Bangladesh is 1 of only 18 developing countries with an annual growth rate that has never fallen below 2 percent. Since the 1990s, economic growth has been steady at 4 to 5 percent annually, with relatively low inflation and stable domestic debt, interest, and exchange rates. Its gross domestic product growth rate has accelerated by 1 percentage point every decade, despite floods and other weather-related catastrophes. This growth, coupled with an impressive decline in population growth rates, has led to a doubling of annual per capita growth from 1.6 percent in the 1980s to 3.3 percent from 1990 to 2004. The country has achieved universal primary education and has an equal number of girls and boys in secondary school, and it is on track to reach the Millennium Development Goal in child mortality.

These growth and development gains have taken place despite widely held perceptions of weak governance, a phenomenon referred to as the Bangladesh conundrum. If not addressed, poor governance will be a growth constraint, particularly in critical areas such as power and transport. The Bangladesh Poverty Reduction Strategy Paper strongly recognizes the need to improve governance and the investment climate. The Bangladesh country assistance strategy is aligned with the strategy paper and mainstreams governance so that all Bank Group interventions are as much about governance as they are about improving sector performance.

The Bank's program will support Bangladesh by improving weak regulatory frameworks, increasing transparency, enhancing capacity for public financial management and procurement, and strengthening institutions of accountability. The country assistance strategy covers the period from 2006 to 2009; lending is estimated to be $3 billion.