Graduating from LDC: A step toward Sonar Bangla

The First United Nations Conference on the LDCs was held in Paris in 1981 (UNCLDC-I Report 1981). The second was held in 1990, also in Paris, and led to the adoption of the Paris Declaration. The third was held in 2001 in Brussels (UNCLDC-II Report, 2001) and adopted the Brussels Declaration and the Brussels Programme of Action for the LDCs for the Decade 2001-2010. The international community meet again in Istanbul, Turkey in 2011 for the Fourth United Nations Conference on the Least Developed Countries (UNCLDC-IV Report, 2011). The LDC-IV conference adopted a comprehensive and result-oriented 10 Year Istanbul Programme of Action (IPoA) and the Istanbul Declaration. This new Programme of Actions sets an ambitious target to enabling at least half the LDCs members to satisfy the criteria for graduation by 2020.

On the basis of criteria used for listing up the members for LDCs, the United Nations decided to include Bangladesh among the LDCs by Economic and Social Council resolution 1976 (LIX) of Jul 30, 1975 which was approved by 2439th plenary meeting of Dec 12, 1975  (UNECOSOC Resolution, 1976). Since then, Bangladesh has embraced every sorts of opportunity provided to LDCs and has achieved significant development progress in recent years.

The criteria for graduating from LDC status are determined by the UN. These criteria are not fixed but are updated by the UN from time to time based on the state of the world economy.  For graduation the current threshold has set values of three different criteria – GNI per capita US$ 1230 or above, HAI 66 or above and EVI 32 or less. Bangladesh has met all three graduation criteria (GNI per capita- 1271 US$, HAI-72.8 and EVI 24.8) and has been recommended for graduation from the list by the CDP. This progress needs to be sustained for the next three years (up to 2021 for Bangladesh). Upon receiving the recommendation from CDP, ECOSOC will endorse the recommendation and the final approval will be provided by UN General Assembly. After receiving approval from the UNGA, a graduated country gets an additional period of three years. According to the procedures and development progress Bangladesh may graduate from LDC status in 2024 and may enjoy LDC preferential treatment up to 2027 for smooth transition (CDP Report, 2017).

In general there are three types of advantages to LDC status. These benefits can be explained as follows:

1. Trade-related benefits: These include preferential treatment in various multi and bilateral trade agreements, such as lower tariffs and greater market access, as well as additional support in building trade and market capabilities.

2. Official Development Assistance (ODA): Bi and multilateral development agencies such as the UN and international financial institutions usually give more aid and lower loan rates to LDCs. A number of support mechanisms have also been created specifically for LDCs.

3. General Support: The costs of membership and participation in many UN bodies is reduced or subsidised for LDCs. Considerable support is also given to help LDCs phase out of the category (UN-OHRLLS Report, 2017).

For doing business Bangladesh gets different treatment from WTO, Generalized System of Preferences (GSP) from European Union and Canada, assistances declared under   regional and international trade agreements like SAFTA, APTA, BIMSTEC etc. and also from some other benefit under Bilateral Trade Initiative. In order to maintain sustainable economic growth LDCs are getting special financial assistances. Since its inclusion in LDCs Bangladesh is one of the leading assistances takers. Official Development Assistance such as, OECD/DAC provide 0.15-0.20 percent of GNI to LDCs , Untied Aid to maximum extent, IDA offered highly concessional terms being LIC and LDC, IDA credit low interest charges, grants in form of Project Aid and UN prioritises allocation without much cost sharing obligations are common forms of assistances relishing by Bangladesh. Travel benefits, aids for capacity buildings are third form of assistances allocated to LDCs and similarly to Bangladesh (UNCLDC-IV Report, 2011). Bangladesh is one of the prime recipients of these types of preferential assistances.  Once it graduates from LDC category, Bangladesh will no longer be considered for these preferential treatments.

The graduation of a country from LDC status is not a choice of a member country but the epitome of its long-term socio-economic progress. This also marks the achievement of a solid and strong economic foundation of a country to be able to overcome mutually exacerbating vicious circles entanglements of the poverty trap, commodity trap and low equilibrium trap. Graduation is therefore not seen as an end in itself, but rather regarded as a means to achieve structural change, poverty eradication and economic diversification in the country. Graduation ultimately aims at a transformative change in their economies and in the lives of people and lays the foundations to enable the country to overcome potential drawbacks and external shocks.

Despite all these positive factors associated with graduation, it is important to keep in mind that the graduated countries only cross the threshold by a limited margin in certain areas of their socio-economic development covered under the three criteria.
For sustainable graduation and thereby to reach its target of being developed country by 2041 Bangladesh should be ready to face challenges and vulnerabilities to various shocks and crisis. Below are a few recommendations that need to be implemented immediately:

i)   Capacity of national entities should be enhanced for preparing bankable projects and accessing more fund for projects/programmes related to climate change.

ii)   An order to strengthen development partnership National Policy for Development Cooperation should be finalised without any delay.

iii)   Bangladesh should go for export diversification into relatively more skill-intensive and technology-intensive products and services.

iv)   A special unit or platform can be established under the supervision of Economic Relations Division.

v)   While negotiating with development partners, the global targets committed in SDG document should be honoured.

The process of being a developed country is not easy task. There are many hurdles in this journey. Graduation from LDCs is only one of these hurdles. Bangladesh must cross this barrier. It is to be hoped that the process of sustainable graduation for Bangladesh will show its true character and will reach its ultimate dream of a ‘Sonar Bangla’.