An agreement to this effect was signed in Dhaka yesterday between the government of Bangladesh and the IDA.

Badiur Rahman, additional secretary, Economic Relations Division, and David Hughart, acting head, World Bank Office, Dhaka, signed the agreement on behalf of their respective sides.

The credits, at a rate of three-fourths of one percent service charge per annum, will be made in one single tranche. The loan is repayable in 40 years, including 10 years' grace period.

The loan is the second "in a planned series of programmatic operations" in the context of a medium-term reform framework, alongside the Poverty Reduction Growth Facility (PRGF) supported by the IMF, an official announcement said.

It said the credits aimed at enhancing Bangladesh's growth and poverty reduction prospects through continued support to implementation in key areas of the country's poverty reduction strategy.

The poverty reduction strategy focuses on acceleration of pro-poor growth, promoting good governance, investing in human development, promoting women's advancement and ensuring social protection.

The operation builds on the experiences in implementing the First Development Support Credit ($300 million) provided by the IDA in a single tranche in June last year, which has already shown "good outcomes in terms of exports, growth and better incentives for private sector investment".

Development Support Credit-II is also expected to play a crucial role in enhancing poverty reduction and encouraging the private sector growth.