank.

This information was in a handout prepared by the finance ministry and World Bank and shared at a PFM Summit '23 in Pan Pacific Sonargaon Dhaka yesterday.

The government is providing social safety net allowances and stipends to 3 crore beneficiaries through the automated system

Under the reforms, 8.40 lakh pensioners receive payments promptly through iBAS++, saving on bank service charges of Tk 400 crore to Tk 500 crore annually, travel costs, and non-authentic expenses, read the document.

The government is providing social safety net allowances and stipends to 3 crore beneficiaries through the automated system, it said.

Through automation of transactions of national savings schemes, the government is going to save Tk 25,000 crore by the enforcement of purchase ceilings and rationalisation of interest rates, it added.

Some 39.31 lakh national savings scheme beneficiaries are getting income automatically, said the handout.

The reforms encompass 3.71 crore beneficiaries, including 98 percent of the around 12.19 lakh government employees who receive salaries through electronic fund transfers, it said.

Though Bangladesh has made strides in improving its PFM systems, significant bottlenecks persist, it added.

These include misalignment between annual budget limits and long-term plans, delayed budget releases, fragmented social sector budgets, slow procurement processes and inadequate follow-up on audits, it said.

Bangladesh's economy fared better compared to others, Finance Minister AHM Mustafa Kamal told the event.

The GDP and investment to GDP ratio are rising and inflation had been contained up until the start of the Russia-Ukraine war. However, remittance earnings are falling although more and more peoples are going abroad every year, he said.

"We have failed to keep the momentum of remittance earnings so the expected earnings have not come," he said.

Kamal requested identifying reforms to raise remittance earnings, saying solely this could solve the country's problems over foreign exchange and eventually other macroeconomic problems.

Strong PFM systems ensure effective and efficient service delivery and good governance, said Abdoulaye Seck, the World Bank's country director for Bangladesh and Bhutan.

He spoke of six dimensions needed in PFM -- transparency and accountability, inclusivity, sustainability, innovation and technology, capacity building, and global partnership.

Major problems lie in the use of existing capacities, including that of government officials, which need to be enhanced, said Zakir Ahmed Khan, a former finance secretary.

He suggested focusing on the demand side of service delivery.

Mohammad Muslim Chowdhury, another former finance secretary, emphasised on adopting new technology and ensuring transparency and accountability in government services.

The PFM system works well in ensuring proper services for people and efficient use of public funds, said Fazle Kabir, also a former finance secretary and Bangladesh Bank governor.

Abdur Rouf Talukder, the current Bangladesh Bank governor and a former senior finance secretary, said the government has brought about a lot of technological reforms and now needs to develop human capital.

Bureaucrats should adopt professionalism and focus on gaining expertise in their works, he added.

Mohammad Tareque, a former finance secretary, Md Khairuzzaman Mozumder, secretary to Finance Division of the Ministry of Finance, Hisham Waly, practice manager of Governance Global Practice of the World Bank's South Asia Region, Shirajun Noor Chowdhury, additional secretary to the Ministry of Finance, and Abu Daiyan Mohammad Ahsanullah, joint secretary to the ministry, also spoke at the event.