Bangladesh is set to graduate from the list of Least Developed Countries (LDCs) on November 24, 2026! After that, a grace period of three more years will be available. However, experts suggest that due to the country's political instability, economic vulnerability, high inflation, and global challenges, this may not be the ideal moment for Bangladesh to leave the LDC category.
They argue that the present issues, including the high value and scarcity of the dollar, limitations in the export sector, the energy crisis, barriers in the domestic agriculture sector, stagnation in employment and investment, financial instability, and ongoing reform programs to reduce irregularities and corruption calls for an extension of the timeline for LDC graduation.
If the national elections are held in December of this year, the new government will take office at the beginning of next year. In that case, Bangladesh will graduate from the LDC list in just 10 or 11 months, which will be a new challenge for the government.
However, Interim Government's Chief Advisor Dr. Muhammad Yunus does not consider this challenge impossible. He stated that Bangladesh has been preparing for LDC graduation for a long time, although business executives argue that the country is not yet fully prepared.
Foreign Affairs Advisor Md Touhid Hossain said that delaying the graduation could result in the country to lag behind on the global stage. He encouraged business leaders to finalize their preparations for the LDC graduation. He added at an event organized by the Economic Reporters' Forum (ERF), "In my opinion, we should not take more time for LDC graduation."
Executive director of CPB warns of rising loan costs and debt risks
Meanwhile, Dr. Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), pointed out that after graduation from the LDC list, the cost of foreign loans will increase. She explained, “We currently get a grace period or lower interest rates on loans from many international institutions. After graduation, the grace period will be shorter, and we will have to pay competitive interest rates. This will increase our costs, and we need to think about this in advance.’
Dr. Khatun added, “If we continue to borrow and misuse funds as we have in the past 16 years, we may face difficulties in repaying foreign loans. We must have a clear understanding of how we will use the loans and the returns we expect. Poor long-term debt management could lead us into a debt trap.”
Challenges will intensify in the global market
Sources indicate that according to the rules, after graduating from the LDC list, the existing duty-free market access to European markets will automatically be revoked. As a result, Bangladesh will have to pay additional tariffs for exports to those countries, which will further challenge the country's export sector.
Currently, the government provides cash incentives to exporters in certain sectors, helping them tackle these challenges. However, this support will end after LDC graduation. The interest on foreign loans will rise, increasing the pressure on loan repayment.
Additionally, foreign aid will decrease, and the export markets for agriculture, jute, and leather products will face greater challenges. The amount of the United Nations’ contributions will also rise.
Overall, Bangladesh's costs will increase to maintain its position in the global system, and economists believe that business challenges will intensify in the global market.
Experts urge more time for Bangladesh's LDC graduation
Meanwhile, the economic and social growth promoted by the previous authoritarian Awami League government was largely inflated and did not align with reality. In many cases, export earnings were reported as fraudulent. The accuracy of statistics regarding production, growth, and income could not be proven. High unemployment is clear evidence of this. Although growth was reported on paper, the benefits have not reached the common people.
Based on these statistics, former World Bank Lead Economist Dr. Zahid Hossain believes that graduating from the LDC list at this moment would only increase the challenges for the country. He stated, ""Perhaps we could take a little more time for this, but delaying it too much wouldn’t be right."
According to the United Nations list, while Bangladesh is currently classified as a Least Developed Country, it is considered a developing country in many aspects. There are currently 44 LDCs in the world, including Bangladesh, Afghanistan, Angola, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, Tanzania, Yemen, and Zambia. The United Nations Committee for Development Policy (CDP) recommends which countries can graduate from the LDC list. Every three years, a triennial evaluation of LDCs is conducted for this purpose.
A country’s qualification for transitioning to a developing nation is based on three factors: per capita income, human resources, and climate and economic vulnerability. To qualify, a country must meet the criteria in two of these areas or double its per capita income to a specified level. These standards evolve over time. Bangladesh passed all three of the triennial criteria in 2018 and 2021. In 2021, Bangladesh received the final recommendation that it could graduate from the LDC list in 2024.
In addition to Bangladesh, Laos and Nepal are also set to graduate from the LDC list in 2026. In the past five decades, only eight countries have graduated from the LDC list: Bhutan, Botswana, Cape Verde, Equatorial Guinea, Maldives, Samoa, Vanuatu, and São Tomé and Príncipe.
Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), believes that Bangladesh should take more time to graduate from the LDC list. He told Bangladesh Pratidin, “Considering the reality, most of the development or progress we have made is not sustainable. Therefore, for a robust and lasting economy, we should allow more time.”
(Translated by Afia Nanjiba Ibnat)
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