CPD seeks stronger political ownership

Bangladesh must use the three-year extension of its preparatory period for graduation from the Least Developed Country (LDC) category to safeguard its economic interests, protect export competitiveness and secure sustainable development gains, the Centre for Policy Dialogue (CPD) has said.

The think-tank stressed that the country needs substantial economic and institutional reforms before its scheduled graduation on November 24, 2029, warning that the extension should not be treated as an opportunity to delay difficult decisions.

Strong political ownership, effective implementation of the Smooth Transition Strategy (STS), export diversification, banking sector reforms, greater revenue mobilisation and improved competitiveness are essential to ensure a smooth, sustainable and irreversible transition, CPD experts said.

They made the observations at a media dialogue titled “Bangladesh’s LDC Graduation: The UNGA Decision and Our Observations”, organised by the CPD at its office in the capital.

CPD Distinguished Fellow Dr Debapriya Bhattacharya presented the keynote paper, while its Executive Director Dr Nazneen Ahmed chaired the session. CPD Distinguished Fellow Professor Mustafizur Rahman and Additional Director Towfiqul Islam Khan also attended.

In his presentation, Dr Debapriya said the United Nations General Assembly’s decision to grant Bangladesh an exceptional three-year extension of its LDC preparatory period had created an important opportunity to address long-standing structural weaknesses in the economy.

However, he cautioned that the decision should not be interpreted as a relaxation of the country’s reform obligations. The UN Committee for Development Policy (CDP), he said, would not support any further extension.

He noted that the United Nations had recognised the complexities of Bangladesh’s recent political transition and its implications for the government’s ability to respond to economic and external challenges.

The extension, however, came with a clear expectation that the country would make significant progress in domestic reforms.

Bangladesh had met 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, according to the presentation.

“The question is no longer eligibility but preparedness,” it observed.
Dr Debapriya identified four priority areas for reform: public financial management, energy, social protection and logistics.

Progress in these areas would be essential to diversify exports beyond the ready-made garment (RMG) sector, raise productivity and improve the country’s overall competitiveness.

Pointing to the scale of the challenges, he said tax revenue stood at just 6.9 per cent of GDP in FY2025-26, while non-performing loans accounted for 32.8 per cent of total outstanding loans as of June 2026.

Private investment represented 21.5 per cent of GDP, while the RMG sector contributed 80.6 per cent of total exports, highlighting the economy’s continued reliance on a narrow export base.

These figures underline the need for banking sector restructuring, stronger revenue mobilisation, increased private investment and wider product diversification, he said.

To strengthen political oversight and coordination, Dr Debapriya recommended transferring responsibility for coordinating the STS from the Economic Relations Division (ERD) to the Prime Minister’s Office.

He argued that the reform agenda required high-level political leadership and a coordinated, whole-of-government approach.

He also proposed placing the STS and the 2026-2029 graduation roadmap before Parliament to ensure greater engagement by lawmakers. A publicly accessible dashboard should be introduced to track progress against annual targets, he added.

The government should publish a three-year action plan setting out specific milestones, responsible agencies and accountability mechanisms, he said.

Dr Debapriya also called for identifying and gradually phasing out LDC-specific support measures, including export cash incentives, ahead of graduation.

He observed that Bangladesh had generally been successful in preparing policy documents and making commitments but had fallen short in translating them into effective implementation.

Presenting a separate assessment, titled “Tracking LDC Graduation Readiness through Bangladesh Reform Tracker”, Towfiqul Islam Khan said the CPD was monitoring 23 reform proposals linked to the country’s graduation preparations.

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 yet reached the action implementation stage, according to the tracker.

The assessment examined four broad areas: trade preferences; export diversification and competitiveness; productive capacity; and partnerships and international cooperation.

It identified several unresolved challenges, including securing preferential market access after graduation, implementing trade agreements, improving labour standards, upgrading logistics infrastructure and ensuring the effective operation of industrial facilities.

The assessment called for faster progress in negotiating and implementing trade arrangements with major partners, including the European Union, Japan, South Korea, India and China.

It also highlighted Bangladesh’s efforts to join the Regional Comprehensive Economic Partnership (RCEP).

Although the country had made progress in pursuing trade agreements, several initiatives remained at preliminary stages or were awaiting the completion of domestic legal procedures.

The Bangladesh-Japan Economic Partnership Agreement, signed on February 6, 2026, is yet to enter into force.

Meanwhile, securing favourable access to the EU market after graduation will require further negotiations and effective implementation of relevant international conventions.

The assessment also raised concerns about the slow pace of export diversification, particularly in developing man-made fibre-based apparel, improving the leather sector and making the Active Pharmaceutical Ingredients (API) Industrial Park fully operational.

Addressing infrastructure constraints, ensuring reliable energy supplies, easing financing difficulties and removing regulatory bottlenecks would be vital to strengthening productive capacity and attracting investment, it said.

The CPD experts called for stronger coordination among government agencies, the private sector, development partners and other stakeholders to turn reform commitments into measurable outcomes before November 2029.

They stressed that the next three years would be decisive in strengthening Bangladesh’s economic resilience and protecting its export competitiveness, investment prospects and development gains as it prepares to leave the LDC category.