Govt to make impact assessment

Dhaka,  Sat,  23 September 2017
Published : 21 Apr 2017, 23:58:42

Govt to make impact assessment

LDC graduation
Mehdi Musharraf Bhuiyan

The government looks to carry out a detailed impact assessment of LDC graduation very soon. This would be done to analyse and rationalise the possible negative effects of the country's eventual graduation from Least Developed Country (LDC) status, officials concerned have said.

"We will complete a comprehensive impact assessment on this issue by the middle of next year," Prof Dr Shamsul Alam, Member of the Planning Commission (PC), told the FE recently.

"We are looking to take up a separate project for carrying out this study. A concept note in this regard is already being prepared," he added.

Mr Alam also informed that they are looking for possible sources of funds for financing the study. The estimated cost of the scheme could be around Tk 25 million, he added.

"If it is deemed that overseas funds are not necessary for such initiative, we will go for financing the study with domestic funding," Prof Alam said.

The government initiative comes at a time when there is a growing consensus about getting a clear idea about the possible impact of Bangladesh's eventual graduation from LDC.

According to various analyses, if the current trend continues, Bangladesh is expected to officially graduate from LDC status by 2024.    

Experts, however, have long noted that the loss of LDC status at graduation may give rise to potentially important economic costs due to withdrawal of GSP facilities from the European Union, Canada, Japan, Australia and other markets.     Currently, Bangladesh enjoys a 12 per cent preference margin for its apparel industry under EU's 'Everything but Arms (EBA)' initiative which gives it a substantial price advantage.

According to a study carried out by Centre for Policy Dialogue (CPD), Bangladesh's exports will fall between 5.5 per cent and 7 per cent if the country loses duty-free market access upon LDC graduation.

It has also been noted that as Bangladesh is expected to graduate concurrently from both the United Nations and the World Bank classifications, options for concessional financing will also dry out.

"Our impact assessment study will take into account all these possible scenarios that can affect the country upon LDC graduation," Prof Alam said.

The PC member expressed the hope that they will be able to launch the project by August this year and the impact assessment will be completed by the middle of next year- well before the next triennial LDC criteria review by Committee for Development Policy (CDP) of the United Nations in 2018.

When asked for their opinion, academics and insiders termed the government initiative 'long overdue'.  

"The impact assessment should objectively analyse both upsides and downsides of LDC graduation," said Ahsan H Mansur, Executive Director of Policy Research Institute, a leading think tank.

"While on the downside, we may lose our trade preferences; on the upside, LDC graduation will give us increased advantages in terms of market access and market borrowing. It will also make Bangladesh more attractive to foreign investors," he said.

"The impact assessment should analyse how to take advantage of these newfound advantages," Mr Mansur added.

He also noted that various government agencies like the Ministry of Commerce need to increase their trade negotiation capacity to smoothen Bangladesh's transition from LDC.    

As per the CDP provisions, inclusion and graduation of LDCs are based on three criteria: per-capita gross national income, human assets, and economic vulnerability to external shocks.

To be eligible for graduation from least developed countries, a country must reach threshold levels for graduation for at least two of these three criteria, or its GNI per capita must exceed at least twice the threshold level.

Bangladesh has already met the threshold of Economic Vulnerability Index and Human Asset Index while it is expected to meet the threshold of Gross National Income by next LDC graduation review in 2018.

As per the current provisions, a country needs to be eligible in two consecutive CDP reviews before any recommendation is made.

Therefore, Bangladesh will have to meet these same criteria again in 2021 to be recommended by CDP for graduating from LDC status.  

"We are hopeful that we will receive the final CDP recommendation in the year 2021," Prof Alam said, adding, "Consequently, with the endorsement from the ECOSOC and approval from the UN General Assembly, Bangladesh will formally graduate from LDC status in 2024."
Editor : A.H.M Moazzem Hossain
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