Kathmandu, May 23: Nepal has formally moved to delay its graduation from the Least Developed Country (LDC) category, saying it is not prepared to handle the economic and external pressures that would follow the transition.
The Ministry of Foreign Affairs confirmed on Friday that Nepal has begun the process to defer its exit from the LDC group by at least three years, extending the timeline to November 2029. Foreign Minister Shisir Khanal sent a formal request on May 13 to the chair of the UN Committee for Development Policy seeking the postponement.
Officials said the decision reflects concerns that losing LDC-specific benefits could expose the economy to serious shocks at a fragile time.
Spokesperson Lok Bahadur Poudel Chettri said the government has already communicated its position to the United Nations.
The government cited five main reasons for the move. It pointed to global instability and regional conflicts that have disrupted supply chains and reduced remittance inflows, weakening domestic economic activity. The World Bank has projected Nepal’s growth at 2.3 percent this fiscal year, well below its long-term average of around 4.3 percent.
Officials also warned that graduation could trigger a sharp decline in employment, estimating up to a 35 percent fall in jobs in export-oriented and productive sectors once duty-free and quota-free access is lost.
Another concern is slow progress in implementing the Smooth Transition Strategy, which was designed to guide Nepal through the shift by strengthening competitiveness, stabilising the economy and cushioning the loss of concessional financing and trade preferences.
The government further cited ongoing geopolitical tensions, climate-related risks and the lingering effects of the Covid-19 pandemic as additional pressures on an already stretched economy.
Rising import costs, especially fuel, food and fertiliser, along with weakening tourism and remittance flows linked to conflicts in West Asia, were also highlighted as key stress factors.
Nepal is currently scheduled to graduate from the LDC category in November 2026, but officials argue the timing now poses risks rather than progress. The International Labour Organization had earlier warned that graduation could cost around 132,000 jobs and nearly $1 billion in economic losses within five years.
With the request now formally submitted, Nepal has effectively signalled that it prefers delay over transition, prioritising economic stability over symbolic advancement.
People’s News Monitoring Service
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