Bangladesh’s LDC Graduation and Its
Impact on International Financial Flows
and Exchange Rate Stability
Bangladesh University of Professionals
Faculty of Business Studies
Department of Business Administration-General
Bachelor of Business Administration (BBA)
Term Paper
International Financial Management (FIN-4810)
Batch: BBA 2021
Submitted To
Lecturer Sinha Marzuka Sultana
Department of Business Administration General
Submitted By
Group- 4
Sr. Name ID
1. Faizha Nazifa Rodoshi 2123011013
2. Masafi Hasan Abanti 2123011051
3. Nabila Zaman 2123011069
4. Raiyan Sanjana 2123011119
5. Ashik Ullah Saad 2123011125
Submission Date: 29th June, 2025
1
Letter of Transmittal
29th June, 2025
To,
Lecturer
Sinha Marzuka Sultana
Department of Business Administration
Faculty of Business Studies
Bangladesh University of Professionals
Subject: Application for the submission of a term paper on "Bangladesh’s LDC
Graduation and Its Impact on International Financial Flows and Exchange Rate
Stability”
Ma’am,
We are honored to present the term paper on the topic "Bangladesh’s LDC Graduation and Its
Impact on International Financial Flows and Exchange Rate Stability”. This paper represents
the result of our hard work and dedication.
We are grateful for your invaluable guidance throughout the preparation of this paper.
Working on this fascinating topic has been a great learning experience. We hope our work
meets your expectations and standards.
Sincerely yours
Faizha Nazifa Rodoshi - 2123011013
Masafi Hasan Abanti - 2123011051
Nabila Zaman Shreya - 2123011069
Raiyan Sanjana - 2123011119
Ashik Ullah Saad - 2123011125
Section-A, Batch 2021
Department of Business Administration-General
Faculty of Business Studies
2
Acknowledgment
We would like to extend our heartfelt gratitude to our faculty, Lecturer Sinha Marzuka
Sultana for her invaluable guidance, unwavering support, dedication, and insightful feedback
throughout the development of this term paper. Her expertise and commitment were
instrumental in shaping our understanding of the subject matter and ensuring the successful
completion of this paper on time.
We also want to thank our classmates for their constant support and encouragement during
this process.
Finally, we sincerely thank our families for their continuous encouragement, understanding,
and moral support throughout this journey.
3
Abstract
Bangladesh, which is supported by strong economic growth, the advancement of human
capital, and structural resilience, is about to leave the Least Developed Country (LDC)
category, marking a significant turning point in its development trajectory. The nation met all
three UN graduation requirements between FY2000 and FY2023 by achieving consistent
GDP growth, poverty reduction, and social advancement. But when important international
advantages like privileged trade access, concessional funding, and institutional assistance are
progressively taken away, this shift will present serious difficulties. The probable effects of
LDC graduation on Bangladesh's foreign currency rate stability and financial flows are
examined in this research. Reductions in foreign aid and concessional loans, dwindling access
to duty-free export markets, and rising capital flow and sovereign borrowing cost volatility
are some of the main causes for worry. Additionally, it describes possible monetary and fiscal
ramifications, especially in light of diminishing foreign reserves, mounting pressure to
service debt, and increased susceptibility to changes in the world economy. Export
diversification, improved foreign reserve management, exchange rate flexibility, investment
environment changes, and proactive international engagement are the main pillars of the
strategic policy framework the report suggests to reduce these risks. By ensuring
macroeconomic stability and creditworthiness in the post-LDC period, these suggestions
hope to help Bangladesh's economy become more robust and competitive on a global scale.
