UN crisis report within March to decide Bangladesh’s LDC delay request: ERD officials 

The UN Committee for Development Policy (UN CDP) is preparing a "crisis assessment" report, evaluating Bangladesh's request to delay graduation from the Least Developed Country category by three years, which is expected to be released within March, according to officials from the Economic Relations Division (ERD).

The officials said the committee will examine whether Bangladesh is facing an actual economic or structural crisis. If the CDP finds evidence of such a crisis, it may recommend extending the country's LDC graduation by three years. The recommendation would then be forwarded to the UN Economic and Social Council for consideration.

Proposals of this nature are usually approved through consensus within the economic council. However, if any member state vetoes, the matter could be put to a vote. Officials in the economic relations said the government has already asked the foreign ministry to begin diplomatic outreach and lobbying efforts to secure support from UN member states for the proposed delay.

A CDP delegation may visit Bangladesh in April and they are expected to present the findings of a readiness study conducted earlier at Bangladesh's request. However, officials said the visit will not directly influence the final decision, as the crisis assessment report will be the main factor.

The final decision could come in September during the UN General Assembly session. If the proposal is approved at that stage, Bangladesh will get three more years before formally graduating from the LDC.

For now, policymakers keep an eye on the upcoming assessment report, as its recommendations will determine the next steps.

However, a high-level meeting of the government on LDCs is scheduled to be held on 5 April, with the finance minister in the chair, where the "Crisis Assessment" report will be evaluated.  

Under the current schedule, Bangladesh is set to graduate from the LDC group on 24 November this year. The third and final review process ahead of graduation is already underway.

Soon after taking power, on 18 February, the government sent a letter to CDP Chair José Antonio Ocampo seeking a three-year deferral of the graduation until November 24, 2029.

In the letter, Bangladesh noted that although it continues to meet the three graduation criteria – gross national income per capita, the Human Assets Index, and the Economic and Environmental Vulnerability Index — the five-year preparatory period has been severely disrupted by a series of global and domestic shocks.

The government cited the lingering impacts of the COVID-19 pandemic, the Russia-Ukraine war, tensions in the Middle East, tight global financial conditions, and the slow recovery of international trade.

On the domestic front, it highlighted irregularities in the financial sector, the change in government following the July 2024 uprising, and the ongoing pressure of hosting displaced Myanmar nationals.

According to the letter, these shocks have led to macroeconomic instability, slower GDP growth, high inflation, and a decline in both public and private investment. It also pointed to mounting pressure on foreign exchange reserves, reduced imports of capital machinery and raw materials, and slower job creation due to weakened investment.

Against this backdrop, the government said its policy focus had shifted toward short-term stabilisation and crisis management, preventing effective utilisation of the preparatory period.

The letter also raised concerns about post-graduation trade risks, including the potential loss of preferential market access for ready-made garment exports to the European Union and the risk of possible countervailing duties from the United States.

Considering the crisis, Bangladesh has requested a three-year extension to stabilise the economy and complete priority actions under its Smooth Transition Strategy.

Officials added that beyond the issues mentioned in the letter, the ongoing conflict across the Middle East could pose additional risks for Bangladesh. Rising military tensions involving the United States, Israel, and Iran have heightened instability in the region.

A prolonged conflict could fuel inflation and disrupt macroeconomic stability, further strengthening the case for deferring LDC graduation by three years.

Stakeholders warn that extended tensions among the US, Israel, and Iran could exert multidimensional pressure on Bangladesh's economy. There are concerns over rising energy import costs, given the country's heavy reliance on oil and gas imports from the Middle East. Escalating conflict could drive up global energy prices, increasing electricity generation and transportation costs.

Additionally, a large number of Bangladeshi workers are employed in countries such as Saudi Arabia, Qatar, Oman, and the United Arab Emirates. Heightened regional instability could shrink labour markets and create income uncertainty.

There are also fears of increased transportation costs for exports. Rising tensions in the Red Sea or the Strait of Hormuz could push up marine insurance and shipping costs, affecting key export sectors, including ready-made garments. Higher energy and import costs would also increase demand for US dollars, putting further pressure on foreign exchange reserves, experts say.