Bangladesh would receive around US$ 500 million in a major donor funding of budget for the next fiscal (2005-06) as a senior World Bank executive on Wednesday gave a broad hint about the country's eligibility for the credits.

Of the total funds, World Bank is likely to take decision on releasing US$ 200 million Development Support Credit (DSC) and US$150 million education- sector assistance by end-July while the International Monetary Fund (IMF) might approve the release of its PRGF loan to Bangladesh by end of this month.

The World Bank has pledged to provide the DSC for three years, already having released US$ 300 million and US$ 200 million in last two years respectively.

“They have agreed that the economy of Bangladesh has progressed,” Finance Minister Saifur Rahman told reporters after a meeting with World Bank's sector director for South Asia Dr Sadiq Ahmed at his secretariat office.

“Corruption is embarrassing… we have taken enough measures to reduce the intensity,” he said, replying to a question as the World Bank executive noted with concern that corruption would be the main challenge to further economic progress of the country.

The minister said the funds would be released anytime after the decisions to be taken by the donor agencies.

“The government of Bangladesh wants the third DSC installment released by July… they want it to be released immediately after the PRGF loan,” Dr Sadiq told reporters, following the meeting with the Finance and Planning Minister.

He met the minister after having discussions with different ministries during last 3-4 days, as part of carrying out a review on the economic situation of Bangladesh on the basis of which the fund would be released.

The internal management of the World Bank would evaluate the outcome of the stocktaking exercise and take disbursement decision.

The World Bank executive would not say whether they were satisfied enough to release the fund but praised the economic performance and reform progress while pointing to a few challenges for sustainability of the macroeconomic stability.

“IMF is satisfied with the macroeconomic stability… The economic progress is on track in the long-term perspective,” Dr Sadiq said, however, stressing the need for sustainability in the macroeconomic performance of the country.

In the short term, he added, it needs efforts to increase the pace of growth through reducing poverty and further improving human development index (HDI) -– health, education and nutrition.

He appreciated that the economy has developed resilience to overcome the adverse affect of natural calamity like the recent recurring floods, registered good performance in manufacturing and services output and efficiently controlled inflation.

“There are also some challenges, mainly making the Anti-Corruption Commission effective,” he said, explaining that corruption has a correlation to economic development. “In Bangladesh , it's negative relation.”

The donor-agency executive said Bangladesh has been making enough effort to continue the ongoing reforms in banking, revenue, power and other institutions. He, however, pointed out that reforms in the nationalised commercial banks remained slow and need to be invigorated.