[🇧🇩] LDC Graduation For Bangladesh

[Saif]

Three more years to prepare for graduation from LDC: Is Bangladesh making them count?

Following graduation from the LDC category, Bangladesh will face the risk of losing various duty-free and preferential trade benefits currently available in international markets

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Three more years to prepare for graduation from LDC: Is Bangladesh making them count?

Selim Raihan

On October 29, 2026, the 81st session of the United Nations General Assembly approved a proposal to extend Bangladesh’s preparatory period for graduation from the Least Developed Country (LDC) category by another three years. Consequently, the graduation deadline has been rescheduled from November 24, 2026 to November 24, 2029.

While this decision provides Bangladesh with additional time to prepare its economy for the challenges of graduation, it also exposes the country's economic vulnerabilities and the shortcomings of its structural reforms.

The COVID-19 pandemic, the repercussions of the Russia-Ukraine war, global economic instability, high inflation, pressure on foreign exchange reserves, and domestic political and financial challenges have undoubtedly hindered Bangladesh's graduation preparations.

However, a critical question remains: how effectively has the country addressed these challenges over the past few years?

Economic development cannot be measured solely through per capita income or improvements in a few macroeconomic indicators. Economic stability, institutional capacity, employment generation, productivity, and the ability to remain competitive in international markets are equally important indicators of sustainable development.

Following graduation from the LDC category, Bangladesh will face the risk of losing various duty-free and preferential trade benefits currently available in international markets. The ready-made garments (RMG) industry, which accounts for the largest share of the country's export earnings, may face increased competition and potential tariff pressures in global markets.

Similarly, changes may occur in access to concessional external financing, development assistance, and certain preferential trade arrangements.

However, Bangladesh's export structure remains heavily concentrated in a limited number of products. Moreover, irregularities in the banking sector, a high volume of non-performing loans, sluggish investment, weak revenue mobilisation, and shortages of skilled human resources continue to undermine the economy's long-term competitiveness.

Under these circumstances, merely fulfilling the formal criteria for graduation is not enough. The real priority should be to build a strong and resilient economic foundation capable of competing in international markets in the post-graduation period.

Therefore, the decision to defer LDC graduation should not be celebrated as a national achievement; rather, it should be viewed as an important opportunity to address the country's existing economic weaknesses.

Over the next three years, Bangladesh must make tangible progress in ensuring good governance in the banking sector, curbing corruption and irregularities, increasing the tax-to-GDP ratio, improving the investment climate, diversifying export products, promoting technology-driven industrialisation, and developing a skilled workforce.

Greater emphasis should also be placed on the development of small and medium-sized enterprises (SMEs) and the creation of new employment opportunities. Most importantly, these reforms must not remain confined to policy statements or official documents; they must translate into measurable improvements in the real economy.

The year 2029 is not a magical solution. Without meaningful reforms and adequate preparation, Bangladesh may find itself confronting the same economic challenges even then. Ultimately, the country's economic future will depend not on how much additional time it has secured, but on how effectively it utilises this extended preparation period.

The writer is a professor of economics at Dhaka University and executive director at SANEM.​

 

[Saif]

LDC reprieve must not go to waste

Without a doubt, the United Nations General Assembly's decision to grant Bangladesh an additional three-year preparatory period before graduation from the LDC category is a piece of good news for the export sector. The extension has come as huge relief to exporters by warding off an average 12.5 pe

thefinancialexpress.com.bd

LDC reprieve must not go to waste

Without a doubt, the United Nations General Assembly's decision to grant Bangladesh an additional three-year preparatory period before graduation from the LDC category is a piece of good news for the export sector. The extension has come as huge relief to exporters by warding off an average 12.5 per cent tariff in key markets while protecting an already struggling economy from another severe setback. At present, 73 per cent of Bangladesh's total exports benefit from LDC-specific trade preferences, with its merchandise exporters enjoying duty-free market access in 38 countries and trade blocs. Losing these advantages without adequate preparation would clearly make Bangladeshi products less competitive and put export orders at risk. Deferring the graduation date to November 2029 is therefore a welcome reprieve, especially at a time of weak investment climate and uncertainty in the global economy. Credit is indeed due to the diplomacy that won the backing of the Group of 77 and the European Union that helped carry the resolution through.

