The United Nations General Assembly (UNGA) has approved Bangladesh’s request for a three-year extension of its preparatory period for graduation from the least developed country (LDC) category, moving the deadline from 24 November 2026.
The decision, adopted yesterday, followed a proposal introduced by Uruguay on behalf of Bangladesh. The extension will give the country additional time to address structural weaknesses, strengthen export competitiveness and prepare for changes in international trade preferences.
The resolution said the assembly decides, on an exceptional basis, to extend by an additional period of three years, until 24 November 2029, the preparatory period for Bangladesh before graduation from the least developed country category occurs.”
It also urged Bangladesh to advance reforms, implement its smooth transition strategy with international support and report progress annually to the Committee for Development Policy.
Chaired by President of the UNGA Khalilur Rahman, the 81st session also approved Nepal’s request for a three-year extension of its preparatory period.
For Bangladesh, the extension is expected to provide relief to export-oriented industries, particularly the readymade garment sector, which faces potential challenges from the possible loss of preferential market access after graduation.
Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told TBS that they had long advocated additional preparation time.
He described the UN decision as good news for Bangladesh’s export sector, adding that the country must use the extended period to improve infrastructure and logistics and pursue free trade agreements (FTAs) with countries where such arrangements are necessary.
Fahmida Khatun, distinguished fellow at CPD, said simply extending the transition period will not make the economy more competitive. “Effective reforms are needed in trade, revenue collection, banking and infrastructure,” she told TBS.
Why Bangladesh sought more time
The government formally requested the extension from the United Nations Committee for Development Policy (UN-CDP) on 18 February, citing uncertainty in the global economy, geopolitical tensions, changes in international trade, energy and supply chain risks, and domestic economic challenges.
The UN-CDP subsequently recommended that the request be favourably considered, while the United Nations Economic and Social Council (ECOSOC) recommended on 21 July that the General Assembly take a decision on the matter.
The extension will allow Bangladesh to retain the opportunity to benefit from LDC-related international support measures and trade preferences during the additional preparatory period, subject to the rules and arrangements of individual development partners and markets.
Economists and trade analysts have cautioned, however, that the additional time will not automatically resolve the challenges associated with graduation. Bangladesh will need to implement reforms and improve competitiveness before the revised deadline.
Graduation move
Bangladesh was included in the UN’s LDC category in December 1975. Progress in agriculture, industrial development, garment exports, remittances, education and healthcare helped the country qualify for graduation.
The country met the UN’s three graduation criteria – gross national income per capita, the human assets index, and the economic and environmental vulnerability index – in consecutive reviews in 2018 and 2021.
On 26 February 2021, the UN-CDP recommended Bangladesh’s graduation. ECOSOC endorsed the recommendation on 8 June, and the General Assembly agreed to the transition on 24 November that year.
Bangladesh was granted a five-year preparatory period, rather than the usual three years, in consideration of the economic effects of the Covid-19 pandemic. Its graduation was consequently scheduled for 24 November 2026.
Export competitiveness faces major risks
As an LDC, Bangladesh benefits from preferential market access in several major export destinations. Following graduation, changes to these arrangements could raise tariffs on Bangladeshi goods and weaken their price competitiveness in markets such as the European Union, the UK, Canada and Japan.
The timing and extent of any changes will depend on the policies of individual trading partners and the transition arrangements they offer.
A 2025 analysis by the United Nations Conference on Trade and Development (UNCTAD) estimated that Bangladesh’s total exports could decline by around 32% if it loses the relevant trade preferences. The estimate represents a potential impact, not a guaranteed outcome.
Mustafa Abid Khan, chief executive officer of the Bangladesh Foreign Trade Institute, told TBS that the extension could create an important opportunity for Bangladesh, particularly in intellectual property and trade negotiations.
He said the country would gain additional time to prepare for changes in intellectual property rules and pursue FTAs, while implementing necessary reforms in business and the wider economy.
“Under the current arrangements, we will lose many benefits anyway if business continues as usual. We must use the additional time effectively to implement the necessary reforms. If we make proper use of this period, many of our future problems can be reduced. But if we fail to use the time, we will find ourselves back in the same position,” he said.
Garments, pharma, development finance
The garment industry, which accounts for a substantial share of Bangladesh’s export earnings, faces particular exposure to changes in preferential tariffs. Higher effective prices for buyers could put pressure on orders, investment and employment.
Improving productivity, product quality, technology adoption and workforce skills will be important to mitigate these risks.
The pharmaceutical industry also faces potential changes. As an LDC, Bangladesh benefits from certain flexibilities under international intellectual property rules. Following graduation, changes to the applicable rules could affect the production of patented medicines, technology transfer and research costs.
Development financing is another area of concern. Some LDC-specific assistance and concessional financing arrangements may change following graduation, although leaving the category does not mean that all grants or concessional loans will automatically end.
Strengthening domestic revenue collection, improving public spending efficiency and managing debt sustainably will therefore be important for financing infrastructure, energy and social development.
Reforms needed before 2029
The government sought additional time amid uncertainty over global trade, geopolitical conflicts, energy supplies and domestic economic weaknesses. Other challenges include attracting investment, creating jobs, controlling inflation, increasing revenue collection and reforming the financial sector.
Over the next three years, Bangladesh will need to pursue alternative market-access arrangements and advance trade negotiations with major export destinations, including the European Union.
Improving energy security, ports and customs services will also be essential to reduce business costs and improve the reliability of export deliveries.
Alongside garments, the country needs to expand exports of pharmaceuticals, leather goods, processed agricultural products, light engineering products and electronics.
Improving the investment climate, addressing weaknesses in the banking sector, adopting new technologies and developing a skilled workforce will also be crucial.
The extension provides Bangladesh with more time to prepare for graduation, but the outcome will depend on how effectively the government and private sector use the period to address structural weaknesses and build a more competitive economy.
Fahmida said Bangladesh during the extension period should engage early with major export markets to prepare for potential changes in tariffs and other trade preferences after graduation.
Exporters must also be better prepared, she said. “The country should reduce its reliance on readymade garments and diversify into pharmaceuticals, agro-processing, leather, light engineering, jute products and information technology.”
Fahmida stressed the need to expand the tax base, ensure good governance in the banking sector, reduce the cost of doing business and develop a skilled workforce.
She said the government should adopt a reform plan with clear deadlines and measurable targets. Progress should be reviewed and published every six months to ensure accountability.
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