How realistic is the postponement of LDC graduation?

Business leaders have raised the demand for postponing Bangladesh’s scheduled graduation from the list of Least Developed Countries (LDCs). They argue that graduating at this moment may have adverse impacts on the export sector as well as on several other areas. This demand was recently voiced by leading businesspersons at a seminar.

Following this, the issue of LDC graduation has resurfaced in public discussion. Questions have arisen regarding how logical and realistic it would be to postpone the graduation timeline. What valid grounds does the Government have to request an extension and is it possible for the Government to unilaterally delay the process? Since, the advisory council of the interim government decided in March that Bangladesh would graduate from LDC status in 2026.

After an eight-year process of evaluation and multiple reviews, the United Nations decided that Bangladesh will exit LDC status on 24 November 2026. This means that Bangladesh has just over 15 months before graduation. At this stage, demands have emerged to postpone the timeline.

However, Anisuzzaman Chowdhury, special assistant (Ministry of Finance) to the chief adviser, told Prothom Alo yesterday that graduation will take place within the stipulated timeframe. He stated, "Graduation will occur on schedule. We have held multiple meetings with business leaders and visited many factories. They often say one thing in meetings but another outside."

"Now the question is, if graduation is postponed by three years and an elected government assumes office, will the problems of electricity shortages and traffic congestion be resolved by then? Global politics is currently very unstable—we must work keeping this in mind," he added.

Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue (CPD), has long served as a member of the UN Economic and Social Council’s (ECOSOC) Committee for Development Policy (CDP).

Being closely involved in Bangladesh’s LDC graduation process, he commented to Prothom Alo, "Bangladesh must have valid grounds to request a deferral of graduation. Citing lack of preparedness after being given eight years will not suffice."

"Recently, at a seminar, one expert did not provide accurate information on why Angola and Myanmar’s graduation was deferred. The reality is that Angola’s socio-economic indicators declined due to a fall in oil prices. In Myanmar’s case, the CDP itself postponed the decision, as a military coup occurred just two weeks before the scheduled graduation," he added.

According to Debapriya Bhattacharya, Bangladesh should now concentrate entirely on a Smooth Transition Strategy (STS). To this end, industrial producers, the pharmaceutical sector, and agricultural entrepreneurs must be actively engaged. He identified three areas that require particular attention, 1. Diversification of the economy; 2.Enhancement of labour capacity and productivity; 3. Strengthening of institutional capacity.

Bangladesh entered the process of graduating from Least Developed Country (LDC) status in 2018. Ordinarily, this process is completed within six years. However, owing to the impact of COVID-19, Bangladesh, along with other countries, was granted an additional two years.

On 13 March, the Advisory Council of the interim Government decided that Bangladesh would graduate from LDC status in 2026 as scheduled. A committee was also formed to oversee the process. Therefore, to postpone graduation, this decision of the Advisory Council would first need to be revised.

There are two recognised procedures through which a request for postponement can be made. The first is for the Head of Government to write directly to the Chair of the Committee for Development Policy (CDP) of the UN Economic and Social Council (ECOSOC).

In such a letter, Bangladesh would be required to present compelling justifications—namely that certain unforeseen and extraordinary circumstances had caused the country’s economic and social indicators to deteriorate beyond its control, leaving postponement as the only viable option.

Upon receipt of such a request, the CDP would undertake an evaluation and the decision on deferral would be based on the outcome of that assessment. The second option would be for Bangladesh to appeal directly to the United Nations General Assembly.

In that case, the decision would rest with the General Assembly itself. To succeed, Bangladesh would require the support of influential Member States, alongside a substantiated justification for deferment.

In August of last year, a change of political circumstances occurred in Bangladesh through a mass uprising. Since then, certain economic reforms have been implemented. Over the past year, GDP growth has been recorded, exports and remittance inflows have increased and reforms in the banking sector have had positive effects. Inflation has also declined.

According to policymakers, the economy is now in a stronger position than before. This raises a critical question on what grounds would Bangladesh justify a request to defer LDC graduation. Despite progress, weaknesses remain in several areas, including skilled labour, economic and social reforms, revenue mobilisation and the investment climate.

The Solomon Islands successfully applied for a deferral of its graduation LDC status. In 2023, the Government of the Solomon Islands submitted a request to the CDP, citing civil conflict and natural disasters as the principal reasons. Following its evaluation, the CDP granted the country an extension of three years.

Several years earlier, Angola, an African nation, also sought to postpone its graduation. As all preparatory processes had already been completed, Angola submitted its request directly to the United Nations General Assembly.

The country argued that a sharp decline in global oil prices had severely undermined its economic and social indicators. With the diplomatic support of Portugal, Angola succeeded in securing additional time through the General Assembly.

Myanmar, by contrast, had itself expressed a willingness to graduate from LDC status. However, neither the CDP nor the United Nations approved this, as a military coup took place only two weeks prior to the review of the country’s progress. The resulting political instability led the CDP to defer Myanmar’s graduation until 2027.

In addition, the Maldives’ graduation was delayed due to the impact of a tsunami, while Nepal’s was postponed following a devastating earthquake.

The CDP makes recommendations regarding which countries are to graduate from LDC status. For this purpose, a triennial review of all LDCs is conducted. Eligibility for graduation is assessed on the basis of three criteria: per capita income, human assets and vulnerability to climate and economic shocks.

To qualify, a country must meet the threshold in at least two of these three criteria, or alternatively, must achieve a per capita income double the specified graduation threshold. These benchmarks are periodically revised over time.

Bangladesh met the criteria in all three indicators in both the 2018 and 2021 triennial reviews. In 2021, the country received the final recommendation to graduate from LDC status in 2024.

However, in light of the COVID-19 pandemic, the preparatory period was extended by two years. Bangladesh, which was included in the LDC category in 1975, has since benefited from various international support measures, including duty-free market access for exports.

At present, there are 44 LDCs in the world. LDCs are also a category of developing countries, but those with relatively weaker capacities are placed on this list. Over the next five years, six countries are expected to graduate from LDC status. Alongside Bangladesh, both Laos and Nepal are scheduled to graduate in 2026.

The first list of LDCs was prepared in 1971. In the last five decades, a total of eight countries have successfully graduated from LDC status. These are Bhutan, Botswana, Cape Verde, Equatorial Guinea, the Maldives, Samoa, Vanuatu and São Tomé and Príncipe.