Truth is that Bangladesh has never been ready to manage the economic consequences of LDC graduation even after meeting all three qualification criteria in both 2018 and 2021. For one, the domestic economy lacks the competitiveness required to weather the loss of trade preferences. Moreover, its reliance on these benefits is exceptionally heavy, with almost three-quarters of exports depending on them. Not to mention that the preparations to secure alternative market access have also been extremely slow. Bangladesh has so far signed trade agreements with Japan and South Korea only but neither has come into force, while negotiations with several other trading partners remain unfinished. Not having a trade agreement with the European Union in particular which is Bangladesh's largest export market is the most concerning when regional rivals like India and Vietnam have already concluded deals with Brussels to secure more favourable terms. This unreadiness explains why UNCTAD estimates that Bangladesh could lose over $17.5 billion in annual export earnings post-graduation, with separate projections warning of a potential 32 per cent drop in overall exports once preferences end. Obviously, Bangladesh didn't win extra time at the United Nations because it is strong. It won extra time because the rest of the world found it not ready.

Even if Bangladesh were to resolve its trade diplomacy shortfalls, domestic economic weaknesses would still have continued to hold it back. Pervasive challenges such as poor banking governance, high logistics costs, inadequate infrastructure, and unreliable energy continue to undermine industrial competitiveness across the board. Consequently, private investment has stayed subdued. Banking is a big part of the problem, as non-performing loans have reached 35 per cent, making credit for new projects almost impossible to get. On top of that, tax revenue stays low at 6.8 per cent of GDP and interest payments swallow 36 per cent of tax receipts. That leaves hardly any money for the roads, ports and power supply that exporters need. With time running out and these issues unlikely to disappear on their own, the country must address these structural weaknesses well before graduation actually takes effect.

Thus, the additional three years should be treated as a window for serious economic reform and not a chance to delay tough choices. The government has no real choice but to roll out time-bound action plan with clear responsibilities, measurable targets and regular public progress reports. Alongside securing preferential access to the EU and other markets, it has to tackle the high domestic costs that undermine export competitiveness. After all, three extra years of duty-free trade will mean very little if Bangladesh reaches the deadline with the exact same flaws that made an extension necessary in the first place.​

 

[Saif]

Bangladesh must use the LDC extension for lasting economic gains

On Thursday, the United Nations General Assembly (UNGA) approved a three-year extension for Bangladesh to prepare for graduation from the Least Developed Country (LDC) category, rescheduling it for November 24, 2029.

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Bangladesh must use the LDC extension for lasting economic gains

Fahmida Khatun

VISUAL: SALMAN SAKIB SHAHRYAR

On Thursday, the United Nations General Assembly (UNGA) approved a three-year extension for Bangladesh to prepare for graduation from the Least Developed Country (LDC) category, rescheduling it for November 24, 2029. Now the country has more time to strengthen its preparations to continue retaining international support and trade benefits that LDCs get. However, time extension alone cannot overcome the economy’s weaknesses if it doesn’t employ targeted, tough measures. The country must use this opportunity to implement meaningful reforms.

The Committee for Development Policy (CDP) reviews the LDCs’ progress every three years against three criteria: per capita gross national income, the Human Assets Index (HAI), and the Economic and Environmental Vulnerability Index (EVI). A country must meet the required thresholds in two consecutive reviews to be considered for graduation. Bangladesh first met the graduation criteria in 2018, and again in 2021. The CDP subsequently recommended Bangladesh for graduation. Given the economic and development losses caused by the Covid pandemic, the UN granted Bangladesh, Lao PDR and Nepal an exceptional five-year preparatory period to prepare for a smooth transition. A UNGA decision in 2021 set Bangladesh’s graduation date at November 24, 2026. Thursday’s decision extends the preparatory period for Bangladesh and Nepal by three more years.

