Government Requests UN to Postpone Nepal’s Graduation from LDC to Developing Country Status: Analyzing Opportunities and Challenges
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According to a senior official from the Ministry of Foreign Affairs, the government has formally requested the relevant United Nations body to temporarily postpone the process of graduating Nepal from the status of ‘Least Developed Country’ (LDC) to a developing country.
The Ministry of Foreign Affairs recently sent an official letter with this request. The matter falls under the jurisdiction of the United Nations Economic and Social Council.
The official did not specify how long the postponement period would last, although eligibility assessments typically occur every three years.
In 2021, the United Nations General Assembly approved Nepal’s graduation proposal setting a five-year transition period to develop country status, which is due to end this November.
According to economist Poshraj Pandey, Nepal has already submitted the request, but the final decision rests with the UN council and remains uncertain.
“Bangladesh has also made a similar postponement request. Nepal’s request has likely come in conjunction with theirs. Despite Bangladesh’s LDC status, there is skepticism about recognizing it as a developing country,” he said. “The council can decide without the consent of the concerned countries. If Bangladesh’s postponement is approved, Nepal’s likely will be too; otherwise, neither will receive it.”
“I see equal chances in both scenarios.”
Likewise, Bangladesh, which is also slated to graduate to developing country status, previously made a formal request for postponement.
Not Fully Prepared?
Image Source, NPC Nepal
The National Planning Commission recently held a meeting with stakeholders regarding the graduation issue, where differing opinions emerged.
“Some supported the graduation while others opposed it, arguing that the timing was not appropriate,” said Deputy Spokesperson of the Planning Commission, Divakar Luintel. “Ultimately, the opinions were summarized and sent to the Ministry of Foreign Affairs.”
The Ministry of Foreign Affairs is responsible for formal communication with foreign bodies, which is why the correspondence was made through them.
Image Source, MOFA
Some media reports have indicated that Nepal is not yet fully prepared for graduation.
The graduation criteria are based on the Human Assets Index, Economic Vulnerability Index, and Gross National Income per capita.
However, economist Pandey states that Nepal has met the criteria since 2015.
“According to the UN’s final report from February 2025, we have fulfilled all three criteria.”
Former Deputy Chairperson of the Planning Commission, Prakash Kumar Shrestha, also supports the postponement.
“We have postponed graduation twice before; currently, the new government and the Generation-J movement have caused an economic crisis. Therefore, this is not an appropriate time,” he said. “Since Bangladesh has also requested more time, we are compelled to accept this.”
Nepal’s private sector has also advised delaying the graduation.
“We are delayed in developing a transition strategy. After obtaining developing country status, a rollback is not possible,” stated Birendra Raj Pandey, President of the Federation of Nepalese Chambers of Commerce and Industry.
Advantages and Disadvantages of Postponing Graduation
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Whether graduation happens sooner or later, there are pros and cons, though most economists agree graduation will yield long-term benefits.
Some argue Nepal should not delay since it meets the criteria, while others insist graduation should only occur once alternatives and safeguards are ensured.
“Graduation is a matter of prestige, akin to reaching a higher level. It means building competitive capabilities,” said former Planning Commission Deputy Chairperson Shrestha. “But without enhancing competitiveness, graduation will not yield the expected benefits.”
Economist Pandey says Nepal should celebrate its graduation.
“There are some primary benefits in LDC status, but graduation reflects real economic progress and increases investor confidence,” he noted.
According to former Planning Commission Deputy Chairperson Shrestha, research indicates that graduation to developing country status may negatively affect export volumes and employment.
“Exports could decline by around 4-5 percent and employment decrease by approximately 150,000 jobs. However, benefits are not guaranteed; foreign direct investment tends to increase in countries above LDC status.”
He further added that Nepal has benefited from LDC status in various sectors but has yet to fully capitalize on these advantages.
“Currently, we have duty-free access to markets in Europe, Turkey, China, and Canada, yet our exports have not fully exploited these opportunities. Improvement is necessary.”
Birendra Raj Pandey, president of the Federation of Nepalese Chambers of Commerce and Industry, mentions certain industries could face challenges transitioning to developing country status.
“I discussed with representatives from five or six key sectors. The ready-made garment, pharmaceutical, and carpet industries will face major challenges. Increased medicine prices will impact consumers, and losing export incentives will weaken garment industry competitiveness.”
Shrestha believes that, amid political instability, remaining in LDC status with proper preparation is the best option for now.
“We have met all three criteria, but our Gross National Income per capita is just slightly below the threshold. Therefore, we must pay close attention so that Nepal does not revert back to LDC status after graduation.”
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