Dhaka seeks diplomats' backing for 3-year LDC graduation extension, unveils reform roadmap

Highlights:

• Bangladesh seeks 3-year LDC graduation extension for a smooth transition.
• Govt says extension is for preparedness, not delay.
• UNCDP backs request, final decision awaits UN bodies.
• 25 reform agenda launched to strengthen the economy.
• Business startup time to be cut from one year to 14 days.
• EU urges Bangladesh to maintain reform momentum.
• Export diversification, financial reforms stressed for LDC graduation.
• Govt cites global economic challenges behind extension request.

Bangladesh today (2 July) unveiled a time-bound reform roadmap as it appealed to foreign diplomats and development partners to support its request for a three-year extension of the preparatory period for graduation from the UN's Least Developed Country (LDC) category.

Speaking at a seminar titled "Bangladesh's Preparedness for LDC Graduation and the Rationale for Extension of the Preparatory Period", Commerce Minister Khandakar Abdul Muktadir said, "We are not seeking additional time to postpone graduation. Rather, we seek the necessary time to complete critical reforms and ensure a stable and effective economic transformation."

The seminar, jointly organised by the Economic Relations Division (ERD), the commerce and foreign affairs ministries, brought together ambassadors, high commissioners, development partners, private-sector representatives, think tanks and senior government officials ahead of a key vote at the United Nations Economic and Social Council (Ecosoc) on 22 July.

If Ecosoc endorses Bangladesh's request, the recommendation will be forwarded to the UN General Assembly for final approval at its September session.

Govt pitches reform agenda

The government used the seminar to present a time-bound reform roadmap for the proposed extension period, arguing that Bangladesh's graduation preparations had been disrupted by a combination of global and domestic shocks despite the country comfortably meeting all three LDC graduation criteria.

Muktadir said the government had adopted a reform agenda covering 25 priority areas, including macroeconomic stabilisation, trade and investment reforms, deregulation, competitiveness, institutional strengthening and human capital development.

He said the government was also working to reduce the time required to start a business from one year to just 14 days, allowing companies to open letters of credit (LCs) to import machinery on the 15th day.

He added that authorities were simplifying business registration and licensing procedures to reduce both the time and cost of doing business. Although the current government assumed office only four months ago, it had already launched several key reform initiatives, the minister said.

Presenting the keynote paper, ERD Secretary Md Shahriar Kader Siddiky outlined Bangladesh's economic, fiscal, structural and external vulnerabilities and presented a phased roadmap for utilising the proposed three-year extension.

The reform agenda prioritises financial sector restructuring and stronger macro-prudential regulation to safeguard economic stability, alongside measures to boost domestic resource mobilisation by broadening the fiscal base and improving revenue collection.

The government also plans to modernise public financial management through greater transparency and accountability, while pursuing deregulation to improve the ease of doing business. Trade facilitation will focus on automated logistics, better port efficiency and export competitiveness, supported by accelerated digital transformation.

Other priorities include structural reforms in the energy and power sectors, human capital development through skills training and workforce mapping, and advancing Free Trade Agreement (FTA) and Comprehensive Economic Partnership Agreement (Cepa) negotiations to expand market access.

The government also aims to strengthen the implementation of the Smooth Transition Strategy (STS) through enhanced coordination, execution and monitoring.

The government said these reforms would be implemented under a broader "3R Strategy" – Recovery, Restoration and Reconstruction – supported by strengthened coordination through the National Graduation Monitoring and Coordination Committee and a public-private task force.

Why Bangladesh wants more time

Bangladesh formally requested the United Nations Committee for Development Policy (CDP) on 18 February to extend its preparatory period by three years until 24 November 2029. Prime Minister Tarique Rahman later wrote to the UN secretary-general on 6 April in support of the request.

On 2 June, the CDP recommended granting Bangladesh a "shorter extension", although it did not specify a timeframe.

The government argues that while Bangladesh comfortably exceeds the thresholds under all three graduation criteria, the preparatory period was largely consumed by crisis management following the Covid-19 pandemic, the Russia-Ukraine war, conflicts in the Middle East, disruptions to global food and energy markets, tighter financial conditions and slowing global trade.

It also cited domestic challenges, including financial sector irregularities, the political transition following the July 2024 mass uprising and the continued fiscal burden of hosting forcibly displaced Rohingya people from Myanmar.

According to the government, these factors contributed to slower GDP growth, persistent inflation, weaker investment, pressure on foreign exchange reserves, slower industrial imports and governance challenges in the financial sector, limiting implementation of the Smooth Transition Strategy.

The government has also warned that uncertainty surrounding the post-LDC trade regime – including possible changes to the European Union's GSP+ preferences, potential US tariffs and evolving global trade rules – could undermine export competitiveness if Bangladesh graduates without adequate preparation.

Diplomats stress reform momentum

State Minister for Planning Zonayed Saki said the government was working to restore macroeconomic stability and rebuild institutions, adding that continued support from development partners would be critical during the extended preparatory period.

European Union Ambassador Michael Miller said Bangladesh should not lose momentum in implementing reforms despite seeking an extension. He added that while the EU was exploring deeper trade relations with Bangladesh, any future arrangement would require greater market openness and a level playing field.

Representatives of diplomatic missions, development partners and the private sector underscored the importance of export diversification, financial sector reforms, expanding the tax base and improving the business environment to support Bangladesh's transition from LDC status.

According to the organisers, members of the diplomatic community also expressed continued support for Bangladesh's request for additional preparatory time.