Structural weaknesses raise LDC concerns
As Bangladesh approaches its scheduled graduation from Least Developed Country (LDC) status on 24 November 2026, a new United Nations assessment has highlighted significant structural risks that could complicate a smooth transition, despite the country meeting the formal eligibility criteria.
The Graduation Readiness Assessment, conducted by the UN Office of the High Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), noted that Bangladesh has surpassed the required thresholds for GNI per capita, Human Assets Index (HAI) and Economic and Environmental Vulnerability Index (EVI). However, it cautioned that substantial gaps remain in overall preparedness.
The report was presented by Dr Daniel Gay and Dr Mohammad Abdur Razzaque at the NEC Conference Room in Sher-e-Banglanagar on Sunday (5 April) during a national multi-stakeholder consultation.
One of the most pressing concerns is continued access to the European Union market, which accounts for about 44 per cent of Bangladesh’s exports, largely driven by the ready-made garment sector.
The assessment noted that even if Bangladesh qualifies for GSP+ after graduation, safeguard measures could impose tariffs averaging around 12 per cent on apparel exports, potentially weakening competitiveness against countries such as Vietnam and India that enjoy duty-free access.
The report also highlighted growing vulnerabilities in the banking sector, with non-performing loans reaching around 35 per cent of total credit by September 2025, among the highest globally.
This situation could limit the financial sector’s capacity to support investment during the transition period.
Fiscal pressures are also intensifying. Government revenue has declined to about 6.8 per cent of GDP, while debt servicing accounts for roughly 31 per cent of total revenue.
The International Monetary Fund and the World Bank have already classified Bangladesh’s debt distress risk as moderate.
Structural competitiveness challenges remain a concern, with logistics costs estimated at around 16 per cent of GDP.
Port congestion, customs inefficiencies and energy shortages continue to raise production costs, while limited implementation capacity and weak coordination have slowed progress in executing the government’s transition strategy.
The assessment also pointed to rising social pressures. Inflation has pushed an estimated 9 million people into poverty, with the poverty rate rising to over 21 per cent in 2025. Employment has declined, particularly among women, indicating a fragile labour market.
Given these challenges, the UN Committee for Development Policy allows for deferral under exceptional circumstances. The report noted that Bangladesh has applied for a three-year extension to strengthen its preparedness and ensure a smoother transition.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury said Bangladesh’s LDC graduation is not yet fully within reach under current economic conditions, citing rising foreign debt, internal liabilities, high borrowing costs and weaknesses in financial management.
“The ongoing fuel crisis and disruptions in global supply chains could have long-term effects on Bangladesh’s economy, extending beyond the energy sector to food and other markets and adding to inflationary pressures,” he told reporters after the meeting.
He said the government is trying to avoid placing additional pressure on citizens but warned that continued financial strain could eventually affect the public.
The minister stressed the need for cautious economic decision-making, capacity building and effective policy implementation, adding that a possible three-year extension could provide time to strengthen key economic indicators and stabilise the economy.
The consultation was organised by the Economic Relations Division (ERD) with support from UN-OHRLLS and the Office of the UN Resident Coordinator in Bangladesh, with senior government officials and UN representatives in attendance.
