On the 27th of February, the Hon'ble Prime Minister Sheikh Hasina, daughter of the Father of the Nation Bangabandhu Sheikh Mujibur Rahman gave us a good news that made all the countrymen proud - Bangladesh has received the recommendations from the United Nations for graduation into a middle income country.
Bangladesh started its journey as a war-ravaged country in 1971 and emerged as a socio-economic success story over the time. After independence, Bangabandhu, the architect of Bangladesh adopted pro-active and forward-looking policies for the reconstruction of the country to transform it into a 'Sonar Bangla', free from discrimination, hunger, and poverty.
Following the ideology of Bangabandhu, his able daughter Prime Minister Sheikh Hasina has been working relentlessly to make the dream of Bangabandhu a reality since she came to power for the first time in 1996.
We may remember that Bangladesh was included as an LDC in the list of the ECOSOC in 1975. Continuing the development stride under the dynamic and visionary leadership of Hon'ble Prime Minister Sheikh Hasina, the country achieved and surpassed all the thresholds of three categories in terms of per capita income, human assets, and economic and environmental vulnerability index for graduating from the group of the Least Developed Countries (LDC) for the first time in March 2018. And now, on 26 February, the United Nations Committee for Development Policy (CDP) has recommended Bangladesh finally to graduate from the LDC category in 2026. This transition is a historic event and a milestone for the whole nation.
It is our national pride and prestige to attain this remarkable status at a time when our country is celebrating the birth centenary of the Father of the Nation and is set to mark the golden jubilee of our independence.
But we need to remember that this has not happened in a day. It took years of continuous, satisfactory, and sustained socio-economic advancements. We have invested heavily in our people to lift them out of poverty and make them empowered to carry out the development journey of the country. We took initiatives to build a human-centered inclusive modern democracy as envisioned by Bangabandhu.
During the official declaration of graduation at the press briefing on 27 February 2021, the Hon'ble Prime Minister said: "The current Bangladesh and the country an era ago are not the same. Today's Bangladesh is a changed Bangladesh. This achievement is an outcome of pure relentless planning, hard work and efforts over the last 12 years". Our government's Vision 2021 and Vision 2041 are two key instruments that have contributed to the commendable progress over the past decade.
We came to power for the second time in 2008 with the slogan "A Charter for Change". Through Vision 2021, we envisioned a Bangladesh which by 2021 would be a middle-income country where poverty would be drastically reduced, where our citizens would be able to meet every basic need and development would be on fast track with ever-increasing rates of growth.
We are growing and we will grow. There is no doubt that Bangladesh has become a model for the whole world. It is no more any exaggeration. Bangladesh is the first ever country to meet all three graduation thresholds of the LDC criteria. Certainly, this international recognition will bring new opportunities for us. There will be challenges as well.
First and foremost, the graduation will give huge support to recreate a new image and branding for Bangladesh. As a consequence, foreign investors will get positive signal and confidence about the improved business climate in the country which will eventually attract higher flow of Foreign Direct Investment (FDI) and generate employment.
Further to this, with graduation and strong financial indicators, Bangladesh will have more opportunities to secure commercial loans from the international market at a competitive interest rate. The country's credit rating will be higher suggesting that the cost of investment in Bangladesh could be even significantly lower if the volume is larger. Upon fulfillment of the World Bank's Gross National Income per capita (GNI) requirement, Bangladesh attained the status of a lower-middle income country in 2015. The World Bank and International Monetary Fund do not officially recognize the LDC category, so graduation has no impacts on loans or grants from these institutions. The demand, institutional capacity and political consideration are rather the main influencing factors.
Mobilization of resources from the global market through sovereign bonds could be another advantage due to added confidence in the country. Not only this, but it will also enhance our borrowing capacity for the private sector. So, the difficulties faced by the private sector in generating capital from the global financial market are expected to be less with graduation in the future course.
Moreover, after the graduation, Bangladesh's new identity as a developing nation will create opportunities to join various regional and sub-regional blocs. We would be able to sign trade agreements and FTAs with other countries. Bangladesh should also experience enhanced domestic tax collection due to internal pressure for more domestic resource requirement as external resources would shrink day by day.
The current mega projects which are under construction, like Padma Bridge, Rooppur Nuclear Power Plant, Karnaphuli Tunnel, Payra Port, Bangabandhu Sheikh Mujib Industrial City, Terminal-3 of Hajrat Shahjalal International Airport, Metro Rail etc. would be completed soon. Upon completion, those mega projects would hugely increase the business competitiveness of Bangladesh offsetting any possible challenge faced from the LDC graduation.
