Announcing that Nepal had met the criteria for graduation after carrying out three consecutive reviews, the United Nations Committee for Development Policy (UNCDP) has recommended Nepal’s graduation from Least Developed Country (LDC) status with a preparatory period of five years. According to the recommendation made during the UNCDP’s triennial review held between February 22 and 26, the graduation of Nepal will become effective in 2026.
A press release issued on February 26 by the Permanent Mission of Nepal to the United Nations confirmed that Nepal had met the thresholds for the Human Assets Index (HAI) and Economic and Environmental Vulnerability Index (EVI) – two of the three key indices that the UNCDP considers when deciding on the question of graduation – and thus became eligible for graduation. The third threshold is Gross National Income (GNI) per capita.
“Due to the extraordinary challenges posed by the COVID-19 pandemic and based on the request of the Government of Nepal (GoN), the normal preparatory period of three years has been extended to five. In addition to Nepal, Bangladesh and Lao People’s Democratic Republic have also been recommended for graduation by the UNCDP,” the statement read.
- Nepal was first listed as an LDC in 1971 and over the past few decades has made remarkable progress under two of the three criteria used in assessing graduation qualification
- According to the World Bank (2018), Nepal’s economy needs to grow by at least 7-8% sustainably to become a middle-income country by 2030
- The World Bank’s Nepal Development Update (2020) observes that Nepal’s economy experienced headwinds in the agriculture, manufacturing, and service sectors in the first half of the fiscal year 2020 with an average growth of 7.3% per year for three consecutive years
- The agriculture sector was affected by a delayed monsoon coupled with an outbreak of armyworms, leading to a 1.7% yearly decline in paddy production
- Services were impacted with a slowdown in the growth of remittances and lower numbers of tourists coming from India leading to an overall decrease in arrivals of 4.3%
- In order to achieve 7-8% growth, the Government of Nepal has fixed a 10% point increase in investment rate by 2021as a target
- Fundamentally an import-driven economy, Nepal witnessed a trade deficit of 37.7% of gross domestic product (GDP) in the fiscal year 2017-18
Although Nepal had met the graduation criteria in 2015, in its 2018 triennial review the UNCDP recommended deferring the graduation at the request of the GoN in view of the setback on Nepal’s economy caused by the 2015 earthquake and other disasters in the following years.
Underlining that the preparatory period of five years is provided to offer adequate time for a smooth transition during which Nepal would enable itself to offset the loss of the support measures exclusive to the LDCs, the statement said, “The UNCDP’s recommendation needs to be endorsed by the United Nations Economic and Social Council which shall then be noted by the UN General Assembly later this year. Also, Nepal will continue to have access to all LDC-specific support measures until 2026.”
This recommendation is said to have been an important milestone on Nepal’s development path towards the national ambition of ‘Prosperous Nepal, Happy Nepali’ including that of the country’s development aspirations as reflected in the fifteenth periodic plan.
