Govt drafts reform roadmap to seek delay in LDC graduation until 2029

The government is preparing to submit a three-year reform roadmap to the United Nations in a final effort to secure a postponement of Bangladesh's graduation from the least developed country (LDC) category until November 2029, despite a UN committee recommending a "shorter" extension.

A high-level meeting chaired by Finance Minister Amir Khosru Mahmud Chowdhury yesterday (3 June) reviewed and finalised a draft 25-point action plan that will be sent to the UN Committee for Development Policy (CDP) following the national budget announcement.

The reform commitments had already been presented to the CDP during a virtual meeting on 29 April, officials said. The proposed reforms are scheduled to be implemented between 2026 and November 2029 by various ministries and agencies, they said.

Infographics: TBS

Officials said the central strategy hinges on demonstrating visible progress, monitored by a newly proposed oversight committee led by the finance minister, which will meet monthly to evaluate domestic implementation.

A senior official familiar with the discussions, on condition of anonymity, told TBS that the government plans to submit a formal letter to the CDP within the next two weeks outlining its commitments and implementation framework.

"The finance minister is highly committed to these reforms and emphasised during the meeting that they are necessary for the country's economic interests," the official said.

Based on an ERD press release, the country's newspapers yesterday published news that the CDP recommended that the United Nations General Assembly extend Bangladesh's preparatory period for LDC graduation until November 2029. But the CDP actually meant a shorter extension rather than a specific three-year period.

Reform commitments

The draft document, titled "Action Plan for Bangladesh's Preparation for LDC Graduation (2026-2029)," focuses on strengthening macroeconomic stability, financial sector governance, fiscal reforms, business deregulation, export diversification and institutional capacity.

The government has pledged to begin implementing measures to ensure macroeconomic stability from June 2027, with implementation continuing until November 2029. The plan includes stronger coordination between monetary and fiscal policies, regular assessment of demand and supply conditions for essential commodities, and trade policy adjustments to maintain uninterrupted supplies.

Bangladesh will also commit to addressing debt vulnerabilities identified in debt sustainability assessments conducted by the International Monetary Fund and the World Bank.

Financial sector reforms feature prominently in the draft roadmap. The government plans to strengthen Bangladesh Bank's supervisory authority and restore discipline across the financial sector by December 2027. It also intends to conduct annual comprehensive reviews of all commercial banks, covering asset quality, capital adequacy, liquidity, governance and stress testing, with corrective measures taken where necessary.

The reform programme further includes anti-corruption initiatives and governance improvements. The government aims to expand digital public service delivery systems to reduce direct interactions between citizens and officials while strengthening transparency, accountability and parliamentary oversight through November 2029.

Deregulation and tax reforms

Business deregulation is another major pillar of the proposed reforms. By June 2027, the government plans to establish a unified digital application platform covering licences, certificates, approvals and renewals. Licensing procedures will be simplified, provisional licences will be issued within seven days and the validity period of licences and permits will be extended from one year to five years.

The government also intends to make the National Single Window fully operational within the same timeframe.

Under fiscal reforms, state-owned enterprises are expected to become commercially viable by June 2028, with selected entities potentially listed on the stock market. The government has also pledged to broaden the tax base and strengthen transparency and accountability in the collection of fees and non-tax revenues.

Plans include integrating data systems between banks and the Central Depository Bangladesh Limited by June 2028 to facilitate automated reporting of savings and investment information.

Other measures include reducing the discretionary powers of tax officials, fully automating the National Board of Revenue and its commissionerates, limiting tax exemptions and strengthening value-added tax compliance.

To monitor implementation, the government intends to establish a joint government-private sector task force.

Export competitiveness and infrastructure

As part of efforts to diversify exports ahead of graduation, the government plans to provide targeted incentives and policy support to pharmaceuticals, leather, information and communications technology, agro-processing, jute and light engineering industries.

By December 2028, authorities aim to improve central effluent treatment facilities for the tannery sector and operationalise the Active Pharmaceutical Ingredient Park.

The government also intends to reduce logistics costs from 15% to 10% by June 2029 through port modernisation, customs reforms, improved multimodal connectivity and the development of integrated industrial and logistics corridors.

In the energy sector, Bangladesh plans to encourage investment in renewable energy, develop a carbon market policy and expand green financing initiatives.

The draft roadmap also outlines measures to secure Generalised Scheme of Preferences Plus benefits in the European Union after graduation. Bangladesh may additionally seek to conclude free trade agreements with South Korea, Oman, the United Arab Emirates, Hong Kong and New Zealand by 2029.

The government has pledged continued support for exporters seeking to meet standards in major markets, including the European Union, the United States, Japan, South Korea, China and regional trading partners.

A revised Smooth Transition Strategy reflecting current domestic and global realities is expected to be completed by March 2027, while progress on implementation will be reviewed monthly.

What happens next?

According to officials, the CDP's recommendation will now be considered by the United Nations Economic and Social Council (ECOSOC) at its meeting on 22-23 July. ECOSOC is expected to forward the recommendation to the United Nations General Assembly.

If procedural constraints prevent ECOSOC from formally adopting the recommendation, Bangladesh may have to seek approval directly from the General Assembly during its September session.

Experts said a favourable recommendation from ECOSOC would improve Bangladesh's prospects of securing an extension at the General Assembly.

Although Bangladesh has met all three formal graduation criteria, analysts believe the government's request for additional preparation time prompted the CDP to recommend a shorter extension as a special accommodation.

They stressed that commitments alone would not be sufficient. Bangladesh must demonstrate measurable progress on reforms and clearly identify areas where international institutions such as the IMF, the World Bank and the Asian Development Bank are involved.

Several experts described the CDP's recommendation as an exceptional concession rather than a precedent for future requests from other LDCs.

This year, Bangladesh is scheduled to graduate from LDC status alongside Nepal and Laos. However, Nepal has also submitted a letter to the CDP seeking a postponement.

After Prime Minister Tarique Rahman sent a letter to the CDP on 6 April requesting a three-year deferment of Bangladesh's graduation, the committee subsequently decided to recommend a postponement.

At that time, however, the CDP's assessment report on Bangladesh's preparedness for LDC graduation had not yet been completed. As a result, the report was not attached to the resolution sent to the ECOSOC. The assessment will now be forwarded separately to ECOSOC.

Under the CDP's recommendation, ECOSOC may endorse a postponement of one year, two years, or the full three years requested by Bangladesh. The final decision, however, will be taken through a vote at the United Nations General Assembly.

What experts say

Debapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue and a member of the CDP, said the extension represents a unique opportunity for Bangladesh.

"This is an exceptional opportunity for Bangladesh. The government should quickly communicate its reform commitments and establish a monitorable implementation framework. That could positively influence consideration by both ECOSOC and the UN General Assembly," he said.

He added that LDC graduation should be viewed not only as an economic issue but also as a political commitment that reflects the country's future development trajectory.

Zahid Hussain, a former lead economist at the World Bank's Dhaka office, said the CDP's recommendation was conditional on Bangladesh implementing fiscal, banking and structural reforms to diversify the economy.

"Bangladesh comfortably meets all graduation criteria even after accounting for the adverse factors identified to make the case for deferment," he said.

According to Zahid, the recommendation reflects concerns about the country's capacity to implement its Smooth Transition Strategy amid challenges arising from the Middle East crisis, disruptions to global trade and the country's political transition.

"Two things are clear. First, this is the last extension if it makes it through the next steps. Second, the period of extension will be less than three years," he said.

The economist added that while approval remains uncertain, Bangladesh's prospects of securing an extension have improved significantly.