In November 2026, Bangladesh is poised to graduate from the Least Developed Country (LDC) classification of the United Nations, marking a significant milestone achieved through years of dedicated effort and resilience. Once known for famine and aid dependence, Bangladesh has transformed into the world’s second-largest exporter of garments, playing a pivotal role in lifting millions out of poverty.
While the graduation is a cause for celebration, it is crucial to acknowledge the challenges that accompany this transition. Moving beyond the LDC status brings forth tangible risks, new regulations, and the potential for economic shocks if the necessary preparations are not made.
Referencing a recent statement by Tarique Rahman of the BNP, graduation is not merely a symbolic achievement; it entails risks and hurdles that demand candid acknowledgment. As Bangladesh graduates, preferential trade agreements will expire, concessional loans will diminish, and stricter intellectual property regulations on pharmaceuticals will be enforced. These are not speculative scenarios but definite outcomes. The pivotal question is how Bangladesh will approach this graduation: as a gateway to expanded opportunities or as a pathway to economic vulnerability.
The primary immediate challenge lies in trade diversification. Currently, around 85% of Bangladesh’s export revenue is generated from the ready-made garments sector. This industry is not just a source of income for millions, especially women, but a means of survival. However, post-graduation, the duty-free access to key markets like Europe, Canada, and Japan that fueled the growth of the garment industry will gradually diminish.
Analysts often liken a country dependent on one or two sectors to a chair with only two legs—functional but unstable. To ensure stability, a country needs a diversified economy. Vietnam, a former competitor in garments, recognized this need and expanded into electronics, ICT, and shipbuilding, positioning itself as a manufacturing hub. Bangladesh must follow suit to avoid potential economic instability.
For years, as an LDC, Bangladesh has benefited from soft loans with favorable terms such as low interest rates and extended repayment periods. However, post-graduation, this privilege will end, and Bangladesh will have to secure loans at higher costs similar to other middle-income countries.
Bangladesh’s current external debt has exceeded $100 billion, with various ministries and state-owned enterprises carrying significant debt burdens. Without effective fiscal management, these risks will escalate rapidly. The experience of Sri Lanka serves as a cautionary tale, as the country faced a financial crisis after losing access to concessional financing and resorting to expensive loans. The key lesson is that cheap credit will vanish post-graduation, necessitating proactive measures to manage debt and attract investments.
One critical aspect affected by graduation is the pharmaceutical industry. Under WTO rules, LDCs are permitted to manufacture generic essential medicines, ensuring affordability for the populace and fostering a robust pharmaceutical sector. However, graduation will eliminate this exemption, potentially leading to price hikes and challenges for families accessing essential medications. To mitigate this impact, Bangladesh must either negotiate an extension or enhance its capacity to produce advanced pharmaceuticals, safeguarding public health.
Beyond these economic implications, the readiness of Bangladesh’s institutions is a pressing concern. Fragmented policymaking, lack of centralized debt data, and political interference often impede reform efforts. To thrive post-graduation, Bangladesh’s institutions must enhance efficiency, enforce contracts rigorously, digitize customs operations, and facilitate workforce upskilling to transition into higher-value industries.
Finance Adviser Salehuddin Ahmed underscored the urgency of the situation, emphasizing the need for Bangladesh to keep pace with other progressive nations. While Bangladesh stands at a pivotal juncture, it can draw lessons from countries like Botswana and Mauritius that leveraged strong institutions and diversified economies for sustained growth. Conversely, the vulnerabilities faced by the Maldives and Sri Lanka highlight the perils of inadequate reform and financial mismanagement.
Bangladesh has a choice in charting its post-graduation trajectory. By prioritizing strategic trade negotiations, establishing a sovereign stabilization fund, and enhancing governance structures, Bangladesh can transform this milestone into a stepping stone towards sustained prosperity. Resilience has been a hallmark of Bangladesh’s journey, but to secure a prosperous future, the nation must embrace new industries, fortify institutions, and adopt prudent governance practices. Only then can graduation signify not just an achievement but the beginning of a new chapter, where Bangladesh competes confidently on the global stage.