The approval was given in Washington on Thursday, the World Bank said in a statement issued here yesterday.

The credit from IDA, the WB's concessionary arm, is interest-free and has 40 years to maturity with a 10-year grace period. It carries a service charge of 0.75 percent.

"Public procurement is an integral part of the development process and a priority area for governance improvement," said WB Country Director Xian Zhu.

He said budgets get translated into services in large part through the operation of the procurement system.

"Improving the use of public resources with greater efficiency, transparency, and accountability, and tackling corruption will contribute to reducing poverty," he added.

The Public Procurement Reform Project II will support procurement reforms by improving procurement quality through better management and monitoring.

It aims to strengthen procurement management at sector level, maintain a sustainable programme for creating skilled procurement professionals, and will introduce electronic government procurement system in target agencies and the Central Procurement Technical Unit on a pilot basis.

It is also designed to create greater awareness of a well functioning public procurement system by engaging civil society, think tanks, and the private sector.

The project will target four agencies of key sector ministries (target agencies) -- Roads and Highways Department, Local Government Engineering Department, Rural Electrification Board, and Bangladesh Water Development Board -- chosen for the size of their annual procurement spending.

The Country Procurement Assessment Report 2002 for Bangladesh identified procurement as the single most significant issue affecting public sector performance, with enormous wastage of money.