The World Bank has approved $300 million financing to strengthen Bangladesh's local government system.
Covering all 4,550 union parishads, the Local Governance Support Project 3 (LGSP-3) will benefit over 115 million people, the global lender said in a statement on Tuesday.
The project will also pilot a fiscal transfer system in 16 municipalities. Eligible municipalities will receive block grants with discretionary power to select sub-projects aiming to improve service delivery.
“The World Bank has been a long-standing partner in supporting the government’s vision of advancing decentralisation and empowering the local governments,” said Rajashree Paralkar, World Bank Acting Country Director for Bangladesh, Bhutan and Nepal.
The project will establish national budget transfers as a norm to the union parishads, the lowest tier of local government.
“A predictable and transparent financial resource transfer system will help the union uarishads and the participating Pourashavas (municipalities) to further improve planning, participatory budgeting, public finance management, and accountability.”
Shenhua Wang, World Bank Team Leader for LGSP-3, said 30% of the grant will be earmarked for schemes prioritised by women.
Since 2011, all union parishads have been receiving annual block grants with full discretion through the LGSP to deliver local services, after undergoing rigorous audit process.
The credit from the World Bank’s International Development Association has a 38-year term, including a six-year grace period, and a 0.75% service charge.