There are currently 46 countries on the list of LDCs which is reviewd every three years by the committee for development (CDP). LDC has exclusive access to certain international support measures in particular in the areas of development assistance & trade. For a country to be eligible for graduation, the graduation threshold must be met for two of the three LDC identification criteria, which include per capita gross national income (GNI), the human asset index (HAI), & the economic vulnerability index (EVI).

The UN Committee for development policy (CDP) has recommended that Nepal be graduated from the LDC status to the club of developing countries. The recommendation is based on the country, meeting the required criteria. The country has met the "Human Assets Index" (HAI) & "economic & environmental vulnerability index (EVI) but failed to meet the "Gross National Income (GNI).

Nepal has given five years as a preparatory period to prepare to become a developing country in 2026. The preparatory period, which is usually three years, has been extended to five years at the request of the country due to impacts on its economy of the covid-19 pandemic. Least developed countries (LDCs) benefit from preferential treatment in their participation in global trade like duty-free access, as well as in the multilateral trading system, i.e. the world trade organisation (WTO). Upon graduation, those benefits phase out.

After LDC graduation in 2026; there will be trust for Nepal among international community / donor agencies. There will be growing support from friendly countries & larger FDI commitments.

When a country graduates from the LDC category, it no longer has acccess to those specific instruments, which include a range of trade-related capacity-building instruments. However, developed partners do not base their cooperation programmes on LDC status.This time, Nepal has decided to graduate to a developing country after being an LDC for the last 50 years. The country has 5 years to improve its economy. Being an LDC, the country has been receiving facilities like concessional Loand, Grants & aid from bilateral & multilateral donor agencies. it is also said that the country postponed graduating to a developing country in 2015 & 2018 for fear of losing concession & exclusive to LDcs.

The CDP's recommendations is an important milestone in Nepal's development trajectory towards the national ambition of "Prosperious Nepal, Happy Nepali" & the nation's development aspirations as reflected in the Fifteenth Periodic Plan. It may be noted that this recommendation needs to be endorsed by the United Nations economic & social council (ECOSOC) which shall then be "Noted" by the UN General Assembly later this year. Nepal will continue to have access to all LDC-Specific support measures until 2026.

Nepal needs potentional Support from international community to increase "Gross National Income"(GNI). 

Hence, for 5 years, Nepal should build economic capacity by devising an appropriate stretegy for economic development.After LDC graduation in 2026; there will be trust for Nepal among international community / donor agencies. There will be growing support from friendly countries & larger FDI commitments.  There will be increased income & socio-economic progress improves creditworthiness & potential for investment.

Nepal needs potentional Support from international community to increase "Gross National Income"(GNI). Graduation should be an integral part of development strategy. Nepal would need to consider how to assist exporters to become competitive through improved connectivity, Enterprise development, trade facilation, foreign direct investment (FDI) & emproved transpert transit arrangements. There is need for a larger development vision, underpinned by national consensus & institutional machinary for effective implementation.
 

Er. Prakash Jha
National Consultant, Nepal
United Nations (DESA)