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LDC Gradation – Challenge Due to Corona

প্রকাশিত: ১০ মে ২০২০  

For Graduation from Least Developed Country (LDC), on 18 March 2018 Bangladesh celebrated the first recommendation of Committee for Development Policy (CPD) under United Nation Department of Economics and Social Affair (UNDESA). Second recommendation in 2021, vulnerability profile by UNCTAD, recommendation of ECOSOC and finally endorsement by UNGA will make us graduate from LDC in 2024. We will have scope to enjoy the facilities till 2027.

Now with the changing global scenario with COVID-19, will we be able to continue our journey towards graduation with the same speed? What are the challenges along with new challenges? What steps are we taking? Are these enough?

Istanbul Programme of Action (IPoA) 2011-2020, targeted to enable half of the 48 countries to graduate from LDC, is struggling hard. Equatorial Guinea, the single country graduated after IPoA declaration and five countries in the pipeline, Vanuatu 2020, Angola 2021, with a five year preparatory Bhutan in 2023, with 6 years preparatory Salmon Island and Sao Tome and Principe in 2024. Graduation of Bangladesh, Lesotho, Laos and Myanmar will be decided in 2024.


During our recommendation in 2018 our record was as follows:

Any two criteria or double the Gross National Income (GNI) threshold (i.e. 2460 USD) enables one country to be recommended. Bangladesh, the largest LDC in terms of population as the first country achieved all these three at a time.

After LDC graduation we will lose some preferential access in export like Generalized System of Preference (GSP), Duty free Quota Free Access (DFQF) and so many. Likewise contribution to UN agencies will be double; rate of Interest of Development Partners’ loan will be high, export will face additional 6.7% tariff that will cause 2.76 USD loss, UNCTAD estimated 5.5-7.5% export fall.

On the other hand, Bangladesh a resilient country had a very good track record of loan repayment, preparing an exit plan from the disadvantages of LDC graduation. It has a robust plan for increase of FDI, good Social Safety Net Programme, plan on Doing Ease Business, NRB engagement in terms of philanthropy, investment, remittance and expert service, develop the capital market, skill development, more use of ICT and AI in all sphere of life including production.

Per capita Gross National Income was 1274 USD in 2018 review against the threshold value 1230 USD. In 2018 and 2019 we progressed a lot and stand at about 1540 USD on January 2020.

Pandemic Covid-19 had caused to stop slowdown almost all the economic activity and production. Up to March 2020, our ADP expenditure was 43% which is 2% lower than last year’s expenditure. Almost all the development work except the Padma Bridge, Bangabandhu (Karnaphuli) tunnel and a few are stopped after March. It is quite uncertain when we can have full speed in development work. It is predicted that ADP implementation may achieve at best 60-70%. After 5 weeks closer, RMG sector started production slowly. It is also not certain, how long we can continue these. In other sectors at best 30% production unit are in action. But the encouraging sector is agriculture and agro-related production like poultry and dairy. Honourable Prime Minister rightly emphasised agriculture production - not to keep any fellow land, she encouraged people from all walks of life including political leaders to stand beside the farmers for paddy harvesting. Local Administration started purchasing vegetables and egg for food support programme.


We understand officials of agriculture and related area are working on how to produce more, how to be self-sufficient in all agro-commodities, maintain the supply chain etc. We believe, we will be able to cope up and at least maintain the 1540 USD average of last 2 years’ GNI.

In the second indicator Human Asset Index (HAI) our achievement in 2018 was pretty good; against threshold value more than 66, we were 73.2 and in January 2020 it is more than 76. This is very remarkable progress indeed. Under HAI all the five components, namely a. under nourished population, b. under-5 mortality, c. secondary school enrolment, d. adult literary and e. maternal mortality showed good progress. But we need to give more emphasis on U-5 mortality, adult literary and maternal mortality. Corona Pandemic can influence all these five sub-index which covers health and education. Keeping health issue at the centre our government already decided to reduce allocation in other sectors in the revised budget. The same thing may also be correct for the upcoming budget.