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Table of Contents
1.0 Introduction........................................................................................................................ 6
2.0 Overview of LDC Graduation...........................................................................................6
2.1 Strategic Significance.....................................................................................................7
3.0 Impact on International Financial Flows:....................................................................... 7
3.1. Foreign Direct Investment (FDI)...................................................................................8
3.2. Foreign Aid and Grants................................................................................................. 9
3.3. Concessional Loans and Finance................................................................................ 10
3.4. Export Financing and Trade Preferences.....................................................................11
4.0 Impact on Exchange Rate Stability................................................................................ 12
4.1. Reduced Foreign Currency Inflows............................................................................ 12
4.2. Trade Balance and Currency Volatility....................................................................... 13
4.3. Capital Flow Volatility................................................................................................ 13
4.4. Impact on Credit Ratings and Sovereign Borrowing Costs........................................ 14
Table 3: Bangladesh’s Sovereign Credit Ratings (as of 2024)...............................14
Table 4: Contrasting Effects of LDC Graduation on Sovereign Borrowing.......... 14
Table 5: Trends in Bangladesh’s Debt Servicing and Fiscal Strain........................15
Table 6: Mitigation Strategies for Rising Sovereign Borrowing Costs..................16
5.0 Policy Recommendations................................................................................................. 16
5.1 Economic Diversification for Export Resilience..........................................................16
5.2 Strengthen Foreign Reserve Management................................................................... 18
5.3 Gradual Exchange Rate Flexibility.............................................................................. 19
5.4 Improve Investment Climate and Business Competitiveness...................................... 19
5.5 Strategic Use of Trade Agreements..............................................................................19
5.6 Maintain Strong Sovereign Credit Metrics.................................................................. 20
5.7 Institutionalize Debt Sustainability and Public Financial Management (PFM)...........20
5.8 Proactive Engagement with Credit Rating Agencies................................................... 20
6.0 Conclusion.........................................................................................................................21
Reference.................................................................................................................................22
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1.0 Introduction
Over the past two decades, Bangladesh has transitioned from a predominantly agrarian
economy to a rapidly industrializing one, driven by export-led growth, demographic
dividend, and strategic policy reforms. Between FY2000 and FY2023, the country’s GDP
grew at an average annual rate of over 6%, with per capita income rising from approximately
$400 to over $2,600 (World Bank, 2023). Significant progress has also been made in poverty
reduction. The national poverty rate fell from 48.9% in 2000 to 18.7% in 2022, and extreme
poverty has been nearly halved. These achievements have been accompanied by
improvements in social development indicators. Bangladesh’s literacy rate increased from
53.7% in 2000 to 76.8% in 2023, while life expectancy reached 72.4 years. The country’s
Human Development Index (HDI) value stood at 0.661 in 2022, placing it in the medium
human development category.
In recognition of this sustained progress, the United Nations Committee for Development
Policy (CDP) recommended Bangladesh’s graduation from the Least Developed Country
(LDC) category. This decision was based on the country’s fulfillment of all three graduation
criteria in both the 2018 and 2021 triennial reviews. However, graduation also brings
challenges: preferential trade treatment, concessional financing, and certain institutional
supports will be phased out. Consequently, this paper aims to analyze how graduation will
reshape Bangladesh's international financial flows and impact the stability of its exchange
rate, alongside broader macroeconomic implications.
2.0 Overview of LDC Graduation
LDCs are defined by the UN based on structural vulnerabilities and underdevelopment across
income, education, health, and economic stability. To graduate, a country must meet at least
two out of the three criteria thresholds in two consecutive triennial reviews. Bangladesh not
only met but exceeded all three in both 2018 and 2021.
Graduation Criteria (2021):
Gross National Income (GNI) per capita:
Threshold: $1,230 | Bangladesh (2021): $2,122
(Surpassing the threshold by over 70%)
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Human Asset Index (HAI):
Threshold: 66 | Bangladesh: 75.3
(Measures health and education; driven by high immunization rates and female school
enrollment)
Economic Vulnerability Index (EVI):
Threshold: ≤ 32 | Bangladesh: 27.3
(Reflects resilience to external shocks such as natural disasters and trade shocks)
Timeline of Graduation:
2018: First CDP recommendation for graduation
2021: Second qualification - formal UN recommendation issued
2024: End of transition preparatory phase
2026: Official graduation from LDC status
2.1 Strategic Significance
● Bangladesh will become the first country to graduate from LDC status primarily due
to manufacturing-based growth, rather than through mineral or oil-based exports,
distinguishing it from peers like Angola or Equatorial Guinea.
● Graduation enhances Bangladesh’s global image and creditworthiness, allowing
greater access to international capital markets.
● However, it also entails the phasing out of international support mechanisms such as
the EU’s Everything But Arms (EBA) initiative, TRIPS pharmaceutical waivers, and
access to multilateral concessional finance.
3.0 Impact on International Financial Flows:
Bangladesh enjoys duty-free access to 38 countries under GSP including the UK and 27 EU
countries, where the majority of our apparel exports is concentrated. Although Bangladesh
stands to lose this access, reformation in human rights and labor rights regulations could
renew the country’s DFQF access under the Everything But Arms (EBA) initiative of the EU
for smooth transition. (Light Castle Partners, 2025).
