Bangladesh Prepares For LDC Graduation By 2026

Bangladesh is gearing up for a significant transition as it prepares to graduate from its status as a Least Developed Country (LDC) by 2026. An interim government has announced the formation of a high-level committee dedicated to overseeing this crucial process, which was revealed during a press conference held at the Foreign Service Academy in Bailey Road on April 15, 2025.

According to Anisuzzaman Chowdhury, special assistant to the chief advisor on finance, the committee will function as an independent body, akin to the Japan External Trade Organization (JETRO) and the United States Trade Representative (USTR). Its primary focus will be on the trade-related aspects of the LDC transition. Chowdhury stated, “The LDC aircraft is already in the air. We are reasonably satisfied it will keep flying, with little chance of crashing.”

The proposed committee will comprise not only government officials but also internationally recognized experts and representatives from the private sector. Chowdhury emphasized the importance of including stakeholders who may be affected by the graduation, noting, “If necessary, those at risk of being affected by the graduation will also be included.”

Bangladesh has been on the United Nations' list of LDCs since 1975 and met the eligibility criteria for graduation in 2018. The UN General Assembly recommended the graduation on November 25, 2021, officially setting November 24, 2026, as the exit date. However, this transition comes with significant challenges, as Bangladesh will lose its duty- and quota-free access to the European market and other LDC trade benefits after 2026.

In recent years, Bangladesh has faced numerous obstacles, including the COVID-19 pandemic, the war in Ukraine, political unrest, and an uprising that led to the previous government’s downfall. These issues have raised doubts about the country's ability to meet the 2026 deadline, prompting discussions about potentially requesting an extension. However, a meeting of the advisory council led by Chief Advisor Muhammad Yunus on March 14 reaffirmed the commitment to proceed without delay.

Chowdhury dismissed any suggestions to defer the graduation, calling them “absurd.” He pointed out that countries with even weaker economies have successfully graduated. “Many weaker countries have already graduated. Bhutan did so even after the pandemic. Why can’t we? There is no turning back for us,” he asserted.

Shafiqul Alam, press secretary to the chief advisor, echoed Chowdhury's sentiments, stating, “In today’s meeting, the chief advisor reiterated that the decision has already been made. Now we must move full speed ahead.” He further instructed officials to ensure that no sector suffers as a result of the graduation and emphasized the need to maximize the benefits of this transition.

As the country prepares for this significant change, Chowdhury highlighted the importance of economic independence. He remarked, “We must stand on our own feet. We have the strength. We are on track to becoming a middle-income country.” He criticized the current low tax-to-GDP ratio, which is stuck at 6-7%, compared to Vietnam’s 19%, Bhutan’s 11-13%, and Cambodia’s 15%. He stated, “If we can raise our tax-GDP ratio, we will not need foreign aid.”

Chowdhury acknowledged existing weaknesses in institutional capacity, particularly the lack of a dedicated trade organization. To address this, he mentioned the creation of a separate cell focused solely on trade, aiming to establish a robust trade negotiation body. He emphasized that this new structure is essential for navigating the complexities of the upcoming transition.

While discussing foreign aid, Chowdhury remarked, “Foreign aid is not a major issue. It is a colonial dependency.” He noted that the proportion of aid to Bangladesh’s GDP has significantly decreased, indicating a shift towards self-reliance. “Since 2010, under the previous government, aid dependence has increased, and as a result, our tax-to-GDP ratio dropped from 10% to 6%,” he explained.

In preparation for the graduation, Chowdhury stated that the government has reviewed its strengths and identified areas needing improvement. He expressed confidence in the country’s readiness, saying, “Our ‘plane’ is ready for takeoff—there’s no risk of a crash.” He also mentioned that the high-level committee will continuously monitor the situation, ensuring that all necessary precautions are taken prior to the transition.

As the government moves forward, it is also addressing the upcoming national elections. Chowdhury indicated that if minimal reforms are agreed upon, polls could be held by December 2025. However, if broader reforms are needed, the election may take place by June 2026. Shafiqul noted, “The final decision on whether we pursue limited or extensive reforms will come out of that dialogue,” referring to ongoing discussions between the National Consensus Commission and political parties.

The government’s approach to the LDC graduation is characterized by a proactive stance, aiming to ensure that the transition is not just a formality but a significant step towards greater economic independence and resilience. As Bangladesh prepares to leave the LDC category, the focus remains on maximizing the benefits of this transition while addressing potential challenges.