We understand Ministry of Health will get much more importance in both revised budget and next year. It is quite reasonable to spend for Corona-related new hospital, Ventilator, PPE, new laboratory etc. to combat Corona. But it is equally important to work for malnutrition; we know better immune system comes from nutrition, healthy life style and well-being. Likewise children and women are also vulnerable. Though earlier it was told that people over 60 years are more likely to be affected by Covid-19, but it is now evident that children are not immune from it. So far, in our country male-female Corona patient is 68:32. But if unfortunately RMG sector people are affected, scenario will not be the same.

After Covid-19, it is expected that government will give priority to education just after health. So easily we can predict that enrolment in secondary education and adult literary will get better attention of the government. NGOs, those works for health and education need to address the issue of nutrition, -5 mortality, maternal mortality, secondary education and adult literary with high care.

The third component of LDC graduation is Economic Vulnerability Index (EVI) and its required value is less than 32 which Bangladesh in 2018 achieved 25.22. Up to January last, it stood with a further development near to 25. This EVI consists of a) Exposure Index having 5 Sub-Index and b) shock index, consists of 3 areas. Under Exposure Index first component is population which we stand at 161 million. If the population is more than 70 million, you get zero. There is another system, now a day, if population is more than 70 million that can’t be treated newly as LDC. Other three Sub-components 2. Trade Remoteness 3. Share of population in low elevated coastal area and 4. Merchandise export concentration.

We are almost at the same value with very insignificant development. It is very difficult to show significant progress in trade remoteness and population in the coastal area. In export concentration, there is the scope and the government is working with export diversification and increase of export by setting 100 Economic Zones and more than 30 Hi-Tech Parks. Also diversification activities in leather, jute goods, pharmaceuticals, agro product etc. are getting momentum which needs to be encouraged more. But the shares of agriculture, forestry and fisheries in GDP in the 5th one under Exposure Index are very difficult to maintain. In our country we try to emphasise more on agriculture, forestry and fisheries; also in this Pandemic situation our Prime Minister rightly felt the necessity of these and made a nationwide call not to keep any fellow land like the call of ‘Green Revolution’ by Bangabandhu in 1974. We understand for our sustainability during and after Covid-19 we need to be self-sufficient in food, rather try to export and help others. Under three shock Index in EVI 6, victims of natural disaster 7, instability in agriculture production and 8. instability of merchandise export, our track record is significant and consistent. We all know Cyclone Bhola in 1970 took 3-5 lakhs lives, cyclone April in 1991 took more than 1.35 lakh lives, while cyclone Sidr in 2007 could take 3,363 and cyclone Fani in 2019 took only 5 lives. No country in the world could show such remarkable achievement. In these three areas, we are perfectly on the right track. But we need to work after Covid-19, what challenges we will face and how we can overcome, where we can achieve better.

With existing incentives in agriculture and industry, to cope up with Covid-19, Prime Minister Sheikh Hasina rightly declared a robust economic plan of about one lakh crore taka (12.5 billion USD) starting from immediate to long term. This package consists of small farmers, MSME, SME, RMG, other industries covering the entire sector by involving all the Financial Institution.

The countries under graduation process already raised their voices at the global level to continue the facilities of LDC countries after graduation also. Nothing is worse than coming back of a graduated country to LDC. To continue the journey towards graduation we need to asses very critically the emerging risks, develop more strategic partnership, increase domestic resource mobilisation, increase export-import with the neighbouring countries, bilateral free trade agreement etc. A study was done on ‘way forward to graduation’ at the end of last year and concern ministries are working with the recommendation of the study.

Corona pandemic is an additional threat on the way to LDC graduation. We need to understand how much Covid-19 will deviate us and how to combat this additional challenge.

From the above discussion, we find that the challenge of LDC graduation after Covid-19 is to local resources mobilisation, maintain right balance and sufficient allocation in health, education and agriculture sector. More incentive on investment, especially on FDI is crucial. This will lead us to maintain graduation parameters, towards a developed country by 2041.

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