Contacts: In Washington Erik Nora (202) 458-4735 enora@worldbank.org In Dhaka Rehnuma Amin (8802) 815-9015, Ext 4136 ramin1@worldbank.org WASHINGTON, December 1, 2005 — The World Bank today approved a US$200 million Development Support Credit (DSC) to support a program of core and sectoral governance reforms carried out by the Government of Bangladesh. The third in an ongoing series, the DSC is designed to assist the government in addressing key governance constraints by strengthening public expenditure and budgetary management to improve public procurement, modernize tax administration, and enhance the delivery of public services. The DSC also targets sectoral governance reforms in banking and state-owned enterprises, energy sector reform, and the government’s trade liberalization agenda. “The governance reforms supported by the Development Support Credit are designed to improve social service delivery to the poor and improve the investment climate to enhance economic growth, exports, and jobs. Creating economic opportunity through sustainable growth and access to services is key to reducing poverty in Bangladesh, and the DSC supports both,” said Christine Wallich, World Bank Country Director for Bangladesh. Bangladesh has achieved significant economic and social progress in recent years. GDP growth per capita has averaged around 3.3 percent since the 1990’s, outperforming low-income and IDA-only countries as a whole. GDP growth in 2005 remained above 5 percent, despite devastating floods in many parts of the country. In the social sphere, Bangladesh outperforms most low-income countries across a range of social indicators: gender parity in school enrollment at secondary and primary level has been achieved, child mortality has been halved, and life expectancy has increased significantly since the 1990’s. Bangladesh is also on track to meeting many of the Millennium Development Goals. Despite sustained progress, the country’s development challenges are daunting. Child malnutrition and maternal mortality rates in South Asia are among the highest in the world, and Bangladesh’s relatively good performance compared to India and Pakistan is little solace. While poverty has declined by 1 percentage point annually since the 1990’s, almost half the population still lives below the poverty line, and corruption is widespread. “Improving governance is a critical challenge for Bangladesh and is very much at the heart of the DSC,” said Praful Patel, Vice President South Asia Region of the World Bank. “We hope the reforms will reduce the scope for corruption, and, in turn, build more effective government institutions and improve public service delivery, giving long-term benefits for all Bangladeshis.” The Development Support Credit builds on Bangladesh’s recently completed Poverty Reduction Strategy (PRSP), which emphasizes economic growth, job creation, social service delivery, and safety nets for the poor. Combating corruption, restoring law and order, and making governance work for the poor are also accorded priority. Accordingly, the Development Support Credit is designed around the three pillars of: - Strengthening governance
- Improving the investment climate and infrastructure to speed economic growth
- Empowering the poor
Two previous Development Support Credits from the World Bank have supported earlier phases of the government’s program of governance and other reforms: a $300 million DSC I was approved in June 2003, followed by a $200 million DSC II in July 2004. The credit from the International Development Association (IDA), the World Bank’s concessionary arm, has 40 years to maturity with a 10-year grace period; it carries a service charge of 0.75 percent.
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