As expected, the United Nations Committee for Development Policy (UN CDP) early Saturday recommended that Bangladesh be taken out of the list of the least developed countries (LDCs) in 2026. When it is done, Bangladesh will be regarded as a developing country.
It's a great achievement on the part of a country that was branded as a 'basket case' by former US secretary of state Henry Kissinger in 1974.
The UN CDP while assessing the economy of Bangladesh during its second triennial review held earlier had found that the country met all the criteria necessary for LDC graduation.
The country's GNI (gross national income) was well ahead of the requirement. The per capita income was $1827 in 2020 against the threshold of $1230. In the case of Human Assets Index, its score was also far ahead of the requirement. In the Economic Vulnerability Index, its score was comfortably below the red mark.
Every citizen is elated by the country's accomplishment. But the news about its LDC graduation has also given rise to a mixed feeling among people who are aware of the challenges that the country would be facing in the post-graduation period.
The graduation was supposed to take place in 2024. Though there were a few worrying faces even at the policymakers' level about meeting the challenges that would come in the way after LDC graduation, most people within the government wanted the graduation to happen. But the Covid-19 pandemic did upset everything. The havoc that the virus wreaked across the world soured everybody's mood. All concerned knew that it would be an uphill task to meet the challenges even with the best of efforts. That is why the government decided to buy some more time and request the relevant UN body to defer the graduation by a couple of years.
The question that is often asked by many is: Will it be possible for Bangladesh to meet all the post-graduation challenges?
Prime Minister Sheikh Hasina while speaking at a press conference held Saturday had rightly said, "Today's Bangladesh is a changed Bangladesh'. The country has made remarkable progress in areas of economy and human development. But the reality is that there are also many weaknesses.
As a least developed country, Bangladesh used to enjoy many concessions and privileges. Those have helped the country, to a great extent, to reach where it is now. Giving them up will be a tough ask since the country is still ill-prepared to meet many challenges.
For instance, after graduation, soft loan windows of the multilateral donors would be closed down permanently. The major setback would come in areas of export. The duty and quota-free facility it now enjoys as an LDC would largely be withdrawn by the importing countries. Under the circumstances, the country will have to opt for bilateral free trade deals to keep the export momentum going. That will also have downside risks of losing sizeable import revenue and influx of cheap imports.
Overall, Bangladesh industries are not yet ready to cope with LDC graduation challenges. One may cite the example of the pashing out of the MFA (multifibre arrangement) that used to govern the global textile and garment trade during the period between 1974 and 1994. Soothsayers had predicted doomsday for Bangladesh RMG industry in the post-MFA days. But they were proved wrong as Bangladesh RMG gained strength and emerged as the second largest exporter in the global market, after China.
One has to keep in mind the fact that the LDC status has done all the tricks in the country's bid to emerge as a major player here.
Moreover, RMG was a single area. Following its graduation as a developing country, it will have to deal with many such areas. The worry is whether the relevant state entities have, in the meanwhile, made sufficient preparations to deal with the post-graduation issues a few of which might prove very tricky ones.
Still, the country, for long, has been aspiring for graduation. The exit from the LDC club does bring global recognition for developmental achievements. In the global financial market, the country is likely to enjoy a higher credit rating, leading to reduced costs for international borrowing. The possibility of attracting more foreign investment will also be there since prospective investors are expected to have greater confidence in the economic stability of the country.
The formal graduation is five years away. By the year 2026, all concerned in both private and public sectors will have to make necessary preparations to face the post-graduation challenges. Any failure on this account might prove very costly and the private sector will also have to count a part of it.
It is beyond doubt that the way things are moving now is not enough to meet the upcoming challenges. Unfortunately, a section of people is failing to comprehend the nature of the challenges. The government, as suggested by many economists, should formulate a transition strategy to help make better preparations to deal with the challenges.