The extension gives Bangladesh an opportunity to address gaps in its preparations and implement plans to meet the challenges that will follow graduation. During the preparatory period, some international support and trade benefits associated with the LDC status may continue under the applicable rules, but their nature and duration will vary across markets. The country should engage early with its major trading partners to clarify tariffs, rules of origin, and post-graduation market access arrangements. This is essential to remain competitive in the global market. Preferential access can help, but it cannot indefinitely offset high logistics costs, unreliable energy, slow customs procedures, low productivity, or limited product diversity. Bangladesh needs to improve port and transport efficiency, reduce production delays, strengthen labour and environmental standard compliance, and help firms shift towards higher-value product manufacturing. Exporters should also be provided with support to meet rules of origin and technical requirements at lower costs.

Trade agreements are one part of this adjustment. Bangladesh has signed a few trade agreements, among which the Economic Partnership Agreement with Japan and the Comprehensive Economic Partnership Agreement with South Korea are positive steps. It should pursue more such agreements with key trading partners based on careful assessments of the markets, sectors and terms involved. Besides tariffs, these deals should also cover services, investment, customs, standards, rules of origin, digital trade, and technology cooperation. Of course, the success of these trade agreements will depend on the actual export growth, use of preferences, investment, technology transfer, and local firms’ participation.

In this context, the need for diversifying exports beyond ready-made garment (RMG) products cannot be stressed enough. Bangladesh should expand production and exports of pharmaceuticals, leather goods, processed agricultural products, light engineering goods, and information technology services as well. This will require compliance with international standards, a skilled workforce, reliable energy, improved transport, and lower business costs. Access to finance and technology can help small and medium-sized enterprises enter new markets.

To this end, the commerce ministry should take the lead in formulating a national plan, in collaboration with the finance ministry, the National Board of Revenue (NRB), export agencies, businesses and workers, to address reciprocal tariffs and other trade barriers imposed by the trading partners. The plan should identify the products, firms and jobs most at risk and guide negotiations to secure predictable access to key markets. Before signing any trade agreement that includes tariff reductions, the government should assess its impact on local industries, employment, consumers and public revenue, and negotiate appropriate transition periods and/or safeguards. If energy, transport, ports, customs and finance are expensive, exporters cannot reduce costs on their own. The government should improve these services and give firms better access to finance, technical advice, worker training, and quality certification. With this support, businesses can upgrade machinery, adopt energy-efficient technology, reduce waste, improve productivity, and develop products for a wider range of markets.

Bangladesh also needs to reform import taxes. The government depends heavily on these taxes, but high duties and additional charges can raise the cost of raw materials and machinery for exporters, increasing production costs and making it harder to compete abroad. Tariffs should be rationalised gradually and predictably under a clear medium-term plan that removes unnecessary layers and aligns duties more closely with production and export competitiveness needs.

However, sudden cuts could create a revenue shortfall. The government must strengthen income tax and VAT collection, broaden the tax base, and improve tax administration to ensure that reduced reliance on trade taxes does not undermine essential public spending. It should also promptly refund import duties paid on materials used to produce exported goods and make bonded warehouse facilities easier for exporters to access, allowing them to import eligible inputs without paying duties upfront.

Bangladesh’s financing landscape will change as the country graduates and becomes a developing country. Some LDC-specific funds and flexibilities will become less available. Financing terms are already tightening. Bangladesh will need to rely more on domestic revenue and efficient public investment. It should exercise caution with external borrowing. Commercial borrowing from global markets may be available to finance projects with clear economic returns. But this will require strong project appraisal, debt management and transparent disclosure.

