The extended preparatory period of five years for graduating from the grouping of the least-developed countries will allow Bangladesh to address the coronavirus pandemic's impacts, according to the United Nations Committee for Development Policy (UN CDP).
It will also help Bangladesh engage with its development and trading partners in preparing a smooth transition strategy and planning for a post-graduation international trade landscape, said CDP Member Debapriya Bhattacharya.
"It highlights the importance for the country to preserve its necessary policy space while negotiating possible bilateral and regional agreements," he said.
The convenor of the Citizen's Platform for SDGs, Bangladesh made the comments at a virtual discussion on the graduation and what was upcoming.
The briefing came a day after the CDP recommended Bangladesh's graduation in its final evaluation on Friday.
Bangladesh is scheduled to officially become a developing country in 2026 as the UN committee recommended that the country should get five years, instead of three, to prepare for the transition due to the impact of the Covid-19 on its economy. Until 2026, the country will continue to enjoy the trade benefits as an LDC.
"The committee notes that Bangladesh meets all three LDC criteria for graduation with comfortable margins," said Bhattacharya.
The CDP recommended Bangladesh reform the domestic business and taxation policy for the creation of jobs for making graduation sustainable.
The committee suggested Bangladesh prioritise policy formulation in the areas to support its development during the preparatory and smooth transition period and beyond.
Of the major policies, the CDP also suggested for collection of more tax, increasing the private and foreign direct investment (FDI), the creation of jobs and improving healthcare and education quality.
The CDP also suggested for export and market diversification of goods as Bangladesh was too much reliant on a single item, which was garment products.
Bhattacharya said now that the timeline of the LDC exit trajectory had been finalised, Bangladesh needed to draw up a robust transition strategy covering the upcoming five years and beyond.
"The strategy is needed to deal with the possible adverse fallouts of LDC graduation, but also lay out a pathway for graduation with a momentum. This should ensure a smooth and sustainable development prospect for the country," he said.
Two other essential criteria, namely inclusivity and good governance, have to be considered, said the noted economist.
Bangladesh is also pursuing a number of development approaches, including implementation of an Eighth Five-Year Plan, a Second Perspective Plan (2021-41), a Bangladesh Climate Change Strategy and Action Plan, and Delta Plan 2100.
"We should not forget in this regard the importance of delivering in Bangladesh the 2030 Agenda for Sustainable Development," Bhattacharya said.
With a view to ensuring inclusive development, underpinned by the growth of investment, employment and income, the building of productive capacity should be the fundamental and core priority in the Bangladesh context, he said.
"This would entail economic diversification, technological upgradation, and improvement of labour productivity. Focus on domestic market expansion and consolidation would be key in this regard."
The Sustainable Development Goals (SDGs) must be used as the guiding framework for crafting a winning transition strategy for LDC graduation, he said.
Bangladesh had joined the LDC group in 1975. The country comfortably met all of the three graduation criteria in the first review in 2018 and then in a second this February.
Bangladesh should not use coal-fired power plants and generate more clean and sustainable energy, said Bhattacharya.
The UN committee called on Bangladesh's development and trading partners to extend preferential market access and the exemptions under the WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) for a reasonable period of time, to be negotiated at international levels and bilaterally with Bangladesh.
It urged the development partners to provide financial and technical support to Bangladesh to strengthen the health sector and tackle the impact of climate change, particularly measures to prevent destruction created by flooding.
LDC graduation, essentially, means acquiring a seal of global approval regarding its development achievements and enhanced confidence of the international financial actors regarding its markets.
The improved perception of the country-level market risks is expected to lead to a registered upgrade of the country's international credit rating. This will further lead to an augmented generation of investible resources, Bhattacharya said.
Post-graduation, countries have experienced enhanced domestic tax collection and a higher flow of foreign direct investment (FDI). Access to foreign aid may not diminish abruptly.
The LDC graduation would lead to relinquishing a wide variety of preferences and privileges and loss of market access preferences, particularly in the European and Canadian markets.
Bangladesh may experience a shortfall to the tune of 8-10 per cent of its gross export revenue due to loss of duty-free and quota-free provisions, amounting to about $2.5 billion annually.
Bangladesh will continue to enjoy market access preference in the European Union (and the United Kingdom) for an extra three years, until 2031, he said.
The CPD distinguished fellow also talked about two special challenges facing Bangladesh.
The post-Covid-19 recovery plans and programmes have to be embedded in the transition strategy, and Rohingya maintenance and repatriation have to be addressed as well, he said.
The economist suggested putting in place a better coordinated and more resultative institutional outfit and mechanism at home, and revisit the role of the National Task Force, set up in January 2016, to monitor the implementation of the roadmap.
Coordination among ministries is needed alongside engagement of the private sector, non-government development organisations and knowledge actors, Bhattacharya said.
He also said the preparation of a coherent, cogent and wholesome transition strategy would need significant and forceful efforts. Real-time necessary data supply has to be strengthened, particularly for the CDP's special monitoring mechanism for graduating LDCs.