The Programmatic Education Sector Adjustment Credit is the first in a proposed series of three support packages for education. "This will assist the Ministry of Education in pushing through the first phase of a long-term and ambitious reform agenda," the WB said in a statement.

Bangladesh with a population of 135.7 million has over eight million students in the secondary education system, mostly in private schools, which are subsidised by the government.

Secondary enrolments more than doubled in the 1990s. And the enrolment of girls increased to over 50 percent by 2003 from 33 percent in 1990. As a result of this rapid expansion, the quality of education has suffered, causing attendance rates to fall and teacher absenteeism to rise. The government's reform programme is designed to address this quality issue, the WB noted.

The vision behind the reform programme is that by increasing the quality of education, Bangladesh will build a more skilled labour force, making the country both more competitive in the global market and better able to tackle its high rate of poverty.

"The reform programme, supported by the bank operation, will change the incentives in Bangladesh for the financing and provision of education," said Amit Dar, WB senior economist and task leader for the project.

"This will ultimately build greater accountability in the education system, which in turn will increase cost effectiveness for the benefit of students, teachers, parents and service providers," he added.

The goals of the reform programme are to provide more equitable access to secondary education by building more schools particularly in under-served areas, to increase accountability of the schools both to the community and to the government, link government subsidies to schools to objective measures of performance and devolve more authorities to local levels of government, the WB statement said.

The loan will help enhance capacity to monitor public expenditure on education, evaluate programmes and policies and disseminate information on standardised examinations results, school performance and program effectiveness.

It will reduce teacher absenteeism and build teacher efficiency with improved teacher recruitment and training programmes and work toward greater student enrolment, higher completion rates and better examination results.

The programme will also help improve textbook quality by introducing competitive production.

By raising the quality of service delivery and improving equity in access to secondary education, this credit will help improve governance in the education sector, which has repeatedly been identified as a major development challenge facing Bangladesh, the WB pointed out.

Given the strong linkages between poverty reduction and human capital development, delivery of high quality education, especially to poor people, is a major goal of the government's poverty reduction strategy.

The credit from the International Development Association (IDA), the WB's concessionaire lending arm, carries a 0.75 percent service charge and has 40 years to maturity with a 10-year grace period.