Tackling structural issues on way to LDC graduation

FE Team | Published: June 11, 2024 20:06:03

The country's dream of LDC graduation is hopefully going to be fulfilled by November 2026. To that end, Bangladesh has already met all the criteria to qualify for LDC graduation under the two consecutive triennial reviews conducted by the Committee for Development Policy (CDP) of the UN in 2018 and 2021 respectively. Mercifully, recognising the devastating impacts of the Covid-19 on the economy, CDP recommended an extended five-year (2021-26) preparatory period for graduation, a move that was endorsed by the UN's Economic and Social Council (ECOSOC). As usual, the UN's General Assembly (UNGA) adopted the ECOSOC resolutions on November 24, 2021. Now, during the preparatory phase, the main task before the government will be to prepare a Smooth Transition Strategy (STS) drawing support from the development partners and with targeted assistance from the UN system, especially from its Inter-Agency Task Force (IATF) on LDC Graduation Support. In this way STS is expected to provide the basis for a successful transition.
So, the task before the government now is to formulate the right policies and strategies to overcome the final hurdles of LDC graduation. With this end in view, the government's Economic Relations Division (ERD), which is tasked with the coordination process to prepare STS by involving all stakeholders and the United Nations Department of Economic and Social Affairs (UNDESA) jointly organised a workshop titled, 'Technical Level Workshop on Smooth Transition Strategy' at the Bangabandhu International Conference Center in the city recently. True, devising an effective STS will require all the support from the country's traditional development and trading partners. But the uncertainties the government is going to come up against as soon as the facilities and entitlements of an erstwhile LDC are withdrawn, particularly in the area of external trade pose the greatest challenge. Notwithstanding extensive discussions on the issue, no concrete answers and action plan are yet in sight.
This is more worrying at a time when the economy is facing internal challenges from the financial sector of which proper governance and structural reforms are long overdue. There is also the growing challenge from the falling forex reserve situation as well as the depreciation of local currency against US dollar. One needs to keep in mind that these problems are directly connected to the country's export performance. For once the nation completes graduation, the first casualties are going to be the various duties and quota exemptions it had so far been enjoying from its major trading partners in Europe and America. To add to the uncertainties, the economies of big apparel markets in Europe and North America have for some time been undergoing recessionary trends, which have left a negative impact on those countries' consumer spending. Obviously, that necessitates diversifying export basket, a concern waiting to be duly addressed for long. Of course, the nation's graduation strategy has to be in alignment with its long-term development goals such as the upcoming 9th Five Year Plan and as envisaged in the Perspective Plan 2041 so it (nation) may not fall into the so-called Middle Income Trap.
Hopefully, the recommendations emerging from the technical level workshop so held would pave the way for the nation's smooth transition towards its LDC graduation. Most importantly, the primary task before the government will be to remove the structural bottlenecks stymieing the nation's efforts to move forward.