LDC graduation to cost Bangladesh $8 billion annually: CPD

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Bangladesh’s transition from a Least Developed Country (LDC) will come at a significant cost, with experts warning of the looming challenge of securing commercial-rate loans under stricter conditions

Staff Correspondent

Publisted at 11:17 AM, Sun Mar 16th, 2025

Bangladesh’s business sector is ill-prepared to tackle the challenges of LDC graduation, with the country expected to lose $8 billion annually in export earnings due to the withdrawal of tariff benefits, said the Centre for Policy Dialogue (CPD).

CPD Executive Director Fahmida Khatun made these remarks on Saturday (15 March), while speaking as the chief guest at a shadow parliament session on LDC graduation challenges, organised by Debate for Democracy at the Film Development Corporation (FDC) in Dhaka.

She noted that international development assistance for climate financing is likely to decline.

During her address, she criticised the previous administration for presenting misleading economic data, asserting that Bangladesh was among the leading nations in politically motivated economic data manipulation.

She alleged that the Bangladesh Bureau of Statistics (BBS) was instructed to generate figures that suited the government’s agenda.

She further cautioned that post-LDC graduation, Bangladesh would need to secure loans at commercial rates with stringent repayment conditions.

Highlighting concerns over Chinese loans, she remarked that while compliance terms for loans from other countries remain clear, those from China often carry uncertainties.

She warned against falling into a debt trap, citing the last 15 years of financial mismanagement, corruption, and embezzlement as key factors behind the mounting debt burden.

Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiron, who presided over the event, questioned whether Bangladesh’s transition to a developing country is genuinely based on economic progress or merely a façade built on manipulated statistics under the previous government.

He asserted that the past administration exaggerated economic growth and fabricated data on reserves, GDP, export earnings, poverty alleviation, food production, child marriage rates, and even population figures. He recalled that former finance minister Abul Maal Abdul Muhith had himself dismissed BBS data as “bogus.”

Kiron also criticised past administrations for extravagant overseas roadshows that wasted state funds and for failing to disclose the actual extent of non-performing loans.

He pointed out that the Bankers’ Association, rather than regulatory authorities, had dictated interest rates and exchange rates from luxury hotels, leading to economic mismanagement by a nexus of politicians, bureaucrats, and business elites.

Despite these challenges, economists believe that Bangladesh can navigate the LDC transition if it addresses financial irregularities, corruption in the banking sector, energy crises, high inflation, rising interest rates, declining foreign direct investment (FDI), and sluggish private sector investment.

However, the global economic and political climate poses additional risks to Bangladesh’s smooth graduation by 2026.

Experts underscored the need for immediate preparations to mitigate LDC graduation challenges. Strengthening governance, ensuring transparency in debt management, and fostering investment-friendly policies could enhance Bangladesh’s economic resilience, attract foreign investors, and create employment opportunities.

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