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3.1. Foreign Direct Investment (FDI)
FDI is an important driver of development and innovation, and graduating LDC status would
theoretically attract more of it. FDI inflows have fluctuated, with net FDI at $3.44 billion in
FY 2022-23. Bangladesh's investment-to-GDP ratio is 31%, lower than Vietnam (34%) and
India (32%) (Light Castle Partners, 2025). Given that Bangladesh has experienced
fluctuating levels of foreign direct investment over the past ten years, a steady rise is more
likely to occur once the country leaves LDC status. Due in part to Bangladesh's quick and
efficient handling of the pandemic and crisis-resilience, foreign direct investment (FDI)
inflow rose by 13% in 2021, and international project financing arrangements tripled at the
same time.
Figure 1. Trend of Foreign Direct Investment (FDI) inflow of Bangladesh (Billion USD)
Increasing Foreign Direct Investment has been associated with general economic advantages
for developing nations. Research indicates that increased FDI results in the creation of human
capital in the form of more productive and efficient workflows as well as technology
spillovers, such as the transfer of cleaner technologies and know-how. Additionally,
connections with foreign investors directly improve international trade integrations and make
the domestic business environment more competitive.
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Figure 2. Net FDI by Fiscal year vs Gross FDI Inflow
3.2. Foreign Aid and Grants
In 2022, Bangladesh received $5.19 billion in net Official Development Assistance (ODA)
and official aid. This figure reflects a long-term decline in ODA dependency: in the early
1990s, ODA equaled export earnings (ratio 1:1), but by 2015, the ratio had dropped to 1:16.
The share of loans in ODA has increased, with grants declining. Bangladesh is already
transitioning from IDA-only (highly concessional) World Bank loans to blended and
eventually IBRD-type (less concessional) loans. Upon graduation, Bangladesh will lose
access to certain LDC-specific funds (e.g., UNFCCC LDC Fund) and face shorter maturities
and higher interest rates on new loans. However, research suggests that the overall reduction
in ODA may be limited, as multilateral agencies base assistance more on income level and
institutional capacity than LDC status alone.
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Figure 3. Net Official Development Assistance (ODA) trends
ODA has increased moderately, but as a share of GDP and the national budget, its importance
is declining. And after LDC graduation, a 20–30% reduction in ODA is expected, especially
in grants, affecting health, education, and rural development sectors
3.3. Concessional Loans and Finance
Bangladesh's external debt portfolio is rapidly shifting. From concessional (low-interest,
long-term) to non-concessional (higher interest, shorter term) loan. From multilateral (World
Bank, ADB) to more bilateral and commercial sources. Increasing use of flexible interest
rates (LIBOR/SOFR plus), making debt servicing more expensive as global rates rise.
Table 1: Interest Rate Trends
Year LIBOR (12M) SOFR EURIBOR (6M)
2016 1.38% — -0.17%
2022 3.40% 1.64% 0.68%
2023 5.47% 4.96% 3.66%
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Interest payments rose from $0.48 billion to $1.31 billion (168% increase) over the past
decade, driven by higher borrowing costs and more stringent loan terms. LDC graduation
itself does not directly change access to concessional finance; rather, World Bank income
classification (e.g., LMIC status) is the key determinant45. However, the loss of export
preferences may indirectly affect export earnings, forex reserves, and thus debt-servicing
capacity. Around 65% of Bangladesh’s $100.2 billion external debt is on concessional terms.
Post-graduation, access to soft loans from the World Bank, IMF, and ADB will be reduced,
raising borrowing costs to 3–6% per annum, thereby increasing the fiscal burden.
3.4. Export Financing and Trade Preferences
Bangladesh could lose some 14% or USD 5.73 billion worth of export earnings a year
following graduation to LDC status. Bangladesh continues to benefit from preferential market
advantages known as the Generalized System of Preferences (GSP), which may be the most
important factor for the nation. These benefits include Duty-Free and Quota-Free (DFQF)
access for exports to World Trade Organization (WTO) international development partners.
Bangladesh will face additional tariffs of about 6.7% in the absence of LDC preferences,
risking an export loss of $2.7 billion, mainly impacting the RMG sector
Table 2: Bangladesh’s Projected Progress and Export Loss (CPD Policy Brief)
Year GNI per Capita Human Assets Economic Export Loss (USD
Index Vulnerability Index Bn)
2018 1,274 73.2 25.2 —
2021 1,730–1,780 79.2 24.8 —
2024 2,260–2,500 86.3 24.7 2.7
On the other hand Readymade garments (RMG) account for 84% of exports ($55.56 billion
in FY 2022-23), with 73% going to preference-granting markets. Graduation will result in the
phase-out of the EU’s EBA scheme and TRIPS waivers, reducing competitiveness and
increasing production costs.