The country also needs a dedicated climate finance strategy to secure concessional funding for adaptation, resilience, and loss and damage, while strengthening project preparation and meeting the funders’ requirements. Linking climate plans, budgets, and investment priorities can direct resources to vulnerable communities and essential infrastructure.

Preparing for stricter intellectual property rules is also critical. As the Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities for LDCs are phased out, the pharmaceutical industry and other sectors may face new legal and compliance requirements. Bangladesh should strengthen IP administration, trade law expertise, and research and development. It should also promote innovation and technology transfer, protect public health, and ensure access to affordable medicines. A phased plan will be required to give firms and public institutions time to adapt.

The extension for Bangladesh’s LDC graduation preparatory period comes at a time when the country is facing difficulties in several areas. Macroeconomic stability should be the top priority now. Controlling inflation, increasing revenue collection, managing external shocks, and improving banking sector governance are essential to improve investment and production. Overcoming these challenges requires deep reforms. The country should also implement its smooth transition strategy to sustain export competitiveness, employment and development as LDC-related support and flexibilities are gradually phased out.

Dr Fahmida Khatun is an economist and distinguished fellow at the Centre for Policy Dialogue (CPD).​

 

[Saif]

LDC graduation: Three more years to finish homework

Graduation days are supposed to be proud moments. Bangladesh’s graduation was less than four weeks away. Instead, on Thursday afternoon in New York, the country was told it could stay back for three more years, and the whole class agreed.

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LDC graduation: Three more years to finish homework

Delaying the LDC exit is easy to celebrate. Now govt must justify it with genuine reform

Arun Devnath

Graduation days are supposed to be proud moments. Bangladesh’s graduation was less than four weeks away. Instead, on Thursday afternoon in New York, the country was told it could stay back for three more years, and the whole class agreed.

The UN General Assembly, without a vote or a single objection, pushed Bangladesh’s exit from the list of least developed countries to November 24, 2029. Nepal, its classmate, got the same reprieve. Laos, which faces economic troubles of its own, is graduating on schedule. It has treated departure from the LDC club as a national goal for decades, and it relies far less than Bangladesh on trade preferences in Western markets.

In Dhaka, the mood is relief. Garment bosses had warned that losing LDC perks next month could cost billions in exports. Economists had fretted about dropping the WTO flexibilities that let the poorest countries subsidise exports. Bangladesh spent months lobbying countries, flying delegations to New York and courting the members of the UN’s Economic and Social Council. It worked.

So far, so good. But anyone who listened to the whole meeting, not just the gavel, heard something less cosy. The extension came with a smile, and the smile came with conditions.

Start with the case for delay, which was perfectly understandable. Uruguay, presenting the resolution for the Group of 77 and China, ran through the shocks that hit Bangladesh and Nepal. It cited “the lingering effects of the pandemic, climate-related disasters, geopolitical conflicts and disruptions to international trade and energy supplies,” plus jitters over migrant jobs, remittances and tourism.

Then came the line that summed up Dhaka’s argument: “Meeting the graduation criteria does not eliminate structural weaknesses overnight.”

Fair enough. Nobody sensible wants a country to graduate straight into a recession. The General Assembly’s president, Khalilur Rahman, himself a Bangladeshi, framed the decision as a response to “the exceptional circumstances related to ongoing conflicts in the Middle East, disruptions to energy supplies and supply chains, global trade uncertainty and persistent structural vulnerabilities for both Bangladesh and Nepal.”

He also said that recent political transitions in both countries had made things worse.

Now listen to the rest of the room. The European Union, which buys more Bangladeshi clothes than anyone, said it supported the extension. It then spent the rest of its speech explaining why nobody should get used to this. Such deferrals, the EU said, are “exceptional time-bound measures,” not a departure from the established graduation criteria.

It warned that “a system in which countries remain in the category for prolonged periods, despite meeting the criteria, risks weakening the credibility of the framework.” It reminded everyone that, under the UN’s own rules, “domestic political transitions do not constitute grounds for extending preparatory periods,” before conceding that Bangladesh’s recent upheaval might merit some consideration. The EU also said the extra time must come with “concrete, measurable domestic actions, effective monitoring and continued engagement.”

