Budget lacks dedicated plan for LDC graduation

Although the proposed budget for fiscal year 2026-27 offers some measures that are aligned with the government’s Smooth Transition Strategy (STS) for LDC graduation, it lacks a dedicated framework with preparations for this watershed moment, which is due in November, experts said.

They added that the government should calculate how much money Bangladesh stands to lose after graduation and spell out concrete steps to compensate for those losses through measures like trade deals, export diversification, and competitiveness reforms.

According to official data, Bangladesh risks losing $17.5 billion in annual exports, as 73 percent of its shipments rely on LDC trade perks. Among all 44 LDCs, Bangladesh enjoys the highest proportion (67 percent) of the benefits extended under the scheme.

As per the budget, policy and financial support for pharmaceuticals, including investment in the API (active pharmaceuticals ingredients) Industrial Park, are specific to LDC graduation.

Initiatives to create an investment‑friendly environment, accelerate industrialisation, attract foreign direct investment (FDI), promote region‑based industrial development, expand trade, and generate employment opportunities are aligned with the STS.

Steps to launching a unified digital platform, “BanglaBiz”, to ensure ease of doing business, including the investment maps that have been published to attract FDI in 19 promising sectors, are also aligned with the STS.

The initiative to establish new economic zones has been lauded as supportive of LDC graduation efforts.

Signing trade deals with major partners has been highlighted in the budget as a key step in preparing for LDC graduation.

To diversify exports, eight sectors have been granted duty‑free import facilities against bank guarantees -- a move welcomed as facilitating trade in the post‑LDC period.

Potential export‑oriented sectors, including agriculture, light engineering, pharmaceuticals, electronics, gold, and diamonds, will be allowed to import inputs under bonded or duty‑free facilities backed by bank guarantees.

Policy support has also been introduced to encourage production of energy‑efficient electric buses, trucks, bikes, and scooters.

Initiatives to promote Cottage, Micro, Small and Medium Enterprises (CMSMEs), improve logistics, upgrade air cargo village facilities, and develop infrastructure are aligned with the STS.

However, experts say the budget misses specific costing and reform measures.

Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID) stressed the need for a dedicated costing exercise and a separate chapter on graduation challenges.

“Reforms and measures should have been clearly outlined to address the risks,” he said.

Citing the latest UNCDP report, he said it noted that STS recommendations must be evaluated for graduation-specific measures.

Under deregulation and business facilitation, the government aims to simplify services, rules, and start‑up procedures to attract private and foreign investment. The proposed “Single Window” is expected to reduce time, cost, and complexity in approvals and licensing.

Mahmud Hasan Khan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said issues directly linked to graduation -- such as signing trade deals, tackling the energy crisis, expanding the Dhaka‑Chattogram Highway, and reducing bank interest rates -- have been addressed in the budget.

Mostafa Abid Khan, former member of the Bangladesh Trade and Tariff Commission (BTTC), said supportive reforms and deregulation are positive. “But, Bangladesh must undertake massive reforms to remain competitive in the global supply chain. Improving port efficiency is crucial to reducing costs and lead times.”