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4.0 Impact on Exchange Rate Stability
4.1. Reduced Foreign Currency Inflows
Bangladesh will have significantly fewer access to grants, soft loans, and highly concessional
support from development partners and international organizations as a result of its departure
from the Least Developed Country (LDC) designation. According to projections, foreign
currency inflows would decline by $1.5–2 billion a year as donor assistance programs and
complementary financial sources such as the World Bank's International Development
Association (IDA) credits are curtailed. Bangladesh's foreign exchange reserves have
dropped from $48 billion in August 2021 to $18.4 billion in May 2024—just enough to cover
three months of imports—making this reduction occur at a precarious time. If affordable
external funding is no longer available, the country's ability to settle debts, finance critical
imports, and uphold currency stability will be challenged; this could lead to tighter capital
restrictions or increased reserve depletion.
4.2. Trade Balance and Currency Volatility
Bangladesh's trade imbalance reached $17.25 billion in FY 2022-23, driven by rising import
costs (fuel, equipment, and food) and slowing export growth. The LDC graduation will
worsen this inequality, as the country would lose duty-free and quota-free (DFQF) market
access in key markets such as the EU, Canada, and Japan. According to research, rising
tariffs and competition from other least developed countries (LDCs) will result in yearly
export losses ranging between $3 and $5 billion. The decline of trade preferences has already
resulted in fluctuations in exchange rates. In 2023, the Bangladeshi Taka dropped by 18%
against the US dollar, marking one of the most significant declines in South Asia. A declining
Taka increases the expenses of imported goods (fuel, materials), driving up inflation.
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Figure 4. Bangladesh’s Trade Imbalance, Export Loss and Currency Depreciation
(FY 2022-2023)
4.3. Capital Flow Volatility
With Bangladesh moving away from LDC status, its growing dependence on international
financial markets, especially government bonds and commercial loans, makes the economy
more vulnerable to fluctuations resulting from changing global investor sentiment. Increasing
interest rates in developed economies, especially those by the Federal Reserve in the U.S.,
could lead to capital outflows from emerging markets like Bangladesh, straining foreign
currency reserves and jeopardizing the banking industry. This vulnerability is exacerbated by
the likelihood of sharp changes in the Taka's value and rising government bond rates if
investors perceive increased macroeconomic threats. Current trends highlight this
susceptibility, since non-resident investment in Bangladesh's stock market and government
bonds is inconsistent and directly related to fluctuations in global risk appetite. External
shocks—like a downturn in major export markets such as the EU or a sudden increase in
commodity prices—might further disrupt capital flows, worsening currency volatility and
restricting financing conditions. Lacking strong protections, this reliance on unpredictable
global capital could jeopardize Bangladesh’s economic stability after graduation.
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4.4. Impact on Credit Ratings and Sovereign Borrowing Costs
Bangladesh’s upcoming LDC graduation coincides with its current speculative-grade
sovereign credit ratings. These ratings affect investor perception, borrowing costs, and the
country’s access to international capital markets.
Table 3: Bangladesh’s Sovereign Credit Ratings (as of 2024)
Agency Rating Outlook Investment Grade Status
Moody’s B2 Negative Speculative
Standard & Poor’s (S&P) B+ Stable Speculative
Fitch B+ Stable Speculative
While graduation from LDC status may strengthen Bangladesh’s global image and improve
creditworthiness in the long run, the immediate financial implications are mixed. Two
countervailing forces are at play:
Table 4: Contrasting Effects of LDC Graduation on Sovereign Borrowing
Positive Effect Negative Effect
Enhanced international perception Loss of concessional loans at ~2% interest
Potential decline in sovereign bond risk Increased reliance on commercial loans (3–6%
premium interest)
Improved branding for sustainable finance Higher debt servicing costs and fiscal burden
The country is already experiencing rising debt servicing pressure. External borrowing is
becoming more expensive and consuming a growing share of fiscal resources.
