February 1, 2007 -- Two years ago, Bangladesh’s Central Bank, embarked on a path to modernize its operations and strengthen its research capacity. The Central Bank with the help of WBI established a Policy Analysis Unit (PAU), which would enable the Bank to take timely decisions and disseminate the information to people inside and outside the Bank. A New Policy Analysis Unit According to Roumeen Islam, sector manager at the WBI, "The overall goal of this long-term program is to enhance economic analysis skills of central bank staff as well as create an incentive environment that rewards excellence."  The Unit currently has about 20 core staff and is part of the Bank's larger research department. The Unit attracts highly motivated and dedicated professionals from other units of Central Bank and from outside. Shubhasish Barua, who had left a think tank to join the PAU believes, "It's a great opportunity to be part of a top-notch unit learning how policy analysis is done and how it needs to be presented." The Unit focuses on specialized aspects of monetary and fiscal policy, trade issues and economic forecasting. New incentives and accountabilities are created such as annual work plans with defined product lines and budgets. Additional learning and networking opportunities and wider access to information technology are also offered. A Resident Economic Advisor oversees the new unit with WBI facilitates seminars in macroeconomics, econometrics, trade, capital market and central banking issues. In-country and cross-country dialogues and knowledge exchange is also being fostered. "Our focus from the very beginning has been to build local ownership for reforming work processes and incentives. For this, the senior management of the Bangladesh Bank agreed that training has to be accompanied by broader HR reforms to upgrade capacity on a sustainable basis", says Dr. Anwar Shah, the responsible WBI task manager. And What Are The Results? The PAU, as an advisor, guides the Central Bank on emerging policy issues and the Bangladesh government on economic and fiscal policy issues. It produces several public policy papers, including the Monetary Policy Review and the Financial Sector Review twice a year. In addition, seminars and public lectures on current macroeconomic issues are being held by the PAU regularly. "For the first time, a rigorous analytical input has been introduced in the preparation of Bangladesh Bank policy documents. This will undoubtedly help to set new standards for macroeconomic discourses in the country" praises Professor Wahiduddin Mahmud, an eminent economist at Dhaka University and a Director in the Board of the Bangladesh Bank. Indeed, documents released by the PAU are now even assigned as required reading material in relevant courses at the economic department of Dhaka University. The press regularly picks up what is published and presented by the PAU and appreciates the quality analysis provided. "We are now getting exclusive clues and information regarding economic affairs and can deliver the same to the nation easily" says Asjadul Kibria, Senior Economic Reporter of the New Age. With better research being available, the Bank can now provide better analytical underpinnings to its monetary policies and, thus, follows the good tradition of other modern central bank research departments around the world. "The contributions of the PAU to policy analysis are significant. The Central Bank’s senior management, policy makers and stakeholders benefit greatly from useful and thoroughly researched policy relevant product lines. We are grateful to the World Bank Institute for the support provided to create this unit" states Dr. Salehuddin Ahmed, Governor of the Bangladesh Bank. "By helping to create a better informed, more responsive, and stronger Central Bank, economic policies can be better targeted to reach the poor and, thus, reduce poverty in the long run"notes Shamsuddin Ahmad, Senior Financial Sector Specialist at the World Bank Office in Dhaka. Challenges Ahead Still, many challenges lie ahead including the long-term sustainability of the PAU which will only be possible if, at the conclusion of the project phase, the unit is also administratively integrated into the overall structure of the Bangladesh Bank and a salary scale for PAU professional staff commensurate with market value. These are difficult decisions as the Bangladesh Bank is subject to the salary structure of the Government of Bangladesh. "While challenging, the incorporation of a separate renumeration package for professional research staff is already being practiced by other central banks in the region. I am hopeful that a similar scheme can be implemented at Bangladesh Bank" states Professor Syed M. Ahsan, the Resident Economic Advisor. Good news travel fast, though. The Governor of the State Bank of Pakistan has already voiced that a similar project should start soon in Pakistan. Contributed by Alexandra Humme, World Bank Institute |
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