Jehangir Hussain :
Following graduation from the Least Developed Country (LDC) group Bangladesh is possibly headed to lose about $2.7 billion in export earnings annually.
Though Bangladesh would lose some of the opportunities, new opportunities would open up for it, expects the Economic Relations Division.
The ERD advised the Ministry of Commerce to make policy frameworks, supportive of exporters and manufacturers for the period covering the duration and post-graduation from the LDC group.
The ERD also advised the government to augment domestic resource mobilisation, improve road, power, and port facilities to offset the effects of losing duty free market access
It also called for diversification of exports in order to minimise vulnerability of the national economy.
Bangladesh has been in the LDC group for 43 years. After its graduation from the LDC group, Bangladesh would be subjected to 6.7 per cent additional tariff as many countries and trading partners would withdraw duty-free and quota-free benefits of Bangladesh, according a paper prepared by the Economic Relations Division (ERD) on the challenges and opportunities regarding its transition from the LDC group. ERD made the study as a United Nations Committee for Development Policy (UNCDP) is expected to place Bangladesh in its graduation list this year.
The UN Committee would place Bangladesh in the new category as it met the criteria of Gross National Income (GNI) per capita, Human Assets Index (HAI) and Economic Vulnerability Index (EVI).
Following review Bangladesh’s progress by the UNCDP and a three-year transition period the country’s graduation from the LDC group would take place in 2024.
Currently, 72 per cent of exports of goods and services of Bangladesh get duty-free and quota-free market access, according to the ERD paper.
Goods and services of Bangladesh enjoy varying degrees of preferential market access to over 40 countries, according a study done by the Centre for Policy Dialogue in March 2021.
As regional and bilateral trade agreements account for about 90 per cent of total exports from Bangladesh, preferential access is of special significance says the ERD paper.
European Union, the destination of 54 per cent of exports from Bangladesh, provides preferential market access to its goods and services.
Following graduation, Bangladesh’s exports would be subjected to 8.7 per cent tariffs by the EU, according to the CPD.
Following graduation, goods and services of Bangladesh would, therefore, be more expensive.
According to the United Nations Conference on Trade and Development (UNCTAD) exports from Bangladesh might decline by 5.5 per cent to 7.5 percent.
Following graduation, Bangladesh is also expected to lose low interest credits from the International Development Association, the soft loan window of the World Bank.
Several mega projects needing borrowing might not get traditional concessional credits.
According to the World Bank’s criteria, if a country’s per capita income goes above $1,400 for three consecutive years, the rate of interest would go up to about two per cent from 0.75 per cent, as Bangladesh gets now.
Despite Bangladesh’s sound track record of managing its public debt and repayment of debts, the ERD sees the risk of foreign debt burden increasing due to non- availability of concessional credits.
Economists, however, view Bangladesh’s reduced dependence on foreign aid as a positive development.
Bangladesh’s dependence on foreign aid accounts for 1.3 per cent of its gross domestic product (GDP).
(The writer is a senior journalist).