Canada, speaking also for Australia and New Zealand, was politer but no less clear: the extension “should serve as a catalyst for reform.”

France skipped the diplomatic padding: “It is critical that these responsibilities be fulfilled by Bangladesh.”

The message, in plain English: you may have your three years, but we will be checking your homework.

Bangladesh is not a hard-luck case. Past deferrals went to places like Samoa and the Maldives after tsunamis flattened coastlines. Bangladesh, by contrast, passes all three of the UN’s graduation tests, on income, health and education, and economic vulnerability, by a comfortable margin. The UN’s Committee for Development Policy said as much, and backed the delay only if Bangladesh makes “significant progress” on reform. The country did not ask for more time because it failed the exam. It asked because it was nervous about life after passing.

That nervousness is understandable, and also revealing, because much of what makes Bangladesh vulnerable is homegrown. Its tax take is among the lowest in the world for a country of its size and income. Its banks are clogged with bad loans, many handed out to the politically well-connected and never repaid.

Its exports lean on a single crutch: ready-made garments make up roughly 85 percent of the total, leaving the economy exposed to every change in Western fashion, tariffs or buyer sentiment. Investors complain about red tape, slow customs and unpredictable rules. The pandemic did not cause any of this. Neither did the Middle East. Those shocks simply hurt more because the foundations were shaky.

At the UN in July, Bangladesh promised to use any extension to shore up economic stability, raise domestic revenue, fix the financial sector, build productive capacity and diversify exports. All correct. Bangladesh has written a smooth transition strategy, and it reads beautifully. Let’s accept that time by itself will not improve our readiness.

Graduation means giving up WTO-sanctioned export subsidies and, gradually, cheap concessional loans. A state that collects so little tax will struggle to support industry in other ways or to pay the higher cost of borrowing. The government should now publish a credible, year-by-year plan to lift the tax take, starting with the exemptions and special treatments that mostly benefit the rich.

Trade is where graduation bites hardest. When LDC preferences fade, Bangladesh will need the EU’s GSP+ scheme, which comes with core conditions on labour rights, human rights, the environment and governance. And Brussels monitors compliance.

Bangladesh must now show progress on these reforms and report it to the UN every year. What’s more, Bangladesh must get serious about signing trade deals with other big markets. Rivals such as Vietnam already have them, while Bangladesh is still largely at the negotiating stage.

Nepal’s homework looks different, though the subject is the same. Battered by floods in late August and heavily dependent on remittances and tourism, it was asked for “a clear time-bound plan to adjust and reprioritise its smooth transition strategy.”

Bangladesh’s task is to broaden its existing export base. Nepal’s is closer to building one from scratch. Both face the same temptation: to treat a postponed deadline as a problem solved.

To his credit, Khalilur Rahman seemed alert to that risk. “Three additional years is not a retreat from graduation, but an investment in making it succeed,” he said.

“This extended time is not time to stand still. It is time to act decisively.”

Bangladesh’s first checkpoint comes sooner than 2029. Next year the UN will hold a mid-term review of the Doha Programme of Action, its ten-year plan for the world’s poorest countries.

Rahman has asked the UN to come to that meeting with a map of how graduating countries are faring on wider development goals, not just whether they clear the statistical bar, and has suggested the findings inform a rethink of the rules for leaving the group. That puts Bangladesh under the spotlight barely a year into its extension. Dhaka would do well to arrive with progress to show, not just reasons for more patience.

One more point for the government’s diary. The goodwill that delivered a consensus this week is not a renewable resource.

Bangladesh has spent the past five decades confounding pessimists. It turned a country once written off as a “basket case” into one of Asia’s steadiest growth stories. It has every chance of graduating with flying colours. But the extra three years are borrowed time, and borrowed time, like borrowed money, has to be repaid.​