Bangladesh must undertake substantial economic and institutional reforms during the next three years to ensure a smooth, sustainable and irreversible graduation from the Least Developed Country (LDC) category, experts said today, says BSS report.
They stressed the need for strong political ownership, effective implementation of the Smooth Transition Strategy (STS), export diversification, banking sector reforms, revenue mobilisation and improved competitiveness to prepare the country for graduation by November 24, 2029.
The observations came at a media dialogue titled “Bangladesh’s LDC Graduation: The UNGA Decision and Our Observations” organised by the Centre for Policy Dialogue (CPD) at its office in the city.
CPD Distinguished Fellow Dr Debapriya Bhattacharya presented the keynote paper, while CPD Executive Director Dr Nazneen Ahmed chaired the session.
CPD Distinguished Fellow Professor Mustafizur Rahman and CPD Additional Director Towfiqul Islam Khan also attended the event.
In his presentation, Dr Debapriya said the United Nations General Assembly’s decision to extend Bangladesh’s LDC preparatory period by three years on an exceptional basis had provided the country with an important opportunity to address its structural economic weaknesses.
However, he cautioned that the decision should not be viewed as a relaxation of reform requirements, noting that the UN Committee for Development Policy (CDP) would not support any further extension.
He said the UN recognised the complexity of Bangladesh’s recent political transition and its impact on the government’s capacity to respond to economic and external challenges.
The extension, however, carries a clear expectation of significant progress in domestic reforms, he added.
According to the presentation, Bangladesh had fulfilled all three LDC graduation criteria in 2024 by considerable margins, including gross national income per capita, the Human Assets Index and the Economic Vulnerability Index.
“The question is no longer eligibility but preparedness,” the presentation observed.
Dr Debapriya said Bangladesh now needed to focus on four major reform areas: public financial management, energy, social protection and logistics.
These reforms should help promote export diversification beyond the ready-made garment (RMG) sector, increase productivity and strengthen the country’s overall competitiveness.
Highlighting the challenges, he pointed out that the country’s tax revenue-to-GDP ratio stood at only 6.9 percent in FY2025-26, while non-performing loans accounted for 32.8 percent of total outstanding loans as of June 2026.
Private investment accounted for 21.5 percent of GDP, while the RMG sector contributed 80.6 percent of total exports, reflecting the country’s continued dependence on a single export sector.
He said these indicators underscored the urgency of banking sector restructuring, revenue mobilisation, investment promotion and product diversification.
The CPD fellow recommended transferring coordination of the Smooth Transition Strategy from the Economic Relations Division (ERD) to the Prime Minister’s Office, arguing that the reform agenda required stronger political leadership and a whole-of-government approach.
He also called for placing the STS and the 2026-2029 graduation roadmap before Parliament, engaging lawmakers and establishing a publicly accessible dashboard to monitor progress against annual targets.
The government should also publish its three-year action plan with clear milestones, responsible agencies and accountability mechanisms, he said.
Dr Debapriya further stressed the need to identify and gradually phase out LDC-specific support measures, including export cash incentives, before the country’s graduation.
He said Bangladesh had been relatively successful in preparing policy documents and commitments but had remained weaker in implementing them effectively.
Presenting a separate assessment titled “Tracking LDC Graduation Readiness through Bangladesh Reform Tracker”, Towfiqul Islam Khan said the organisation was currently monitoring 23 reform proposals related to Bangladesh’s LDC graduation.
Of these, six remained at the proposal stage, nine had been initiated, two had reached the legal and policy measures stage and six were at the operationalisation stage. None had reached the action implementation stage, according to the tracker.
The assessment covered four broad areas: trade preferences, export diversification and competitiveness, productive capacity, and partnerships and international cooperation.
It identified several outstanding challenges, including securing preferential market access after graduation, implementing trade agreements, improving labour standards, strengthening logistics infrastructure and ensuring effective operation of industrial facilities.
The report also highlighted the need to expedite negotiations and implementation of trade arrangements with major partners, including the European Union, Japan, South Korea, India and China, alongside Bangladesh’s efforts to join the Regional Comprehensive Economic Partnership (RCEP).
Although Bangladesh has made progress in pursuing trade agreements, several initiatives remain at preliminary stages or await completion of domestic legal procedures.
The Bangladesh-Japan Economic Partnership Agreement, signed on February 6, 2026, is yet to enter into force, while the country’s efforts to secure favourable access to the EU market after graduation require further negotiations and effective implementation of relevant international conventions.
The assessment also raised concerns over weaknesses in export diversification, particularly the slow progress in developing man-made fibre-based apparel, improving the leather sector and making the Active Pharmaceutical Ingredients (API) Industrial Park fully operational.
It stressed that Bangladesh needs to address infrastructure, energy supply, financing and regulatory bottlenecks to strengthen productive capacity and attract investment.
The CPD experts called for stronger coordination among government agencies, the private sector, development partners and other stakeholders to translate reform commitments into measurable results before November 2029.
They said the next three years would be critical for Bangladesh to strengthen its economic resilience and ensure that LDC graduation does not undermine its export competitiveness, investment prospects and development gains.