Is delaying LDC graduation feasible?

Recently, the Commerce Adviser rekindled concerns over Bangladesh's impending graduation from the Least Developed Country (LDC) category, painting it as a "ticking time bomb" and expressing frustration at the apparent lack of urgency.

Is this a simple case of one hand unaware of the other's actions? After all, back in mid-March, the Council of Advisers resolved not to pursue a deferral of graduation, with the Chief Adviser directing all relevant parties to begin preparing for the post-LDC reality in November 2026.

Bangladesh cannot, by its own accord, simply opt to remain within the LDC category. It does have recourse to request a deferral, provided certain criteria are met. The United Nations Committee for Development Policy (CDP) oversees this process, conducting triennial reviews where countries are assessed on Gross National Income (GNI) per capita, the Human Assets Index (HAI), and the Economic and Environmental Vulnerability Index (EVI). Bangladesh uniquely crossed each of these graduation thresholds in both the 2018 and 2021 reviews.

The precedents for postponement are few, invoked only under extraordinary circumstances. Nepal, for example, secured delays in response to shocks such as the 2015 earthquake and the global 2020 pandemic. Vanuatu's path was similarly altered by the devastation wrought by Cyclone Pam. Bangladesh received a two-year extension from 2024 to 2026 on the grounds of Covid-19. These exceptions were all a result of significant external shocks, not internal considerations.

Vulnerability to shocks

Events such as the July 2024 upheaval, subsequent transition dynamics disrupting security and mobility, floods, energy price volatilities and Trump Tariff are shocks whose combined effects could in theory carry the same weight in the decision to delay as a severe natural disaster or pandemic. The CDP may recommend delay if convinced that these disruptions have undermined progress towards sustainable development. Crafting such an argument credibly is challenging in light of official and business pronouncements on Bangladesh's development.

The Voluntary National Review, presented at the UN High-Level Political Forum (HLPF) in July 2025, underscored:

"Despite the setbacks caused by the Covid-19 pandemic, Bangladesh has made significant strides in eradicating extreme poverty, with the percentage of the population living below the World Bank's International Poverty Line of $2.15 per day dropping from 13.47% in 2016 to 5% in 2022.

"Noteworthy progress has been made in reducing maternal and child mortality over the past decade.

"Post-pandemic, steady economic growth has resumed, although productivity improvements and per capita income growth still fall short of targets.

"The share of manufacturing in GDP has increased from 20.35% in 2016 to 23.82% in 2024, with corresponding growth in manufacturing value added per capita."

These achievements do not suggest Bangladesh faces imminent collapse should LDC-related benefits be withdrawn. Global and internal shocks come with covariate risks and opportunities. If loss of competitiveness in manufacturing is one of major concerns, why four years is not enough to invest in productivity to maintain competitiveness despite MFN tariffs post "smooth" transition? As the country reinvents political settlement post elections in February 2026, will Bangladesh not be perfectly poised to implement productivity increasing structural reforms?

Postponing graduation from LDC status may grant domestic industries time to adjust and recalibrate amid ongoing global uncertainties. Yet, such a deferment risks impeding the momentum necessary for transformative economic reforms and the diversification that is expected to accompany such reforms. Why not focus there?

Any appeal for postponement must be cast as a judicious act – one that places Bangladesh's stability and deliberate advancement at the forefront, distinguishing it from a retreat from development. Achieving this requires recalibrating the dominant narrative surrounding the nation's economic trajectory, both domestically and in the global arena – a narrative shaped by official statistics whose reliability can range from solid to suspect.

Credibility of the data

Could it be that the data is so deeply flawed that the entire development community got the narrative wrong in the run up to Bangladesh's LDC graduation? Robust, verifiable evidence that fabrication or deliberate misreporting occurred to an extent that change the narrative could buttress the case for delay.

Framing the delay as a necessary response to genuine concerns over data integrity has some, albeit limited, promise. If the focus is on rectifying statistical inaccuracies, it could be recognised as worthy of consideration. If the initiative appears motivated as a pretext to postpone LDC graduation, it risks backfiring. Institutions such as the World Bank, IMF, UN, and prominent human rights groups have frequently validated the data or affirmed that Bangladesh has fulfilled the criteria for graduation. Should the international community continue to endorse the official figures, efforts to challenge them may well falter.

We may have missed the opportunity to strike when the data on data veracity was hot. The World Bank's 2022 assessment indicated that GDP growth figures were likely overstated. These findings gained wider prominence when the White Paper (2024) highlighted them holistically. The revelations did not prompt a thorough, independent review of data by agencies that carry weight with the CDP. Key economic officials have remained reticent to the data questions at best and cherry picking at worst. Only the Chief Adviser responded with genuine concern. Such limited endorsement does not offer a robust foundation for advocating a data-driven delay in LDC graduation.

Within the context of the UN's LDC graduation deferral process, digging substantial errors of omission and commission in the data is insufficient. Bangladesh would need to provide credible alternative calculations or updated statistics from recognised authorities. The CDP relies on data from official sources – primarily UN agencies (UN DESA, UNCTAD, UNDP) and World Bank/IMF datasets. They in turn generally rely on official national data sources.

The government could audit all three key metrics in collaboration with reputed international bodies. Framing the audit as a quest for evidence-based decision-making can potentially garner broader support. The audit would have to demonstrate that Bangladesh falls below the threshold in at least two of the three metrics. The data corrections may reduce the distance between the state of the metrics and the LDC graduation thresholds but not necessarily the signs. This is particularly true for the GNI per capita and the HAI metrics. Mileage may be a problem.

Time running out

The Interim Government is implored from inside and outside to weigh the strategic merits of formally pursuing a deferral. There is the option to petition the CDP in advance of the forthcoming triennial review, slated for March 2026. Time bomb or not, there aren't too much left for the clock to click.

Given a narrowing window, officials and advocates for delay must marshal compelling story that the nation's economic fundamentals – growth, exports, poverty, financial solvency, fiscal health – are undergoing pronounced stress, or that Bangladesh's exposure to external shocks, be they climatic upheavals, disruptions in trade, or global pandemics, has deepened to a point that tests the very resilience of the economy. The challenge is not only to reinforce these claims with conclusive evidence that the underlying data are egregiously flawed but also to argue for the continued necessity of LDC-specific privileges as bulwarks of stability and tools for ongoing development.

If you are sensing that the graduation train has already steamed ahead from the platform, you are not alone. To have any hope of off boarding, we can try pulling the vulnerability and the data brakes – uncertain, as ever, whether the train will pause. Even if it does, we gain not much more than just kicking the can down the road. 

Zahid Hussain is former Lead Economist at the World Bank Dhaka office.