Staff Reporter :
As Bangladesh moves toward graduation from least-developed country (LDC) status, growing economic pressures—from rising debt to new US reciprocal tariffs—are complicating the transition.
Bangladesh’s GDP data for the first three quarters of FY25 indicate a gradual recovery from the mid-year slowdown caused by political instability.
However, the country’s latest submission to the UN Committee for Development Policy (CDP) highlights ongoing economic challenges.
Inflation remains persistently high, and unemployment among the educated workforce is rising, revealing deep mismatches between labour market needs and skills produced by the education system.
The report also underscores continued revenue shortfalls due to slow growth and weak investment. Measures equivalent to 0.5 percent of GDP will be required in the upcoming fiscal year to raise additional revenue. Meanwhile, the interim government has begun reviewing large infrastructure projects undertaken in previous years.
Although Bangladesh is still considered a “low-risk” country, the IMF has indicated that evolving domestic conditions could elevate the risk rating to “medium.” The report notes that Bangladesh will be able to meet external debt obligations even during the expected repayment peak in FY27. Nevertheless, it cautions that the country is entering a new phase of debt management as access to long-term concessional loans diminishes.
The banking sector remains fragile due to accumulated non-performing loans (NPLs) from previous years. While reforms—such as restructuring bank boards, passing a resolution ordinance, and merging five Shariah-based banks—have been initiated, NPLs continue to expose governance and credit risks.
Energy shortages, heavy reliance on imported fuel, and limited investment in renewable energy are further constraining domestic industries. Additionally, US reciprocal tariffs are expected to impact global trade and Bangladesh’s competitiveness in its largest export market. Although lower rates have been negotiated, export declines to both the US and EU were recorded in August and September, with the report warning that tariffs may hinder a smooth graduation.
Senior Secretary of the Economic Relations Division, Anisuzzaman, said the government is implementing reforms at ports, the National Board of Revenue, and the business environment in preparation for graduation.
He noted that any postponement would stall these reforms, emphasizing that Bangladesh’s submission to the UN-CDP is part of the regular process.
Bangladesh is following a Smooth Transition Strategy (STS), overseen by a high-level expert committee, which monitors preparation activities at the highest level.
Professor Mustafizur Rahman, distinguished fellow at CPD, said the government’s report is reasonable and confirms that Bangladesh meets the three criteria for graduation.
However, he cautioned that challenges remain in implementing the 157 action points under the STS.
Political uncertainty, the previous year’s mass uprising, falling investment, high inflation, and pending post-graduation TRIPS waivers from the WTO all pose risks.
He added that even if Bangladesh applies for a postponement, preparations must continue.
The UN General Assembly will ultimately decide on any delay, based on the CDP’s recommendations expected in February, coinciding with national elections.
