The United Nations Committee for Development Policy (UN CDP) deliberated on Bangladesh’s appeal to postpone its exit from the least developed country (LDC) group by three years during its recent plenary session in New York. The 28th committee session, which commenced on February 23 at the UN headquarters, concluded yesterday.
Debapriya Bhattacharya, a member of the UN CDP and its Enhanced Monitoring Mechanism, confirmed the receipt of Bangladesh’s deferment request and its discussion during the plenary session. A comprehensive report assessing the government’s justifications will be drafted by the committee, outlining the evaluation process for the plea, with a decision expected in the coming weeks.
Subsequently, the recommendation will be passed on to the United Nations Economic and Social Council (ECOSOC) and then to the UN General Assembly for final deliberation. The evaluation will scrutinize if Bangladesh is encountering a crisis from unforeseen and uncontrollable factors that could warrant a deferment, as per Debapriya.
Regarding the likelihood of the CDP approving Bangladesh’s request for deferment, Debapriya mentioned that a conclusive stance can only be taken after the application review process concludes. While Bangladesh, Nepal, and Lao PDR are slated to graduate by November 2026, Bangladesh is the sole country that has officially sought a three-year extension.
In a communication to CDP Chairperson José Antonio Ocampo, Economic Relations Division Secretary Md Shahriar Quader Siddiqui emphasized that the five-year preparatory phase had been significantly disrupted by concurrent global and domestic crises. The government highlighted the lingering impacts of the Covid-19 pandemic, the Russia-Ukraine conflict affecting global energy and food markets, financial constraints, trade sluggishness, Middle East instability, and global trade regime uncertainties.
Domestically, factors such as financial sector irregularities, political turmoil in July 2024 leading to a change in government, and the ongoing Rohingya repatriation burden necessitating substantial fiscal backing were mentioned. These circumstances have contributed to macroeconomic instability, reduced GDP growth, heightened inflation, decreased investments, pressure on foreign reserves, declining tax-to-GDP ratio, reduced capital imports, limited job creation, and setbacks in poverty alleviation.
The government also highlighted governance challenges in the banking and capital market sectors. Extending the timeline until 2029, as per the government’s proposal, would offer vital policy leeway to stabilize the macroeconomy, cement reforms, and accomplish priority tasks under the Smooth Transition Strategy for LDC graduation.
Originally slated for graduation in November 2024, Bangladesh received a two-year extension until November 2026 due to the severe repercussions of Covid-19, after meeting the graduation criteria in consecutive triennial reviews. Business leaders have consistently advocated for deferment, citing the lingering effects of the pandemic, global inflation, high interest rates, currency volatility, and geopolitical disturbances.
Concerns have been raised by business circles and certain economists regarding the country’s readiness to handle graduation challenges, including the discontinuation of preferential trade facilities by developed nations, notably the European Union, a significant market for Bangladesh’s primary export, garments.
Forecasts indicate that post-graduation, Bangladesh could face a loss of approximately 14 percent of its exports, equivalent to around $8 billion annually, as preferential trade benefits expire. Additionally, exporters could forfeit nearly $1 billion in government incentives each year.
Despite previous cabinet decisions to graduate on schedule, the newly established BNP-led government has formally requested an extension, underlining the necessity for a seamless transition to uphold economic stability and competitiveness.