Bangladesh Urged to Continue LDC Graduation Preparation Despite Potential Three-Year Deferral

Dhaka, July 31, 2026 — Bangladesh should continue preparing for graduation from the group of Least Developed Countries (LDCs), even if the transition is deferred by a few years, as postponement should not distract from the reforms needed to ensure a smooth and sustainable graduation. 🌏 This was the key message delivered by Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), at an event organised by the Institute of Cost and Management Accountants of Bangladesh (ICMAB) in Dhaka on Wednesday. 📊

🏛️ The CPD economist emphasised that the deferment of graduation should not be seen as a diversion from what needs to be done, nor should it serve as an excuse for failing to take the necessary steps to ensure Bangladesh's smooth and sustainable LDC graduation. His warning comes as the UN General Assembly (UNGA) is scheduled to decide on Bangladesh's request to defer its graduation in September 2026. 📅

⚖️ UNGA Decision and Diplomatic Requirements

📋 The approval of Bangladesh's request to extend the preparatory period by three years will require the support of a majority of member states — specifically 50 percent plus one of the UNGA membership. Key facts about the deferral process:

• 📅 UNGA decision — scheduled for September 2026
• 📊 Vote required — majority of member states (50% + 1)
• 🇳🇵 Nepal — has also submitted a similar deferral request
• 🤝 Diplomatic outreach needed — particularly with traditional development partners

🌐 Mustafizur Rahman stressed that Bangladesh will need to pursue proactive diplomacy to secure support at the UNGA, particularly from its traditional development partners, including:

• 🇪🇺 European Union (EU) — Bangladesh's largest export market
• 🇨🇦 Canada — key development partner
• 🇦🇺 Australia — Indo-Pacific partner
• 🇬🇧 United Kingdom — historical trade partner
• 🇯🇵 Japan — major investor and ODA provider
• 🇨🇳 China — largest infrastructure partner
• 🇮🇳 India — regional neighbour and trade partner

📊 The Bangladesh government is also mobilising development partners based in the country so they can advocate Bangladesh's case in their respective capitals. 🤝

📊 UN Committee for Development Policy Assessment

🔍 At its meeting with Bangladesh government representatives in May 2026 and in its Crisis Assessment Report on Bangladesh, the UN Committee for Development Policy (CDP) made several key observations:

• ✅ Exceeded all thresholds — Bangladesh had exceeded all three graduation thresholds by a significant margin
• 📋 Justified reasons — Bangladesh had justified reasons to seek an extension
• 📈 Consistent with practice — the request for a three-year extension was consistent with the practice followed in all five previous extensions granted to graduating countries
• ⚠️ External shocks acknowledged — uncertainty arising from external shocks was recognised
• 🔄 Smooth Transition Strategy — time needed to adjust priorities under the STS was acknowledged

⚠️ However, the CDP also warned that prolonging Bangladesh's stay in the LDC category despite comfortably meeting the graduation criteria would delay the benefits of graduation. This creates a tension between the deferral request and the long-term economic benefits of graduating. 📊

🏛️ Government Perspective: Commerce Minister's Address

📋 During a panel discussion, Commerce Minister Khandakar Abdul Muktadir addressed the government's rationale for seeking deferment:

"The government had sought deferment to make the transition more sustainable. Inadequate preparation could lead to economic stagnation and setbacks."

💊 The minister highlighted several specific challenges and initiatives:

• 💊 Medicine prices — could rise after graduation because manufacturers would need to purchase patents for some drugs, making them less affordable for consumers
• ⛽ LNG storage — Bangladesh lacks LNG storage facilities, leaving industries vulnerable during global crises such as wars
• 💻 Digital business registration — government plans to introduce a portal that will reduce approval time for all required documents from 355 days to 14 days, expected to be completed this year

👔 Industry Concerns and Recommendations

🏭 Several industry leaders shared their perspectives during the panel discussion:

• 👕 Mahmud Hasan Khan, president of BGMEA — Bangladesh must secure a trade agreement with the EU to retain duty-free market access. Otherwise, exporters could lose competitiveness to India, which has already signed a free trade agreement with the bloc
• 📊 Md Abdur Rahman Khan, former chairman of NBR — Bangladesh would already have graduated had it not been for the fallout from Covid-19
• 🥤 Eleash Mridha, managing director of PRAN Group — urged the government to sign a trade agreement with the Association of Southeast Asian Nations (ASEAN) to expand access to Asian markets
• 💊 Md Nasser Shahrear Zahedee, chairman of Radiant Group — the pharmaceutical sector should not worry about LDC graduation, as local companies could partner with foreign firms to benefit from patent protection after graduation

🔮 Strategic Context and Next Steps

📈 Bangladesh's LDC graduation has significant implications for the country's export economy:

• 📉 Loss of duty-free access — Bangladesh will lose preferential market access to certain developed markets after graduation
• 🤝 Trade agreements needed — must negotiate bilateral and regional trade pacts to maintain export competitiveness
• 💊 Pharmaceutical patents — drug prices could rise as TRIPS flexibilities end
• 📊 Economic diversification — need to diversify exports beyond RMG to reduce vulnerability
• 🏛️ Institutional reform — digital registration and regulatory simplification are critical

🌐 The CPD economist's message is clear: deferral is not a substitute for preparation. Bangladesh must use the additional time — if granted — to implement the structural reforms, trade agreements, and institutional improvements needed for a successful and sustainable graduation. The upcoming UNGA decision in September 2026 will be a critical milestone, but the work of preparation must continue regardless of the outcome. 🎯