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World Bank accepts Inspection Panel Recommendation on Bangladesh Jute Sector Reform Project

​CONTACT: Eduardo Abbott

Telephone: (202) 458-5006

Independent Panel says investigation unwarranted

WASHINGTON, APRIL 8, 1997 The World Bank's Board of Executive Directors accepted on April 1 the Inspection Panel's recommendation that an

investigation into the Bangladesh Jute Sector Adjustment Credit (JSAC) was not warranted.

A group of private sector jute mill operators in Bangladesh requested an investigation of the effects of project implementation on the private sector. They claim that the project, designed to promote a healthy private sector, has instead resulted in financial damage and closure of some private jute mills.

In its review of the claims the Panel Report cites problems in project design, slow implementation, and political instability which have delayed privatization of public sector mills and resulted in adverse impacts on private sector mills.

An adjustment credit of US$247 million equivalent from the International Development Association (IDA)-the Bank's concessionary lending affiliate-was approved in 1994 to support the Government of Bangladesh in carrying out its reform program in the jute sector.

IDA Management informed the Board that an upcoming supervision mission will evaluate the Government's progress in achieving privatization of jute mills. If such evaluation concludes that the progress achieved in respect of this or any other component of the reform program is not substantial, the closing date of the project in June 1997 will not be extended. If the evaluation concludes that the progress achieved justifies a further extension of the closing date, the extension would only be granted against a tight schedule for completing the reform program.

In its report to the Board, the Panel recommended that based on experiences of JSAC during the past three years, emerging political forces, and earlier lessons pointed out by the Bank's Operations and Evaluation Department, an extension of the closing date of the credit without revisiting the basic design concepts with the government and Requesters may not be an adequate solution. "Close supervision during this extension with regard to financial discipline might at least meet some of the Requesters' concerns. The closing of the program without a new approach in place, however, would presumably meet none of their expectations from the reform program," the Panel report stated.

In this context, the Panel recommended to the Board that an investigation into violations of IDA policies and procedures alleged in the Request would serve no useful purpose. The Board accepted the Panel recommendation on a no objection basis.

About the Inspection Panel

The independent Inspection Panel was established by the Executive Directors in September 1993 to help ensure that Bank operations adhere to the

institution's policies and procedures. Its establishment now enables any group of individuals-who consider they may or might be harmed by

Bank-supported projects-to ask the Panel to investigate their complaints that the Bank has failed to abide by its policies and procedures.

Detailed guidance for filing requests is provided in the Panel's Operating Procedures. These are available from the Panel's office in Washington, DC, the

Bank's Bookstore, and the Public Information Center in Washington, DC, the Bank's offices in London, Paris, and Tokyo, field offices, and on Internet (