World Bank Vows to Address Corruption in Bangladesh's Power Sector

Strategic Insights -

The World Bank has expressed its determination to tackle corruption in Bangladesh's power sector, particularly in projects funded by the bank. World Bank Vice President Praful Patel emphasized the need to reduce leakage and corruption in the sector, citing a significant cost to the country's development. The bank plans to implement various interventions, including building institutional capacity to monitor and prevent corruption, and cancelling financing for projects with irregularities. Patel highlighted the potential economic benefits of reducing corruption, estimating that the annual average per capita growth rate could be 2.0-2.8 percentage points higher if corruption were reduced to the level of least corrupt countries.

Key Takeaways:

  • The World Bank has committed to addressing corruption in Bangladesh's power sector, particularly in projects funded by the bank.
  • Corruption in the power sector is estimated to cost Bangladesh a significant percentage of GDP, with the World Bank citing the need to reduce leakage and misused funds.
  • The bank plans to implement various interventions, including building institutional capacity to monitor and prevent corruption, and cancelling financing for projects with irregularities.
  • The World Bank estimates that reducing corruption could lead to an annual average per capita growth rate increase of 2.0-2.8 percentage points.
  • Economic losses due to strikes are estimated to be around 3-4 percent of GDP, according to a study by the UNDP.
  • The World Bank is set to release a study on the Sources of Growth and Productivity in Bangladesh, which found that improving economic governance, particularly by strengthening the rule of law, could lead to 2 percent higher growth.
  • Several cross-country studies have demonstrated a positive relationship between economic growth and sound policies and institutions in developing countries.

Statistics:

  • Estimated cost of corruption to Bangladesh's development: in the range of percentage points of GDP
  • Projected increase in annual average per capita growth rate if corruption is reduced: 2.0-2.8 percentage points
  • Estimated economic losses due to strikes: 3-4 percent of GDP
  • Potential growth increase from improved economic governance: 2 percent
  • Cross-country studies demonstrating a positive relationship between economic growth and sound policies and institutions: several

Sources:

  • World Bank Vice President Praful Patel's statement at the launch of the Country Assistance Strategy (CAS) for Bangladesh
  • UNDP study on strikes and their impact on the economy
  • Forthcoming World Bank study on Sources of Growth and Productivity in Bangladesh
  • Multiple cross-country studies on the relationship between economic growth and sound policies and institutions