LDC graduation in challenging times

The Annapurna Express

The Annapurna Express

LDC graduation in challenging times

Nepal has set the target of graduating from the least developed country to a developing country by 2026—but there are challenges galore.

World leaders expressed concerns about the challenges posed by the global environment including the Russia Ukraine conflict that could deepen poverty and set roadblocks on their target to uplift the status of more countries from the block.

Nepal in particular is raising the issue of  duty- and quota-free market access, special and differential treatments, preferential rules of origin, service waiver, aid for trade, and flexibilities in the implementation of multilateral trade rules and commitments.

The UN has recognized LDCs as the ‘poorest and weakest segment of the international community’ since 1971. The group currently holds 46 countries, most of which are in Africa, and represents nearly 40 percent of the world population.

Only six countries have graduated from the group while many have made remarkable progress in poverty alleviation and improvement in the quality of life. The Doha conference has brought top UN officials, LDC leaders, and members of the international community to debate ways to ensure the implementation of Doha Program of Action.

Nepal’s representation

Leaders have described the framework as a ‘new global partnership’ that would enable graduation of more countries from the LDC category within this decade.

After diplomatic debacles at home—ahead of two key UN events—the world is closely watching Nepal’s commitment to human rights and LDC affairs.

The Nepal government has entrusted Deputy Prime Minister and Minister for Physical Infrastructure and Transport Narayan Kaji Shrestha with the task of leading the Nepali delegation at the Doha conference. It was a last-minute decision after Prime Minister Pushpa Kamal Dahal was caught up in domestic political affairs. Nepal is set to elect its new president on March 9, and Prime Minister Dahal himself is set to go on a parliamentary floor test after its coalition partners, CPN-UML and Rastriya Prajatantra Party, pulled out of the government.

Previously, Prime Minister Dahal government had delegated his “peace and human rights advisor” and former law minister, Govinda Prasad Koirala (Bandi), to lead the Nepali delegation at the 52nd session of the UN Human Rights Council in Geneva. Dahal had prevented the foreign minister at the time, Bimala Rai Poudyal, from taking part in the session following the decision of UML (Poudyal’s party) to pull out from the government.

At the ongoing LDC conference, too, there was a last-minute change of plans. Though Prime Minister Dahal was supposed to attend the gathering, he pulled out at the last minute, citing preparations for the presidential election and parliamentary vote of confidence.

The current iteration of LDC conference is significant for Nepal, for it is taking over the chair of the LDC grouping from Malawi for three years after this event. It is also crucial, given the globally divided international order and the forward-looking goal that Nepal aims to set for the world’s low-income countries.

The Russia-Ukraine war, which started last year, has divided the world’s powerful nations, overshadowing some key international meetings and impacted the global supply chain and cost of living around the world. The Doha conference could have been an important platform for Nepal. 

Observers say the presence of Prime Minister Dahal would have been more impactful on the crucial meeting. But instead of Dahal, it was his deputy, Shrestha, who addressed the conference as a keynote speaker. He also met with UN Secretary General Antonio Guterres.

Addressing the gathering UN Secretary General Guterres said: “Countries with the least need the support most. And the need for support is something that is required now.”

He said most developed countries were falling short of their promise to provide 0.15 to 0.20 percent of their Gross National Income to LDCs, who are struggling to combat the climate catastrophe and struggling to address the impacts of conflicts and poverty, among others.

It also pledges to create a food stockholding system to address food insecurity and establish an investment support center to help LDC and graduated countries attract foreign investment.

The UN Secretary General Guterres has stressed that it would be unfortunate if the graduating countries failed to continue their momentum.

“Graduation must be a reward, never a punishment,” he said. “We cannot allow countries to fall back down the development ladder after working so hard to climb it.”

Among the seven LDC countries scheduled to graduate by 2026, five are from the Asia Pacific region.

While Bhutan is graduating this year, Solomon Islands, Angola and Sao Tome and Principe are set to graduate next year. Bangladesh, Lao People’s Democratic Republic, and Nepal are slated to become middle-income countries by November 2026.

Leaders of the graduating countries spoke about ‘smooth transition strategies’ under the current ‘unprecedented circumstances.’

Addressing the general debate, Deputy Prime Minister Shrestha stressed that the LDC graduation should be smooth and sustainable.

He said Nepal is determined to graduate despite the fact that pace of economic development is not rapid and satisfactory in the country.

“There should be a continuation of some support measures so that the graduating and the graduated LDCs will attain and sustain smooth and irreversible graduation,” he said.

Shrestha also called upon development partners to fulfill their Official Development Assistance (ODA) commitments and provide “concrete and substantial support to meet the development needs” of the LDCs.

Fighting climate change is a collective responsibility, Shrestha said, while stressing that the loss and damage funds agreed upon by world leaders should be adequate so that the underdeveloped countries could implement climate adaptation programs.

Bhutanese Prime Minister Lotay Tshering expressed hope that the country’s transformation could propel for a lasting graduation.

He added that the landlocked kingdom had accessibility challenges for international trade and market and stressed that the country would seek support from the UN and development partners post-graduation.

“It is another fact that more developed countries are diverting a significant amount of their resources into defense systems. This will take away resources that will otherwise be invested in health care, education, food and nutrition for the people in the developing parts of the world,” he said

According to the UN, among the nine countries in the graduation pipeline, five have met the criteria, two have been recommended for graduation and two have been deferred by the Committee for Development Policy (CDP), a subsidiary body of the UN Economic and Social Council.

Challenges ahead 

Arjun Karki, global coordinator of the LDC watch, a civil society organization representing the LDCs, says the road ahead for those countries looking forward to graduating to developing countries is not easy.

“After 50 years of programs of action by the UN and development partners, the stark reality is that these programs have utterly failed to bring significant improvements in the living standard of people in LDCs,” he said.

He has called for the need of a renewed international cooperation with a new set of formal and informal institutions and design of new international support mechanisms for LDCs to address their structural constraints and vulnerabilities.

Hundreds of delegates debated at the main event and sideline events keeping in focus the world’s poor population.

There were questions whether the countries that aspire to climb up the development ladder can maintain the hard earned achievements.

While many other countries fighting with poverty, conflicts and perils of climate change called for more global support stating that they would not want to languish in the category for another 50 years.

With Kathmandu witnessing renewed political instability and the country’s economy facing challenges on multiple fronts, there are many who are skeptical of Nepal’s smooth transition from an LDC status to a developing one.
“It’s hard to predict what situation we will be in future. Both political and economic challenges are there,” an official said, adding that the decision to move forward with the graduation was taken when Nepal’s economy was in a better shape.

What do the LDC countries want? 

Bangladesh, Laos, and Nepal have come up with a joint statement. They have called on  international community and development partners, including multilateral development banks and international financial institutions, to extend necessary support to the graduating LDCs in the spirit of the Doha Program of Action that calls for international solidarity and reinvigorated global partnership.

Their demands are as follows: 

-Support to formulate and implement strategies

-Continuation of international support measures beyond graduation

-Promote export diversification

-Providing easy and flexible access to climate mitigation

-Technical support to public finance management reforms

-Continued ODA to meet financing gap

-Post-graduation extension of waivers   

-Assurance of safe, orderly and regular migration 

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