Kathmandu, May 22 (IANS) Nepal has formally requested the United Nations to defer its scheduled graduation from the Least Developed Country (LDC) category, citing mounting economic challenges, global uncertainties, and concerns over the country’s preparedness for the transition.
Nepal was due to graduate from the LDC category in November 2026, a milestone that would mark the country’s progress in human development and economic resilience.
However, as the deadline approaches, concerns have intensified among policymakers and the private sector regarding the potential economic consequences of losing preferential trade benefits currently available to LDCs. Nepal’s private sector has been lobbying strongly against graduation, arguing that the country is not yet prepared for the transition.
Speaking at a regular press briefing, Foreign Ministry spokesperson Lok Bahadur Poudel Chhetri said Foreign Minister Sishir Khanal had sent a formal request to the Chair of the UN Committee for Development Policy (CDP) on May 13, seeking a postponement of Nepal’s graduation date until November 2030.
According to the ministry, the request is based on five major concerns.
First, Nepal cited the adverse effects of regional conflicts in West Asia and disruptions in global supply chains, which have affected remittance inflows, trade, and overall economic stability. The government referred to the World Bank’s projection that Nepal’s economy would grow by only 2.3 per cent in the current fiscal year 2025/26, ending in mid-July, reflecting a challenging economic environment.
Second, Nepal highlighted the anticipated loss of duty-free and quota-free market access available under the LDC framework, particularly in developed countries. “Nepal’s manufacturing and processing sectors remain vulnerable and could face significant setbacks, with potential employment losses estimated at up to 35 per cent due to the loss of duty-free and quota-free market access,” Chhetri said.
Third, Nepal said the implementation of its Smooth Transition Strategy — designed to prepare the country for graduation — had been delayed, affecting the country’s preparedness for graduation.
Fourth, the government stressed that Nepal’s economy has yet to fully recover from the impacts of the Covid-19 pandemic. Ongoing geopolitical tensions and the increasing effects of climate change have further complicated recovery efforts, Chhetri said.
Fifth, Nepal pointed to the economic repercussions of conflicts in West Asia, particularly tensions involving the United States and Iran, which have affected remittance flows from Nepali migrant workers while contributing to higher food, fertilizer, and energy prices. The government said these developments have negatively impacted tourism and the broader economy.
Nepal is the second country to request a deferral of its graduation date after Bangladesh. In February, Bangladesh formally requested the UN body to postpone its graduation by three years.
Bangladesh, Lao PDR, and Nepal are currently scheduled to graduate from the LDC category in November 2026, while the Solomon Islands is set to graduate in 2027, followed by Cambodia and Senegal in 2029.
LDC graduation is determined based on three criteria: Gross National Income (GNI) per capita, the Human Assets Index (HAI), and the Economic and Environmental Vulnerability Index (EVI).
A country may graduate by meeting at least two of the three criteria in two consecutive triennial reviews or by achieving a per capita income more than three times the graduation threshold.
Nepal has long met two of the three criteria — the Human Assets Index and the Economic and Environmental Vulnerability Index — and has now also met the GNI threshold. According to the National Statistics Office, Nepal’s per capita income for fiscal year 2025/26 is projected to remain unchanged at USD 1,535, the same level recorded in the previous fiscal year.
Under the UN’s 2024 Triennial Review criteria, a country must have a GNI per capita of at least USD 1,306, an HAI score of 66 or above, and an EVI score of 32 or below to qualify for graduation consideration.
Nepal first met two of the three UN criteria for LDC graduation in 2018, fulfilling benchmarks related to human assets and economic and environmental vulnerability while falling short of the income threshold. Following the devastating 2015 earthquakes, the country opted to defer graduation to avoid the risk of economic reversal.
In 2021, the UN Committee for Development Policy recommended the country for graduation, granting a five-year preparatory period to mitigate the effects of the Covid-19 pandemic.
By the end of 2025, eight countries had graduated from the LDC category: Botswana, Cabo Verde, Maldives, Samoa, Equatorial Guinea, Vanuatu, Bhutan, and Sao Tomé and Príncipe, according to United Nations records.
–IANS
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