Graduation from LDC by 2020 requires additional $6b: official

The government will need to invest an additional $6 billion fund to take Bangladesh to a middle-income country by 2020, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).     

The additional money -- $1 billion a year for the next six years -- has to be invested in key physical infrastructure such as roads, transport, port, power and energy, education and healthcare.

Bangladesh now invests about $10 billion in development projects a year, with 80 percent coming from domestic sources and 20 percent from official development assistance.   

The additional fund was estimated considering more than 6 percent GDP growth, current birth rate, and investment growth, said Syed Nuruzzaman, chief of Countries with Special Needs Section at the ESCAP. 

His comments came at a press conference to mark the conclusion of three-day regional meeting styled “Financing Graduation Gaps of Asia Pacific LDCs”, attended by 59 officials from 12 LDCs from the Asia-Pacific region. 

The Economic Relations Division in association with the ESCAP and the United Nations Department of Economic and Social Affairs organised the event. Bangladesh is focusing on domestic resource mobilisation along with official development assistance to finance development programmes in the country, ERD Secretary Mohammad Mejbahuddin said.

The government aims to raise its tax-GDP ratio by 1 percentage point this year from the current 10.5 percent by plugging some loopholes, he said.

Mejbahuddin also agreed that the inflow of foreign direct investment in Bangladesh is below expectation.

“We have to improve our business climate further to attract more FDI,” he said, adding that quick development of special economic zones is another factor to lure more investments.

He also talked about the cost of graduating Bangladesh from LDCs. “There will be some costs, but in the long-term, it will be worth it.”

All the benefits the country is now enjoying as an LDC will not cease after graduation as there will be some post-graduation support, he added.   

At the closing session of the event, Commerce Minister Tofail Ahmed said the country wants to move out of the LDC bracket as quickly as possible, as it is a matter of pride.

Bangladesh can also get duty benefits such as GSP plus after graduating, he added. Officials from the 12 LDCs of the region also made a number of recommendations to meet the financing graduation gaps of Asia-Pacific LDCs.   

LDCs are encouraged to explore options to find the required fiscal space such as implementing tax administration reforms to tackle tax evasion and fraud and increase the efficiency of tax collection and allocation.

They also recommended implementing reforms to create an enabling macroeconomic environment and appropriate incentives to attract private investment in support of LDC graduation on a sustainable basis.

LDCs are encouraged to use ODA and fiscal resources to minimise risks and provide credit to leverage private sector investment in infrastructure development, economic diversification and increase of productive capacities.

Development partners should expeditiously meet their ODA commitment of 0.15 to 0.20 percent of GNI and above to LDCs in accordance with the Istanbul Programme of Action for the LDCs (2011-2020).