Accountable and transparent institutions not only promote growth, but are also essential for reducing poverty and ensuring that the voices of poor people are heard.

Many developing countries have pledged to attack corruption, which taxes the poor and can skew economic policies in favor of political and economic elites.

The World Bank helps by providing technical advice on making public institutions—including legal and judicial bodies—more transparent, accountable and efficient, while also providing guidance on sound financial management and fair business regulation.

In the wake of a banking crisis in 1995, Latvia's government acknowledged that deep reforms were needed to address the issues of corruption and poor public services that were a legacy of Latvia's Soviet past. Red tape, in the form of excessive and inefficient market regulation, was stifling the private sector. Business inspections were rife with corruption. Bribe-taking by civil servants was hurting poor people, who were often denied basic public services as a result.

In 1996, Latvia accepted an offer from the World Bank to help it address public governance and corruption problems. The Bank collaborated with the government to create the Corruption Prevention Council, and a supporting program that emphasized education, prevention and enforcement.

In 1999, the Bank helped the Council to conduct a series of surveys of businesses, households, and public officials to establish priority areas for subsequent anticorruption efforts. It also approved two loans to improve government transparency and accountability through better business regulation.

The first loan, approved in 2000, focused on making the government's structure, spending and regulation processes more open. Laws were redrafted or amended. The Bank, through a second loan, is now helping the government implement the new laws.

There are still people with vested interests in the civil service delaying public sector pay reform, but gains have been made in making government institutions more transparent and accountable. A new prime minister came to office on an anticorruption platform in 2002, and the Bank continues to work with government on further reforms.