IMF stresses for reform of Finance Ministry

Kamruzzaman Bablu :

To increase the government’s ability to guide economic policy, the International Monetary Fund (IMF) stressed to reform the Ministry of Finance. In particular, the agency recommended reducing skill shortages and transfer of the relevant finance officers. A high-level technical assistance report of IMF published recently has given this opinion, said insider.
To enhance the capacity of the Finance Department and develop the Medium Term Macroeconomic Framework (MTMF), an IMF technical mission visited Bangladesh from January 22 to February 1 last year. The mission assessed the existing macroeconomic forecasting and policy analysis methodology of the Finance Department. During this time they also gave training on financial programming to the officials. Then the IMF Technical Mission identified several issues and made some recommendations In the report. It said, the Finance Department has a framework in place to prepare the MTMF and present it to policymakers. The officers of the Macroeconomics Section of the Finance Department have good professional relations with other technical teams and other organizations of the same Ministry.
The IMF sees the challenge of staffing the macroeconomics division as being relatively small in number and turnover. In this regard, the organization says that most of the officers of this department have master’s or PhD degrees in economics. As a result, they have good general theoretical knowledge and analytical skills in economics. Although there is a practice of transfer within the Bangladesh Civil Service, the long-term appointment of this department for sustainable forecasting and policy analysis skills should not be overlooked.
Moreover, the organization said that the number of officials in Bangladesh is less compared to the number of officials in the finance ministries of other countries. Although the Macroeconomics Division has a number of macroeconomic frameworks and forecasting tools, the IMF thinks that their practical knowledge is quite limited.
“Degree holders from world-renowned universities are working as officers here. We have some consultants working on the project, they are also quite good. All in all, we want to establish our forecasting model as a more ideal model. In this regard, not only the IMF, but the World Bank is also helping us,” a senior official of the finance department told The New Nation on condition of seeking anonymity.”
The IMF report made several recommendations. The department can benefit from the macroeconomic framework in preparing MTMF forecasts consistently and assessing policy and risk scenarios. Focusing on the existing capacity of the department, increasing participation of officers from other departments, induction of new officers and more effective dialogue capacity with policymakers is recommended.
“Turnover has always been an issue in the bureaucracy and it is a very old problem. However, according to the IMF report, most of the officers of the Finance Department, especially the Macroeconomics Department, are masters and PhD holders in economics, which is possible through informal negotiations with the government. In this case, through the Ministry of Public Administration, there has been an attempt to appoint officers with degrees in economics to the finance department and keep them in this department. There was a tendency to retain officers except for reasons of promotion or if one wanted to be transferred voluntarily. The turnover rate of officials in the Finance Ministry is low compared to other ministries. The success rate of this effort will be 60 to 70 per cent. But there will be some turnover in the civil service. As the complexity gradually increases, the economy becomes more problematic, so there needs to be an arrangement on whether turnover can be further reduced. But I don’t know how it is possible to reduce the turnover in the existing structure of the civil service,” Mohammad Muslim Chowdhury, Former Comptroller and Auditor General (CAG) and Former Finance Secretary and told The New Nation on Tuesday.
The IMF thinks that there are several measures to be taken to address the lack of capacity and the transfer of officials. In this regard, it has been recommended to provide training, development of the user-friendly system, and training of officers who will be added in future. In addition, the organization believes that there is an opportunity to improve the process of developing the medium-term macroeconomic framework through the large-scale participation of other technical groups. The Finance Department has agreed to implement several action plans in conjunction with the IMF Technical Mission. For this, 17 officers of various departments have been given assignment by the finance department. Under this capacity-building project with duration from January 2023 to July 2025, 10 missions are planned. In this, the mission will be completed through a hybrid model and virtual medium in combination with direct presence. This project has been divided into four phases.