Home ›› 15 Jul 2022 ›› Opinion
Bangladesh was categorized as least developed country (LDC) shortly after gaining independence from Pakistani rule. The war-ravaged newly independent country had negligible foreign exchange reserves. Robust export earnings during that period were a distant dream. Amidst many obstacles, Bangladesh economy moved at a slow pace.
Bangladesh’s economic achievements in the last five decades have been nothing short of spectacular. Today, Bangladesh’s export earnings have crossed 50 billion USD. This indeed is a remarkable achievement for this country of 170 million people. By now it is well known that Bangladesh is graduating from an LDC to a developing country in 2026. With a view to achieving the prestigious status, Bangladesh had to fulfill three criteria. The country has been able to show significant performance in the area of per capita income, human asset index and environmental vulnerability index. It also should be noted that Bangladesh also achieved Millennium Development Goals (MDGs) by 2015.
Currently, LDC graduation issue is vitally important for Bangladesh. The graduation will strengthen Bangladesh’s brand image worldwide. Bangladesh is ready to face many economic challenges following the LDC graduation issue. The steps for addressing challenges has already been taken. As part of the steps, Bangladesh is on the move to enter into free trade area agreements in addition to signing agreements for doing free trade on condition of duty-free facility. Besides, Bangladesh is now interested in doing trade under preferential trade agreements (PTAs). Ahead of the year- 2026 (LDC graduation year), Bangladesh wants to sign Comprehensive Economic Partnership Agreement (CEPA) with neighboring India in a year. Later, the CEPA signing is set to take place with Sri Lanka and Indonesia. It is important to note that CEPA is alternative to Free Trade Area (FTA) agreement. If CEPA is done between India- Bangladesh, bilateral trade is likely to reach 25 billion US dollars from the existing 10 billion, according to a recent study. If Bangladesh can make progress in the negotiation on Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) free trade pact, the country will experience trade-related benefits.
As Bangladesh, widely known as one of the fastest growing economies of the world, aspires to become an upper-middle-income country (UMIC) by 2031, there is a need for a huge support from the government level. It is worth mentioning that the current visionary government has chalked out many programmes to achieve the UMIC status. There many challenges also just ahead of getting the UMIC status. The World Bank (WB) is going to facilitate Bangladesh under a five-year Country Partnership Framework (CPF). The CPF comprises of 8th Five-Year Plan, Systemic Country Diagnostic (SCD) update, consultations with stakeholders, completion and learning review.
The Washington-based multilateral lender has, in the meantime, identified four crucial challenges for Bangladesh on the way to becoming a UMIC. CPF drafted by the World Bank, one of Bangladesh’s foremost development partners, is nothing but a strategy paper that stresses the priority areas. It has been learnt that CPF activity starts from FY23 and ends its operation in FY 2027, a year after LDC graduation. The Washington-based lender in 2021 completed the Systemic Country Diagnostic (SCD) that identified eight priorities to tackle four challenges. The Priorities are (1) inclusive and resilient human capital development (2) productive and sustainable management of natural capital (3) effective and efficient public institutions (4) macroeconomic and financial financial-sector stability (5) competitive and diversified markets (6) skills development and technology adoption (7) closing infrastructure gap and (8) private-sector financing for development.
It would be extremely difficult for Bangladesh to become an upper-middle-income country (UMIC), if Bangladesh fails to achieve sustainable Development Goals (SDGs) by 2031. A total of 17 goals framed by the United Nations ( UN) have to be achieved ahead of going forward toward attaining the UMIC status. The goals that must be achieved are : (1) No Poverty (2) Zero Hunger (3) Good Health and Well-being (4) Quality Education (5) Gender Equality (6) Clean Water and Sanitation (7) Affordable and Clean Energy, (8) Decent Work and Economic Growth, ((9) Industry, Innovation and Infrastructure (10) Reduced Inequality (11) Sustainable Cities and Communities, (12) Responsible Consumption and Production, (13) Climate Action (14) Life Below Water (15) Life on Land (16) Peace and Justice Strong Institutions (17) Partnership to achieve the Goal. According to Sustainable Development Report 2022, Bangladesh ranked 104th out of 163 countries scoring 64.2 indicating that Bangladesh lags far behind in achieving all goals. Among other South Asian economies, Bhutan ranked 70th, Sri Lanka 76th, Nepal 98th, Myanmar 103rd, India 121st and Pakistan 125th.
In the current context, reducing poverty rate has become one of the key challenges for Bangladesh. The corona pandemic resulted in a vast number of people falling into the poverty trap. Some research organizations revealed that the poverty rate jumped to 36 per cent during coronavirus. The poverty rate before Covid-19 situation was not more than 21 per cent. The government failed to check the poverty rate despite reaching virus-hit downtrodden people with stimulus packages. If Bangladesh fails to address the first goal of SDG- No Poverty, in what way can other goals be met? Besides, SDG-10, reducing inequality within and among countries is another challenge for Bangladesh. There has been high income inequality in Bangladesh for the last one decade. According to World Ultra Wealth Report-2018, Gini-coefficient, a measure of income inequality, stood at 0.483 in 2016 where it was only 0.36 in 1973-74. In view of Gini-coefficient figure, it can be said that Bangladesh is in trouble in terms of income inequality. The World Economic Forum in its annual paper titled “Outlook on the Global Agenda 2015” termed income inequality as a major concern in the world.
As Bangladesh is planning to become a high-income country by 2041 after attaining the upper-middle-income country status by 2031, there needs timely policy guidelines in addressing the bottlenecks. Foreign assistance from donor agencies might be taken with a view to materializing our dream by 2031. It is essential to put emphasis on the issue of private sector development among other initiatives. Let the World Bank work for greater interest of Bangladesh under a five-year Country Partnership Framework (CPF). Hopefully, CPF would be prove to be a blessing.
The writer is an economic affairs analyst. He can be contacted at mazadul1985@gmail.com
