Nepal to Graduate from Least Developed Countries List to Developing Countries List in 2026
Starting from 2026, Nepal is set to make a significant leap from the list of Least Developed Countries (LDC) to the list of developing countries. The United Nations decided on this transition in 2021, and since then, Nepali authorities have been diligently preparing to be included in the roster of developing nations.
Ordinarily, such preparation would have taken three years, positioning Nepal for an upgrade in 2024. However, due to the Covid-19 epidemic, Nepal was granted an extended preparation time of five years. As two years have already passed, Nepal now faces the challenge of completing all necessary tasks within the next three years. However, progress is currently sluggish.
On Ashad 17, a meeting was convened by Dr. Min Bahadur Shrestha, the vice-chairman of the Planning Commission, to initiate discussions on the strategy draft.
The Planning Commission has undertaken the task of creating strategies to mitigate any negative impact on the economy post-upgradation. Following the upgrade, benefits such as subsidies received by poor countries, customs exemptions on exports, employee training, and reservations for conferences will be reduced. To counter these effects, the commission is devising a comprehensive strategy.
Collaboration is key in devising the strategy, with all relevant government agencies contributing their separate plans, coordinated by the commission. The objective is to create a 'smooth transition strategy' encompassing necessary measures to safeguard the economy from adverse consequences after the upgrade.
Economist and Member of the House of Representatives, Swarnim Wagle, emphasizes the importance of considering the boost to national confidence rather than merely focusing on the short-term concessions that may be lost when Nepal is no longer categorized as a least developed country. The transition to a developing country status will alter the perception of Nepal and its citizens on the global stage, potentially attracting more foreign investment and encouraging Nepali producers and investors to compete with quality goods in the international market.
However, Nepal will also face challenges post-upgradation, including the loss of customs exemptions for exports and the end of free legal services provided by the World Trade Organization for international trade disputes. Additionally, Nepal's share of the 60 percent funding allocated to poor countries will cease, impacting the subsidy and reservation quotas it had previously received.
Since being included in the list of least developed countries in 1971, Nepal will have remained on this list for 55 years until its expected upgrade to a developing country in 2026. Nepal currently fulfills the necessary criteria for this upgrade, including per capita income, human capital index, and economic risk index.
Despite the obstacles, Nepal is well-positioned to embrace its new status and join the ranks of developing countries after five decades of being listed as an LDC.
