Bangladesh is set to graduate from Least Developed Country (LDC) status in November 2026 which is less than a year from now. Also, Bangladesh is positioned to graduate by meeting all three criteria -- income, human assets, and economic vulnerability. This is a feat achieved by few other graduating nations.

Yet, instead of celebration, the mood in Dhaka is gloomy. 

Over the last few weeks, LDC graduation has surfaced repeatedly in meetings as a source of alarm rather than pride. Acting BNP Chairperson Tarique Rahman recently argued that sticking to the 2026 timeline without an option for deferral is a “political decision” by an interim government and it lacks electoral mandate.

Why is a milestone of national success causing such panic? The answer lies in a paradox: While Bangladesh has technically passed the test, its structural readiness remains largely an illusion.

The exposure to global competition without the cushion of safety net

Bangladesh has thus far operated with a safety net of International Support Measures (ISM). With graduation, the safety net will be plugged off, leading to a phased withdrawal of benefits that will expose the economy to the harsh realities of global trade.

The most immediate hit will be the Loss of Preferential Market Access. Currently, Bangladesh enjoys duty-free, quota-free (DFQF) access to the European Union under the “Everything but Arms” scheme. 

Post-graduation, we will face most favoured nation (MFN) tariffs, which could spike to between 8% and 12% in key markets like the EU. 

Simultaneously, the window for concessional financing with a long repayment period will close. Future development will be funded on commercial terms. This will significantly increase debt servicing costs.

The loss of duty-free access might wipe out $2 to $7 billion in export revenue. But the challenge is not just tariffs; it is also compliance. Stricter Rules of Origin (RoO) will come into force, disrupting supply chains that currently rely on minimal domestic value addition.

When we combine this with the external pressure of Trump tariffs and the aggressive Free Trade Agreements (FTAs) secured by rivals like Vietnam, Bangladesh faces a severe erosion of price competitiveness. We risk entering a boxing ring with one hand tied behind our back.

The human cost: Common people will face the brunt

Discussions on LDC graduation often feel abstract, but the impact will be felt in the local pharmacies of Bangladesh. The domestic pharmaceutical industry currently meets 97% of local demand, thriving under a TRIPS waiver that allows the production of generic versions of patented medicines.

When this waiver expires post-graduation, the industry will face full international patent laws. This is not just about stifling innovation; it means the era of affordable medicine might be ending. For the common people, the cost of essential healthcare is about to rise.

The deeply-rooted systemic rots

Why are we so vulnerable despite meeting the UN's criteria? The harsh reality is that we have failed to build a resilient economy. 

It is distressing to note that despite years of rhetoric, we have miserably failed to find export markets beyond RMG. Sectors like leather, IT, and light engineering have not delivered the expected results. We remain a one-sector economy highly susceptible to external shocks.

Deep systemic rot compounds this vulnerability:

• Governance deficit:A banking sector burdened by non-performing loans (NPLs) cannot support the private sector investment needed for an upgrade.
• Infrastructure gaps:High transaction costs caused by port congestion and energy uncertainty negate our low-wage advantage.
• Fiscal weakness:With a tax-to-GDP ratio of just 8.5% which is one of the lowest globally, the government lacks the domestic resources to fund the infrastructure and skills training required to survive without foreign aid.

The way forward

The debate must shift from whether to graduate to how we manage the transition. Requesting a delay now, after passing all reviews, would signal to foreign investors that our economy is weaker than projected. Instead, we need a high-impact roadmap for the remaining months:

• Diplomatic priority (The GSP+ Push):We must aggressively pursue GSP+ status in the EU to retain duty-free access. However, this is conditional on 27 international conventions regarding labour rights and human rights. This is non-negotiable; we must implement decisive institutional reforms to meet these standards immediately.
• Domestic reform (mobilizing resources):We cannot survive on commercial loans with an 8.5% tax-to-GDP ratio. We must automate tax collection and expand the net to fund our own development.
• Logistics overhaul:To offset the tariff hikes, we must lower the cost of doing business. Accelerating the National Single Window (NSW) to modernize customs is the fastest way to reduce transaction costs.

Political and business leaders must move beyond rhetoric and acknowledge the substantial gaps that remain. A strategic delay might buy time, but it will not fix the systemic issues of lack of export diversification and weak governance.

Bangladesh requires an unwavering, time-bound roadmap for reform. Only by tackling these structural weaknesses head-on can we ensure that LDC graduation serves as a springboard for resilient growth, rather than a slide into economic stagnation.

Md Rubaiyath Sarwar is Managing Director, Innovision Consulting.