Bangladesh's LDC graduation deferred by 3 years

The United Nations General Assembly (UNGA) has approved a proposal to extend Bangladesh's preparation period for graduating from the least developed country (LDC) group by three years.

As a result, the new deadline for graduation has been set at 24 November 2029, instead of 24 November 2026. The same three-year extension applies to Nepal as well, as per the vote cast at UNGA around 1:30am Friday in Bangladesh time.

With the extra three years, Bangladesh will be able to retain trade benefits for its exports for additional three years. In the meantime, it can address structural weaknesses in the economy, boost investment, and strengthen its competitiveness in international markets.

On Thursday, Uruguay moved the proposal at the UN General Assembly on Bangladesh's behalf. In a vote, the Group of 77 and China, who together form G77+China, backed the proposal. It is worth noting that the Group of 77 started with 77 founding member countries in 1964, but now includes 134 countries.

Afterwards, the European Union, Canada, Australia and New Zealand also explicitly voiced their support for deferring the graduation deadline for both Bangladesh and Nepal.

With their support, Bangladesh's request to extend the five-year preparation period for LDC graduation by another three years was approved at the UNGA.

When presenting the proposal, the Uruguay representative said that the UNGA approved the November 2026 LDC graduation deadline for Nepal and Bangladesh in 2021. However, since then the two countries have faced unexpected and unprecedented hurdles, the Uruguay side said.

“Since November 2021, their (Bangladesh and Nepal’s) preparations have faced successive shocks, including the lingering effects of the pandemic, climate related disasters, geopolitical conflicts and disruptions to international trade and energy supplies, uncertainty affecting migrant employment, remittances and tourism has added further pressure.

These external shocks have interacted with persistent domestic vulnerabilities, complicating the implementation of smooth transition strategies.

In view of this unforeseen issues, Uruguay said that meeting the graduation criteria does not eliminate structural weaknesses “overnight.”

“The experience of Bangladesh and Nepal underscores the importance of considering the conditions in which countries prepare for graduation and their capacity to sustain progress afterwards.

“International support must respond to these realities,” the Uruguay representative said.

Bangladesh had sought the extension in view of global economic uncertainty, risks to energy supply, changing conditions in international trade, and domestic economic challenges.

The government aims to use the additional time to build the economy's capacity and complete the preparations needed for the post-LDC reality.

Commerce Minister Khandakar Abdul Muktadir said recently that a decision on Bangladesh's request to defer its graduation from the least developed country (LDC) category by three years is expected within October.

"The government has prepared a time-bound action plan to utilise the additional time for strengthening the country's preparedness for graduation. It also aims to conclude negotiations on a free trade agreement (FTA) with the European Union (EU) before Bangladesh graduates from the LDC category," he said.

Time extension ‘an investment in making graduation successful’

After the UNGA members backed the proposal, the assembly’s president said that the consensus responds to the exceptional circumstances related to ongoing conflicts in the Middle East, disruptions to energy supplies and supply chains, global trade uncertainty and persistent structural vulnerabilities for both Bangladesh and Nepal.

The political transitions that took place recently have compounded external shocks and constrained the government's capacity to respond, he said.

“Against this backdrop, three additional years is not a retreat from graduation, but an investment in making it succeed. This extended time is not time to stand still.

“It is time to act decisively, to strengthen institutions, address vulnerabilities, and prepare for the challenges of life beyond graduation.

“The Assembly invites Bangladesh to advance reforms addressing persistent structural vulnerabilities.

“It invites Nepal to implement a clear time bound plan to adjust and reprioritize its smooth transition strategy.

“Both countries must strengthen resilience, accelerate progress towards the Sustainable Development Goals and translate preparations into results.

“The objective is clear graduation should protect hard won gains and open new development opportunities.”