Why delay in our LDC graduation sought

In the current economic reality of Bangladesh, the process of graduation from the list of Least Developed Countries (LDCs) has given rise to a deep and multidimensional discussion. Considering the recent global context and the country’s internal economic capacity, the government has applied to postpone this graduation process by three more years�"from the scheduled 2026 to 2029. This request for delay is a realistic reflection of the structural weaknesses and challenges existing in the country’s overall export trade, employment, and foreign relations. In the formal proposal submitted to the United Nations, the post-COVID-19 economic shocks, the global instability caused by the Russia�"Ukraine war, and various internal pressures have been clearly stated. Moreover, the prolonged closure of the Strait of Hormuz due to the attacks by Israel and the United States on Iran has created a global fuel crisis, the impact of which has also affected Bangladesh. This has disrupted the import and export of essential goods, further intensifying the economic crisis. As a result, the initiative to defer the LDC graduation timeline has gained additional momentum.

If this graduation takes place on schedule, there is a concern that it may have a negative impact on the country’s export sector and overall economy. As a consequence of graduation, Bangladesh will lose a significant portion of the international trade benefits it has long enjoyed. In particular, Bangladesh currently receives duty-free access on about 98 percent of its products in the European Union market, which will gradually decline after graduation. It is estimated that the loss of these benefits could create an annual export pressure of approximately 5 to 7 billion US dollars.

 

“However, within these challenges lie new opportunities. LDC graduation will strengthen Bangladesh’s international image. The country will be perceived by foreign investors as a stable and emerging economy. Notably, the progress seen in the ICT sector, pharmaceuticals, and agro-based processing industries is encouraging for the future. Export earnings from the ICT sector are steadily increasing, indicating positive signs of economic diversification”

This raises the core question�"Is Bangladesh prepared for this transition? It is no longer enough to simply increase production; improving efficiency, adopting technology, and enhancing product quality are now essential. The current labor-intensive production structure will make it difficult to sustain long-term competitiveness. According to data, a large portion of the country’s workforce is still unskilled or semi-skilled, which is a major barrier to productivity.

On the other hand, LDC graduation will also bring changes to international aid and loan structures. Bangladesh has so far been receiving loans on relatively easy terms, which will no longer be available in the future. Interest rates will rise, and repayment conditions will become stricter. This may increase the burden of external debt. At present, the country’s external debt has already grown significantly, indicating the need for greater caution in economic management.

There are also major challenges in the revenue sector. The country’s tax-to-GDP ratio remains around 8 to 9 percent, which is much lower than international standards. After LDC graduation, this ratio must be significantly increased to manage development expenditures and debt repayments. In other words, increasing domestic revenue collection is no longer optional�"it is essential.

However, within these challenges lie new opportunities. LDC graduation will strengthen Bangladesh’s international image. The country will be perceived by foreign investors as a stable and emerging economy. Notably, the progress seen in the ICT sector, pharmaceuticals, and agro-based processing industries is encouraging for the future. Export earnings from the ICT sector are steadily increasing, indicating positive signs of economic diversification. Similarly, the pharmaceutical industry is now exporting to more than 150 countries, creating a strong foundation for new possibilities. With adequate policy support, these sectors can significantly reduce dependence on the garment industry.

Overall, LDC graduation is not a final destination; rather, it marks the beginning of a new chapter. To succeed, it is not enough to increase the growth rate alone�"this growth must be made sustainable, inclusive, and diversified.

The challenges Bangladesh faces today are also its greatest opportunities. With proper planning, skilled human resources, a strong policy framework, and effective implementation, LDC graduation will not remain merely an achievement of status; it will mark the beginning of a new era in the country’s economic history.