The U.N. is expected to declare this month that Bangladesh has met three criteria for developing nation status and passed a first hurdle in trying to graduate from the category of least developed country (LDC) by 2024.
The United Nations Committee for Development Policy (CDP) will make the announcement that Bangladesh has satisfied the requirements for leaving the ranks of the world’s poorest countries during a meeting in New York from March 12 to 16, State Minister for Finance Abdul Mannan said.
“Bangladesh looks likely to be the first LDC ever to graduate on the basis of all three criteria,” Daniel Gay, the inter-regional adviser on LDCs, wrote on a U.N. website in October 2017.
Those criteria are: annual per capita income – or the average citizen’s yearly earnings – must be at least U.S. $1,242; the country has achieved certain targets in nutrition, health, school enrollment and literacy; and its economy must demonstrate resilience in the face of risks such as natural disasters and trade instability, as measured by an “economic vulnerability index.”
A country must exceed thresholds of two of the three criteria during consecutive three-year reviews to be considered for graduation from its standing as a least developed country. A mission by the CDP Secretariat to Dhaka in October confirmed that Bangladesh was likely to meet the criteria for graduation for the first time.
In 2021, the CDP will again review Bangladesh to determine whether it has maintained progress. If so, the country will then be moved from an LDC to the ranks of developing countries in 2024.
In July 2015, the World Bank announced that Bangladesh had become a lower-middle income country, meaning its per capita income was between U.S. $1,046 and $4,125 (86,850 and 342,500 taka). The finance ministry said the latest per capita income stood at $1,602 (133,000 taka), above the level required by the U.N.
As of December 2016, Bangladesh was one of 48 LDCs. Only four countries, Botswana in 1994, Cape Verde in 2007, Maldives in 2011 and Samoa in 2014, have graduated to developing country, according to a U.N. report.
In Dhaka earlier this week, Prime Minister Sheikh Hasina announced news of the expected U.N. action to members of parliament.
“The Father of the Nation led the country’s independence. He established Bangladesh as a least developed country. We are going to be upgraded one step,” said Hasina, the daughter of founding President Sheikh Mujibur Rahman. “We are going to be a developing country.”
Hasina’s Awami League party plans a mass rally on March 23 to celebrate the anticipated U.N. announcement. Hasina is expected highlight the country’s progress since Bangladesh was born in 1971 following a war of independence from Pakistan, in an address to the rally.
Bangladesh is due to hold its next general election in December 2018 or January 2019.
Bangladesh could lose benefits
The move up to developing country would have some drawbacks.
As a least developed country, Bangladesh enjoys duty-free market access to the European Union (EU), Canada, Australia and other countries. The country likely would be given a three-year grace period before losing this privilege.
The annual export to the EU market is about U.S. $20 billion (1.66 trillion taka), according to data from Bangladesh’s commerce ministry. About 90 percent of Bangladeshi export items are garments and knitwear products.
“Yes, we may face some trouble in retaining duty-free market access for our ready-made garments when we graduate to developing country,” Abdul Wadud, a businessman in the sector, told BenarNews. “But we are capable enough to meet the challenges in the international market.”
In addition, Bangladesh would pay higher interest on loans from international financial institutions such as the World Bank and Asian Development Bank, according to analysts.
As an LDC, Bangladesh gets loans at the rate of 0.75 percent per annum from the World Bank, the Asian Development Bank and others institutions.
“Even when we come out of the LDC status … I think our ready-made garment industry and knitwear sector will remain capable of competing with other countries,” Mannan, the state minister, said.
However, the country must change its thought process as the nation gets closer to reaching the economic milestone, according to Nazneen Ahmed, a senior research fellow of the Bangladesh Institute of Development Studies (BIDS).
“Our problem is we want the status of a developing country, but our businessmen want to retain the benefits of the LDC. If we want to be a developing country, we have to behave and think like a developing country,” she told BenarNews.