The government on Wednesday decided not to graduate Nepal from the Least Developed Countries (LDC) category to developing country category for now. The cabinet meeting on Wednesday took decision to send report to the United Nations (UN) stating not to graduate Nepal from LDC category in 2018.

As of now, there are 48 countries under LDC category including Nepal.

The Cabinet meeting on Wednesday held deliberations on whether or not to upgrade the country from the current status of LDC. Nepal has already met two of the three criteria set by United Nations and the third criterion will be met by 2021, the Cabinet meeting concluded.

The Cabinet accepted National Planning Commission’s (NPC) recommendations on Wednesday. The NCP had earlier decided to abandon the plan of relying on the non-income criteria framed by the UN to graduate from the LDC category, fearing the transition would significantly reduce the flow of foreign aid and deprive the country of other international support measures.

 Of the three criteria stipulated by the UN to graduate to developing nation category, Nepal has fulfilled two—Economic Vulnerability Index (EVI) and Human Assets Index (HAI), which makes Nepal eligible to graduate. However, Nepal lags behind UN threshold on per capita gross national income which stood at $659 during 2915 review whereas it should have been $1242 or more.

 Nepal had achieved a score of 26.8 in Economic Vulnerability Index, which was 5.2 points more than the UN threshold. Also, Nepal had scored 68.7 in Human Assets Index, which was 2.7 points more than the UN threshold.

 The government is of the view that it can achieve UN threshold on per capita gross income by 2021.

 In March, 2015, a meeting of the UN Committee for Development Policy (UNCDP), a body under the UN Department of Economic and Social Affairs, had told Nepal it was eligible for LDC graduation under non-income criteria. During that meeting, the UNCDP had said it would review Nepal’s case again in March, 2018 and confirm whether it was ready for graduation.

 NPC was of the view graduating to developing country on technical terms—that is without propping up per capita income—could cost the country dear. Nepal would see reduction in foreign aid and gradually lose trade preferences, like duty-free, quota-free market access in the European Union and the US. If Nepal graduates on technical terms, the country will also gradually lose access to special World Trade Organisation waivers. These losses, according to experts, can hit Nepal’s exports and development endeavours.

All the Least Developed Countries will table their progress report in the upcoming meeting. In the meeting, Nepal will report about its plans to work to meet its standards.