Referring to the present political situation, the WB said the caretaker government is making good efforts to create conditions for free and fair elections before 2008.

It, however, said the timing of the elections remains a bit uncertain, which may pose risks to present public support.

"The caretaker government enjoys widespread public support, but there is risk that it may erode with uncertainty regarding the timing of the elections," the bank's programme information document (PID) report said.

According to a press release of the World Bank, the $200 million aid will be spent for macroeconomic stability, trade liberalisation, better functioning of financial and power sectors, and reforms in core governance functions such as public financial management, the Anti-Corruption Commission, and tax administration.

Earlier, the bank released $700million as part of its DSC programme.

The approval of $200 million was discussed during the tenure of last four-party government. But the bank agreed to provide half of the amount in installment as it assumed that reforms would be hampered during the time of political transition.

However, the WB shifted from their previous position as the present caretaker government brought out a number of long standing reforms in energy and banking sectors and judiciary as well as made the Anti-Corruption Commission active.

To keep the reform programmes to be continued, the government has requested speedy assistance from development partners, including the World Bank group.

The government specifically requested the World Bank to fast-track the proposed DSC-IV, a budget-support operation, the PID report said.

The World Bank also said that it has contacts with the pro-reform leaders of the two major political parties to ensure broader political support for the DSC-supported reforms.

Both the parties agreed on the broad reform priorities supported by the DSC operation and pledged for sustainability of the reforms, it said.

The World Bank report also analysed possible economic risks of Bangladesh and said the main economic risk stems from the weak financial condition of state-owned enterprises (SOEs), especially those in the energy sector.

Sustained large losses at the energy sector SOEs have led to a build-up of outstanding liabilities and exacerbated the financial fragilities of the nationalised commercials banks (NCBs) that are directed to financial losses, it said.

It said the BPC is still unable to pay its large outstanding debt, mostly to the NCBs, which would need to be resolved.

The press release quoted Xian Zhu, World Bank Country Director for Bangladesh, as saying, "The DSC supports key aspects of the government's reform agenda aimed at strengthening prospects for stronger economic growth, improved governance, and faster poverty reduction in Bangladesh."