Bangladesh Seeks World Bank Support for Smooth Transition Post-LDC

As Bangladesh prepares to graduate from the status of a Least Developed Country (LDC) in 2026, the country will seek the World Bank's technical cooperation to support its efforts in export diversification, boosting competitiveness, expanding investment, and improving trade logistics.

In a brief prepared for the upcoming spring meetings of the World Bank and International Monetary Fund in Washington, the Bangladeshi Finance Ministry highlighted the country's desire for the World Bank's assistance in enhancing human capital and institutional capacity development to facilitate a seamless transition.

"World Bank may also assist the country's initiatives aimed at enhancing human capital and institutional capacity development to facilitate a seamless transition," the brief stated.

The finance ministry noted that Bangladesh's external debt lies well below the threshold level, and the government has 'adequate repayment capability.' However, the government remains cautious about the exchange rate risk posed by the appreciation of the local currency.

The finance minister is expected to share his concerns with the global lenders about the country's macroeconomic challenges, such as higher inflation and the depreciation of the Taka against major trade currencies, which have slowed the development momentum.

The ministry's documents acknowledge Bangladesh's economic challenges, including rising inflation, external imbalances, and financial sector vulnerabilities. The government believes that strong and immediate policy actions will be critical for Bangladesh to stay on course to achieve its long-term goals.

One of the key priorities for Bangladesh is to create jobs, increase human capital, and build efficient infrastructure to attract private investment and improve business competitiveness in its pursuit of upper-middle-income status by 2031.

The finance minister is also expected to explain why Bangladesh currently needs more budget support than before in response to measures taken to curb the COVID-19 pandemic, revive the economy, and absorb shocks from price volatility and supply disruptions caused by the Russia-Ukraine war.

While Bangladesh's debt sustainability is assessed as low risk, the exchange rate volatility remains a concern. The country is planning to introduce a crawling peg exchange rate management system to reduce market volatility and stabilize the foreign exchange market.

As Bangladesh prepares for its graduation from the LDC status, the country will also use the upcoming World Bank-IMF meetings as a platform to promote the causes of graduating LDCs, seeking innovative incentive packages and the extension of trade-related international support measures beyond graduation.