Table 5: Trends in Bangladesh’s Debt Servicing and Fiscal Strain
Indicator FY 2023–24 Early FY2024–25
Increase in external debt servicing +25.73% year-on-year —
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Increase in interest payments +44% year-on-year —
Share of interest payments in — >50%
government revenue
Projected annual debt servicing — $5–6 billion
(post-2026)
Figure 5. Trends in Bangladesh’s External Debt Servicing and Interest Payments
(FY2018–FY2024)
To address these emerging risks, the government must adopt targeted financial and structural
reforms:
Table 6: Mitigation Strategies for Rising Sovereign Borrowing Costs
Strategy Description
Thematic Bond Issuance Expand use of sustainability-linked or green bonds to attract
ESG capital
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External Borrowing Reduce from 22.9% to 16.7% of gross financing needs by
Reduction FY2026–27
Revenue Mobilization Improve tax-to-GDP ratio through tax base expansion and
reform
Credit Rating Engagement Proactive communication with rating agencies to improve
outlooks
If these measures are not implemented in a timely and coordinated manner, Bangladesh risks
worsening debt vulnerability in the post-LDC period. Sustained fiscal reforms and strategic
debt management will be critical to ensuring long-term macroeconomic stability and
creditworthiness.
5.0 Policy Recommendations
To ensure a smooth transition from Least Developed Country (LDC) status while maintaining
macroeconomic stability and preserving access to international financial flows, Bangladesh
must adopt a proactive and multidimensional policy strategy. The following
recommendations are designed to address the challenges posed by LDC graduation and
support long-term financial and exchange rate stability:
5.1 Economic Diversification for Export Resilience
Bangladesh’s export sector remains heavily concentrated in Ready-Made Garments (RMG),
which contribute over 80% of total export earnings. While this sector has been instrumental
in driving economic growth, such a narrow export base presents a significant vulnerability in
the post-LDC era, where preferential trade benefits may be reduced or phased out. To ensure
sustainable export growth and resilience against external shocks, Bangladesh must actively
diversify into high-potential sectors. Information technology, already contributing around
$1.9 billion, along with pharmaceuticals ($0.2 billion) and agro-processing, represent
promising avenues for expansion due to their growing global demand and job-creating
potential. The government should support these sectors through targeted policies, such as
offering R&D tax credits to incentivize innovation and private sector investment in non-RMG
industries. Additionally, the development of enabling infrastructure—including specialized
economic zones, digital connectivity, improved logistics, and cold-chain systems—will be
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essential to facilitate high-value exports and build globally competitive industries beyond
garments.
Figure 6. Export Diversification by Sector in Bangladesh in 2023 (USD Billion)
As shown in Figure 1, Bangladesh's export profile remains heavily skewed toward RMG,
which accounted for approximately $45 billion in 2023, compared to only $1.9 billion from
IT and marginal values from pharmaceuticals and agro-processing. This underlines the
urgency for targeted export diversification policies to reduce dependency risks.
5.2 Strengthen Foreign Reserve Management
As Bangladesh graduates from LDC status, maintaining an adequate level of foreign
exchange reserves becomes crucial to cushion against external shocks and maintain investor
confidence. A strategic reserve benchmark of at least $30 billion should be targeted to ensure
six months’ worth of import coverage and mitigate volatility in global financial conditions.
To bolster reserves, the government must promote the use of formal remittance channels by
leveraging fintech platforms such as mobile banking and blockchain-based remittance
systems. These digital tools can reduce transaction costs and incentivize the inflow of
remittances through official channels. Additionally, issuing diaspora bonds can provide an
innovative mechanism to engage the large Bangladeshi expatriate population while raising
foreign capital in a secure, patriotic, and structured manner.
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Figure 7. Bangladesh Foreign Exchange Reserves from 2018 to 2023
Bangladesh’s foreign exchange reserves have shown volatility in recent years, peaking at $48
billion in 2021 before declining to $20 billion in 2023, as depicted in Figure 2. This
reinforces the need for prudent reserve management, including enhanced remittance channels
and targeted savings instruments.
5.3 Gradual Exchange Rate Flexibility
In light of LDC graduation and increasing integration with global markets, Bangladesh must
adopt a more flexible exchange rate regime to enhance competitiveness and adapt to shifting
external dynamics. Implementing a crawling peg or a managed float system would allow the
exchange rate to adjust gradually based on macroeconomic fundamentals while avoiding
excessive volatility. This approach would also help manage inflationary pressures and
maintain export competitiveness. Furthermore, strengthening coordination between monetary
and exchange rate policies is essential. The central bank should employ forward-looking tools
and real-time data analytics to synchronize policy actions and mitigate destabilizing
fluctuations.