Having said these, we must confess that there will be new and additional challenges towards smooth graduation. All graduated countries had to walk through this challenging transition path. We are no exception.
It is true that with graduation, LDC-specific International Support Measures (ISMs) will no longer be available for Bangladesh. Among various ISMs, the trade-related ISMs are the most important ones for Bangladesh as the country has been able to make the best use of those ISMs. Additionally, Bangladesh will no longer have access to waivers under the WTO TRIPS agreement. This may hinder development of the pharmaceutical industry of our country. Provision of subsidy to agriculture and infant industries may also cease.
Most importantly, Bangladesh bears a heavy brunt from the impacts of climate change. The country may lose Green Climate Fund (GCF) which can hamper its adaptation measures despite being a negligible emitter of Greenhouse gases.
Nonetheless of the above facts, we are glad that due to our prudent policies, except the Covid-19 pandemic period, Bangladesh has maintained a public debt-to-GDP ratio at about 35 per cent for a decade from fiscal 2008-09 which is below the responsible threshold of 40 percent and currently Bangladesh has foreign currency reserve of more than 44 billion dollars. These indices reflect the strength of Bangladesh's economy. Therefore, Bangladesh's economy is well prepared to cushion out any short-term pressure faced from the LDC graduation.
Again, though Bangladesh is not receiving any tariff benefit from USA for its garments products, it is one of the top exporters of RMG in USA which shows the resilience of Bangladesh's export industry whether it receives any preferential support or not.
We have proved our resilience and strength time and again. We need to keep up the momentum which is most important at this moment. We have received five years transition period which should be utilized efficiently. While we take preparation to smoothen the graduation process, we must take into consideration the challenges posed by the ongoing covid-19 pandemic.
To overcome the challenges of covid-19, our government has taken immediate, medium term as well as long-term measures. We have announced stimulus package amounting to US$ 14.60 billion that accounts 4.44% of our GDP in three broad areas: maintaining supply-side economy and restoring aggregate demand, employment creation and revitalizing rural economy and enhance social security.
The 8th Five-Year Plan (8FYP) centres on six core themes, one of which is mitigating the impacts of LDC graduation. The main task of the 8FYP is to start the implementation of Perspective Plan 2041 in a way that it brings Bangladesh closer to the goals of attaining Upper Middle Income Country status, attaining major SDG targets, and eliminating extreme poverty by FY2030-2031. The strategies that have been included in the 8FYP to support sustainable graduation are growth acceleration, quality job creation, rapid poverty reduction, inclusiveness development process with social protection, enhanced resilience to disaster, climate change development strategy, attaining SDG targets and coping up the impacts of LDC graduation.
While focusing on increasing our productivity and competitiveness, our government has given utmost priority to market diversification. Simultaneously, technological advancement, skill development and up gradation of infrastructure has remained our key priority sectors.
Our government is equally serious to enhance internal resource mobilization and to explore new sources for getting loans. For instance, we have decided to join the New Development Bank (NDB) recently. More so, our government is in continuous engagements with development partners. Similarly, we are working closely with EU on human and labour rights issues to continue enjoying preferential market access under the GSP/GSP plus. We are taking necessary preparations to enter into FTAs with important countries. We have established Special Economic Zones and IT parks, expanded the EPZs to attract FDI and domestic investment.
Our government has also taken national and global policies for smooth transition. Some significant features among the domestic policy intervention include diversification and expand base of industries and export, exploring FTA with trade partners, improved environment for private sector investment and more FDI in high value industries, ensuring inclusiveness and increased coverage of safety net, investment in human capital to lift productivity, adapting to climate change to reduce vulnerability and prudent debt management.
In regards of global initiatives, the key initiatives are: taking actions so that duty-free quota-free market access should continue for a reasonable time after graduation, relaxing the accessibility to TRIPSs and LDC technology bank for graduated nations, allowing easy and affordable access to knowledge product for graduating and graduated nations, scaling up concessional support targeting infrastructure development to enhance productive capacity for LDCs pre and post-graduation phase, pressing global community to materialize their committed support for climate change for which many LDCs are innocent victims.
Hon'ble Prime Minister Sheikh Hasina is a global voice in international arena when it comes to climate change. She has been playing a pivotal role in raising global consensus for the implementation of the Paris Agreement. We are a champion in the field of adaptation measures.
The global investors have started focusing on Bangladesh as one of the emerging economies. Our Prime Minister has expressed confidence that Bangladesh would be established as a developed, prosperous, and dignified country soon if the pace of the development continues.
It is high time to look forward and work hard and work together to find inclusive solutions for all. Next five years is therefore crucial.
Md Shahriar Alam, MP, is the state minister for foreign affairs