LDC graduation: milestone or risky leap?

Bangladesh is set to leave the least developed country (LDC) club next year after meeting UN criteria in two consecutive reviews. Graduation means crossing three thresholds: income per person, human development indicators and economic vulnerability. The UN reviews these every three years, and a country must pass twice before graduating.

Several nations have already done this, including Botswana, the Maldives and Bhutan. In 2026, Bangladesh will graduate alongside Nepal and Laos. What makes Bangladesh stand out is its size. With nearly 200 million people, we are by far the most populous country to graduate in recent times. The task is far more complex than for small nations.

Graduation will bring some benefits. It raises our profile as a creditworthy and growing economy and may attract more investment. It will make it easier to raise funds in global markets and negotiate trade deals as a developing country. It will also boost national confidence and send a message that Bangladesh is no longer seen as fragile.

But this recognition comes at a difficult time. Banks are burdened with bad loans, governance failures and declining public trust. Foreign currency reserves are low, making it harder to import fuel and raw materials. Inflation is pushing up prices, and families are cutting back on essentials. Investment is slow, and job creation is falling short of the needs.

Exports face mounting pressure. Most of our earnings come from garments, mainly to Europe and North America. Buyers now demand stronger labour rights, greener production and traceable supply chains. Meeting these standards will require investment and compliance.

Graduation also means losing the benefits we now enjoy. The European Union will continue providing duty-free access until 2029, but after that, we must qualify for GSP Plus by implementing 27 conventions on labour, human rights, environment and governance. The United Kingdom offers a similar transition, while the United States already imposes tariffs. Without GSP Plus, our exports could face 9-12 percent tariffs. We will also lose special treatment at the World Trade Organization and some concessional aid.

The pharmaceutical sector highlights another risk. Bangladesh produces almost all of its own medicines and exports to more than 150 countries thanks to a WTO waiver allowing us to make generic versions of patented drugs. This is why life-saving medicines are affordable. After graduation, that waiver will expire, and prices could rise sharply.

Some argue Bangladesh should ask for more time. This is technically possible in case of a major crisis, but a delay might signal weakness to investors and buyers. Others believe we should go ahead and use the three-year transition to push urgent reforms.

We must also be realistic. Corruption and pollution remain serious concerns, and Dhaka continues to rank among the most unlivable cities in the world. These realities remind us that graduation is not the finish line. It only means we have crossed statistical thresholds. The real challenge is to turn this milestone into better governance, a cleaner environment and a better quality of life.

The next few years will decide whether graduation becomes a success story or a missed opportunity. We must clean up banks, control inflation and rebuild reserves. The government needs to raise more revenue and invest in power, ports and skills. Exporters must diversify into electronics, IT services, agro-processing and higher value pharmaceuticals. We must also prove to buyers that we can meet labour and environmental standards to retain market access after 2029.

Graduation is not the end of our story. It is the start of a tougher, more competitive chapter. If we act quickly and honestly, this moment can be a springboard to a stronger future. If we delay, we risk losing the very gains that brought us here.

The writer is co-founder and CEO of Accfintax and associate director at Hoda Vasi Chowdhury & Co