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5.4 Improve Investment Climate and Business Competitiveness
A predictable and investor-friendly business environment is critical for sustaining
development financing and attracting long-term foreign direct investment (FDI) in the
post-LDC era. Accelerating the full implementation of the Bangladesh Investment
Development Authority’s (BIDA) one-stop service portal can streamline bureaucratic
procedures and reduce red tape for investors. Simultaneously, expediting the development of
Special Economic Zones (SEZs) and Export Processing Zones (EPZs) with modern
infrastructure and regulatory clarity will provide competitive advantages to both local and
international firms. Structural reforms are also needed to address bureaucratic inefficiencies
and reduce policy unpredictability, thereby improving Bangladesh’s overall ease of doing
business and investor confidence.
5.5 Strategic Use of Trade Agreements
With the gradual phasing out of LDC-specific trade benefits, Bangladesh must proactively
explore alternative avenues to preserve export market access. This includes negotiating Free
Trade Agreements (FTAs) with key trading partners such as the European Union, United
Kingdom, and ASEAN countries. These agreements would help maintain tariff-free access to
crucial export destinations and safeguard Bangladesh’s global trade position. Additionally,
the country should evaluate the potential benefits of joining larger trade blocs like the
Regional Comprehensive Economic Partnership (RCEP), which could offer access to broader
markets and diversified export opportunities. To navigate these complex negotiations,
Bangladesh must also invest in building institutional and human resource capacity in trade
diplomacy and international law.
5.6 Maintain Strong Sovereign Credit Metrics
To ensure continued access to affordable international financing, Bangladesh must maintain a
positive credit rating outlook through disciplined macroeconomic management. Introducing
fiscal responsibility legislation that sets clear guidelines on deficit limits and public debt
ceilings would demonstrate commitment to sustainable fiscal practices. Transparency in
economic data is equally critical—publishing timely and credible macroeconomic indicators
will reassure international investors and credit rating agencies. Moreover, comprehensive and
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regular debt reporting on public and publicly guaranteed loans will enhance credibility and
enable better risk assessment by external stakeholders.
5.7 Institutionalize Debt Sustainability and Public Financial Management
(PFM)
Robust public financial management is vital to macroeconomic stability in the
post-graduation era. Bangladesh should integrate debt sustainability analyses (DSAs) into its
annual budget planning processes to assess the long-term affordability and risks of public
borrowing. Simultaneously, modernizing PFM systems through digital platforms will
improve transparency, accountability, and efficiency in budget execution. These
improvements will enable better tracking of public expenditure and foster trust among
citizens and international development partners.
5.8 Proactive Engagement with Credit Rating Agencies
Given that sovereign credit ratings significantly impact borrowing costs and capital inflows,
Bangladesh must engage proactively with international rating agencies. Regular, structured
dialogues can provide clarity on the country's ongoing reform efforts, fiscal discipline, and
structural resilience. Additionally, developing a clear and consistent investor relations
strategy will allow the government to communicate its reform narrative effectively,
reinforcing confidence in Bangladesh’s economic management and stability post-LDC
graduation.
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6.0 Conclusion
Bangladesh’s impending graduation from the LDC category marks a significant milestone in
its economic journey, reflecting sustained improvements in income levels, human
development, and resilience to structural vulnerabilities. However, this transition also signals
the end of long-standing privileges, including preferential trade access, concessional
financing, and institutional support frameworks that have historically underpinned the
country’s development progress. The withdrawal of these benefits is expected to alter the
flow and cost of international capital, impact the stability of the exchange rate, and elevate
the importance of sovereign credit ratings in shaping the country’s financial future. These
dynamics pose both challenges and opportunities—requiring Bangladesh to strengthen its
macroeconomic fundamentals, deepen structural reforms, and enhance institutional readiness
for a post-LDC global environment.
To navigate this transition successfully, Bangladesh must implement a coherent policy
framework that balances resilience with reform. Diversifying the export base beyond RMG,
maintaining a robust level of foreign exchange reserves, gradually transitioning toward a
flexible exchange rate regime, and improving the overall investment climate will be essential
to safeguard financial stability. Moreover, Bangladesh must engage proactively with
international financial institutions and credit rating agencies while strengthening fiscal
discipline and debt transparency. With the right combination of strategic planning,
international cooperation, and institutional commitment, Bangladesh can not only mitigate
the risks of LDC graduation but also harness it as a platform for long-term, inclusive, and
globally competitive economic growth.
21
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