Graduation from LDC: UN projections show high hope

Bangladesh is on track to graduate to a developing country from a least developed one as a UN body estimates that the country's scores in all three criteria would be much higher from the graduation threshold next year.

In its assessment, the United Nations Conference on Trade and Development (UNCTAD) painted an encouraging picture on the progress, saying the country would stand at 142 percent of one of the thresholds in 2021, when a UN panel would review Bangladesh's progress for a second time.

UNCTAD made a presentation of its projections to the government during a virtual meeting on Thursday where government high officials and representatives of trade bodies like BGMEA and FBCCI were present.

The UNCTAD projections on the three eligibility criteria are almost similar to the latest status report that the government last month sent to the UN Committee for Development Policy (CDP).

The criteria are: Gross National Income (GNI) per capita, Human Assets Index (HAI) and Economic Vulnerability Index (EVI). According to the status report, Bangladesh is well ahead of the required thresholds in the three criteria.

Bangladesh was included in the LDC list in 1975. In 2015, it crossed the threshold of the World Bank-defined lower middle-income country and became eligible for graduation in 2018.

A country must cross the threshold on two of the three criteria in two consecutive triennial reviews to be considered for the graduation.

The CDP will scrutinise Bangladesh's progress towards the graduation for the second time at its triennial review in February next year. The country's official graduation from the LDC category will take place after a three-year transition period.

If the country maintains its position in the three categories for the next three years, it will be recognised as a developing country in the UN General Assembly in 2024.

PER CAPITA INCOME

According to the UN's graduation threshold, the GNI per capita of a country has to be $1,230 or above. Bangladesh's GNI per capita is now $1,640, according to the government's status report.

The GNI per capita is the value of a country's final income in a year, divided by its population. It reflects the average income of a country's citizens.

The UNCTAD estimates that in this criterion, the distance of Bangladesh from the graduation threshold was more than 50 percent between the years 2000 and 2009.

Riding on robust macroeconomic fundamentals and strong growth of exports and remittances, the country reported a consistently improving performance against the per capita income criterion, it said.

A continuous rise in the GNI per capita guaranteed that Bangladesh exceeded the graduation threshold for the very first time in 2018, said the UNCTAD assessment.

"In the year 2021, Bangladesh will be at 142 percent of the graduation threshold," said the assessment.

"This suggests that Bangladesh is likely to fulfil graduation criteria in terms of per income at the next triennial review in 2021."

In 2018, the country scored 104 percent of the graduation threshold.

HUMAN ASSETS INDEX (HAI)

In terms of the HAI, a country must have a score of 66 or above. Bangladesh has performed better than it did in 2018 as its score has risen to 75.3 from 72.8, according to the government's status report.

The HAI is an indicator of nutrition, health, adult literacy and secondary school enrolment rate.

Mentioning that a steady progress has been observed in Bangladesh in this criterion, the UNCTAD estimates that the country will stand at 114 percent of the graduation threshold in 2021.

It said the country's score was 45.3 in 2003 and then it exceeded the graduation threshold in 2018 with a score at 111 percent of the threshold.

The key indicators underpinning the evolution of the HAI include child (under five) mortality rate, maternal mortality ratio, prevalence of stunting, gross secondary school enrolment ratio, adult literacy ratio and gender parity index for gross school enrolment ratio.

In terms of child mortality, the country has achieved remarkable success as the under-five mortality rate fell to 31 deaths per 1,000 live births in 2019 from 222 in 1971, 138 in 1991, 82 in 2001 and 46 in 2011, said the assessment.

"Over these decades, extensive changes have occurred in health policy related to maternal health and new-born care- with an emphasis on the integration of delivery of services and interventions targeted at underserved populations-, which could partially explain reduced child mortality."

It further said mortality declines can be also explained with improved coverage of effective interventions to prevent or treat the most important causes of child mortality.

The maternal mortality has decreased significantly over the years, though it remains higher than in developed countries. Between 1990 and 2017, the maternal mortality rate in Bangladesh decreased from 574 to 173 (per 100,000 live births), a remarkable 70 percent decrease in three decades, it said.

The UNCTAD said the gross secondary school enrolment rate has increased, albeit in a volatile manner, over the years.

However, it is still relatively low (72.6 percent in 2019), particularly when compared to other South Asian LDCs.

ECONOMIC VULNERABILITY INDEX (EVI)

In the EVI criterion, a country's score has to be below 32. Bangladesh's score is 27.3 against 25 two years ago, said the status report of the government.

The EVI is a composition of indicators like instability of agricultural production and exports of goods and services and share of agriculture, forestry and fisheries in gross domestic product. The lower a country scores in this index the better it performs.

The UNCTAD assessment said Bangladesh's performance under the graduation threshold relevant to this criterion demonstrated sustained improvements between 2012 and 2015 triennial reviews, with the EVI score hitting a plateau thereafter.

The EVI score of Bangladesh in 2018 was 25.2, which was 127 percent relative to the graduation threshold. The provisional value relevant to this criterion for 2021 triennial review is estimated to meet graduation threshold at 117 percent, it said.

The assessment said the agriculture, forestry and fisheries sector displayed sustained growth in labour productivity, even though its contribution to value -- as well as its employment share -- has declined.

Although exports played an important role in its growth trajectory for Bangladesh, the heightened dependence on the readymade garments sector remains a source of concern in the long term, it cautioned.

BANGLADESH WILL RESPOND

Finance ministry officials said the government disagrees with some of the observations of UNCTAD and will send its opinion to them shortly.

After receiving Bangladesh's opinions, UNCTAD will present the assessment during a meeting in January next year where a group of CDP experts will discuss the country's position.

Upon getting the experts' views, the CDP will hold the triennial review on February 7, 8, and 9 and recommend Bangladesh's name for the graduation if the country passes the assessment.

If Bangladesh gets out of the LDC bloc in 2024, it will be given a three-year transition period before it loses duty-free and quota-free market access to the European Union under the Everything but Arms initiative for LDCs, according to the CDP.

The officials said the representatives of BGMEA and FBCCI requested keeping the duty-free export facilities and other benefits for Bangladesh until 2030, considering the economic fallout of the pandemic.