Economists, trade leaders call for delay in LDC graduation over export data errors

Economists and business leaders have urged the government to reconsider the scheduled LDC graduation by 2026, arguing that the country's policies – whether trade, fiscal, monetary, or GDP estimates – have been based on erroneous export figures, an issue that exporters have flagged for months.

In its latest balance of payments data today, the Bangladesh Bank disclosed that export figures for the first 10 months of the recently concluded fiscal year were inflated by approximately $10 billion due to multiple entries of export shipments by the National Board of Revenue (NBR).

Experts told TBS that prompt correction of such errors is crucial as these inaccuracies can not only damage the country's credibility and reliability in international economic forums but also lead to misguided government estimates and policies.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said, "The government should reconsider the decision for the country to graduate from the Least Developed Country [LDC] status by 2026, as export earnings have declined."

He said following the revision of export data, other growth metrics such as the export-to-GDP ratio and net export growth would also need to be revised.

"We are unaware of the methodology used for this data revision, and it should be verified to avoid another potential mistake," he said.

The economist also advises that the central bank verify its export data by comparing it with the import data reported by destination countries.

"We are encountering data discrepancies, but the EU and USA have robust data governance, making their import data more reliable than our export data," Razzaque added.

Mohammad Hatem, the executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS, "The country's economic situation was different when Prime Minister Sheikh Hasina aimed for Bangladesh to transition from LDC status to a developed country. However, the entire economic landscape has changed due to three global issues: the pandemic, the Russia-Ukraine war, and the Israel-Iran conflict.

"If we proceed with LDC graduation despite these global economic changes, it will be disastrous for the economy, especially the apparel industry."

Hatem said, "Even before this graduation, we are already losing some policy benefits, affecting the industry's competitiveness. Post-graduation, duty-free market access will be eliminated." He added that such a transition would not benefit the apparel industry.

Bangladesh Garments Manufacturers and Exporters Association (BGMEA) president SM Mannan Kochi said the industry is not in good shape due to global economic volatility.

"Government bureaucrats often think exporters are lying to them as they implement measures to cut exporters' fiscal benefits, including cash incentives designed to enhance global competitiveness. The government has already reduced cash incentives for exporters by Tk 3,400 crore this year," he said.

"If the government wants to make us competitive in the global market, cash incentives should continue without any reductions until 2029. Additionally, alternative incentives for exporters should be introduced as per the commitment made by government officials," added the BGMEA president.

However, Dr Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, believes there is no need to revise or delay the transition from LDC status to a developed country by 2026.

He said that the government should support exporters in reaching export targets by 2027, noting that exporters will now need to double their exports to achieve this goal.

The government should also ensure adequate port facilities, simplify customs procedures, provide uninterrupted gas and electricity, and diversify the export basket to increase export volumes, he added.