Bangladesh's progress in reducing poverty is nothing short of remarkable. Once described as a "basket case" by Henry Kissinger, periodically subject to floods and governance problems, this same country now has one of the fastest rates of poverty reduction in South Asia. In 1991, 57 percent of Bangladesh's population was living below the poverty line. By 2000 this number came down to 49 percent. Over the period 2000 to 2005, the poverty rate further declined to 40 percent with around six million people lifted out of poverty. If this progress continues, Bangladesh will meet the Millennium Development Goal (MDG) of halving the poverty rate by 2015.

This sharp reduction in poverty in Bangladesh during recent years is also mirrored by substantial improvements in living conditions that include quality of housing, asset levels, and access to sanitation facilities, electricity and communications. For instance, the proportion of households living under a straw roof -- a highly sensitive indicator of extreme poverty -- fell from 18 per cent of the population in 2000 to 7 per cent in 2005.

One reason poverty has declined rapidly is that inequality has changed little over the past decade in Bangladesh. The most commonly used measure of consumption inequality, the Gini coefficient, increased marginally from 0.30 to 0.31 between 1995 and 2005.

Consumption growth for the poorest and richest ten percent of the population was the same (14%) between 2000 and 2005. Hence growth has been broadly egalitarian in Bangladesh and has therefore made a real dent on poverty.

Amidst these positive findings, it is important to stress that the pace of poverty reduction in Bangladesh is still much slower than in the fast-growing East Asian countries, like China, Thailand and Vietnam. The poverty rate in Vietnam fell from 58 per cent in 1992 to 20 per cent in 2005. In other words, although the proportion of poor in Vietnam was similar to that in Bangladesh in the early nineties, it is now around half that in Bangladesh. The main reason is that Vietnam's annual growth was on average 2.5 percentage points higher than Bangladesh's during this period. Key to Vietnam's success are the infrastructure investments that have created three 'growth poles' within the country, the government's focus on boosting exports and the decentralization process that has improved public sector performance. The rate by which growth is 'converted' into poverty reduction (what economists call 'elasticity') is similar in both countries. If Bangladesh can now raise GDP growth to a sustained 7-8 per cent rate, it will be able to match the pace of poverty reduction seen in the likes of Vietnam and China.

While the overall progress in reducing poverty in Bangladesh is impressive, there are major differences between the eastern and western parts of the country. Dhaka, Chittagong and Sylhet divisions, all in the eastern part of the country, have had the most significant reductions in poverty; in contrast to Barisal, Khulna and Rajshahi divisions, in the western part of the country. Regional differences were thus quite sharp in 2005 -- the poverty headcount ranged from a low of 32 percent in Dhaka and 34 percent in Chittagong and Sylhet to over 50 percent in Barisal and Rajshahi. In fact, Dhaka and Chittagong, with just over half the country's population, contributed as much as 79 percent of the aggregate reduction in poverty headcount between 2000 and 2005.

The reasons for these patterns are varied. International remittances are concentrated in Chittagong (24 percent of households received remittances in 2005) and Sylhet divisions (16 percent). In contrast, less than five percent of households in Rajshahi, Khulna and Barisal received remittances from abroad. Sub-districts with more rapid expansion of microfinance coverage also experienced a higher rate of poverty reduction. Another important factor is connectivity. Lower travel time to the nearest town, as well as to Dhaka, explains some of the regional differences in poverty. The reduction in poverty in Bangladesh has also been helped by a fall in household size between 2000 and 2005. This pattern is broadly consistent with the decline in fertility up to the mid-1990s -- although one should note that there has been a tapering off in recent years. Finally it is evident that the rewards for the sharp increase in female secondary schooling are now paying off, as women are now shifting towards occupations that generate higher income, lifting their families and themselves out of poverty.

While significant progress has been made, the government, NGOs and development partners cannot afford to lose sight of the 56 million people who remain below the poverty line and whom we need to collectively fight for, so that they can overcome the daily struggles that they face. Given this context, let me return to the policy directions that this caretaker government can initiate or accelerate.

First, the comparison with East Asia highlights the fact that even greater poverty gains are possible if the obstacles to higher economic growth (e.g. power supply shortages, an inefficient port, unskilled labour) are removed. The sharp improvement in Chittagong Port efficiency in the past few months, if sustained, is an important step towards a higher growth path and clearly shows what the caretaker government is capable of. Second, the regional disparities highlighted above may progressively become worse given the possible dire consequences of global climate change on Bangladesh. Some of the existing pockets of poverty (e.g. south-west parts of the country) are highly vulnerable to rising sea levels. Hence, there is a real urgency to act now to improve infrastructure facilities, create diverse employment opportunities and expand insurance programmes in lagging areas.

Third, Bangladesh's innovations in the social sectors are clearly paying off. It is essential to maintain the focus on reducing fertility even further as well as improving the quality of education so that Bangladesh can take advantage of higher-skill employment opportunities such as in the Information Technology sector. Fourth, inasmuch as micro-credit and remittances have played an important role in this pro-poor growth process, an enabling macro-economic and regulatory environment for micro-credit is essential as is the development of greater investment options to increase the incentives to remit money from abroad.

Not all these actions can happen at once. Some will require sustained policy commitment over a long period. Yet even during this political transition, the caretaker government is in a position to accelerate and initiate actions that can push Bangladesh onto a higher growth trajectory, reduce regional inequalities and contribute to ending poverty within a generation. This development agenda, and millions of poor citizens, cannot wait.

Praful Patel is Vice President, South Asia Region, World Bank.