Laxmi Capital News
Nepal puts LDC graduation plan on hold

Thegovernment is preparing to request the United Nations Committee for theDevelopment Policy (CDP) to provide some additional time to Nepal to graduateto the league of developing countries.

Followingdiscussions with a wide range of stakeholders, including private sector,academicians, think-tanks, civil society organisations and non-governmentalorganisations, the National Planning Commission (NPC) has informed PrimeMinister KP Sharma Oli about the position of the country on the graduationprocess.

Accordingto NPC Secretary Bishnu Lamsal, the NPC is preparing to write to CDP that thecountry is not prepared for graduation and to seek another triennial review in2021.

TheEconomic and Social Council (ECOSOC) had said that Nepal has met the criteriain two out of three indicators. Human asset index (HAI), economic vulnerabilityindex (EVI) and per capita income (PCI) are the major indicators in thisregard.

Nepalmeets the criteria to graduate to the league of developing countries in twomajor indices — HAI and EVI, according to Lamsal.

However,Nepal’s per capita income is far below the required level.

Nepalaims to graduate to the league of developing nations by 2022. However, theECOSOC review has said that the country could graduate to the league ofdeveloping countries technically as there has been remarkable performance intwo major indices.

However,the NPC could not get positive response from the consultation with stakeholderson graduating the country to the league of developing nations.

Theprivate sector is wary about cut to export preferences in the market ofdeveloped countries that Nepal is currently enjoying as one of the leastdeveloped countries.

“Itdoes not mean that we should remain as LDC despite making marked improvement inthe indicators, but we do have to look at the sustainability of theachievements in terms of HAI and EVI,” said Satish Kumar Moor, senior vicepresident of Confederation of Nepalese Industries.

Thereare also concerns related to the international assistance that the country hasbeen receiving as a LDC. As per the commitment made by the developed countries,they have to provide 0.75 per cent of their gross national income as officialdevelopment assistance (ODA). And the LDCs are major beneficiaries of ODA.

ParasKharel,researcher at South Asia Watch on Trade, Economics and Environment, a regionalthink-tank based in Nepal, said that there is no concentration in any 21sectors (called ‘industries’ in terminology of Central Bureau of Statistics )included in GDP calculation, like high concentration of manufacturing(readymade garments) in Bangladesh. Less concentration in each industry is goodfor Nepal, but the preference utilised by the Nepali exports will not continueafter certain years of graduation.

“Tradepreferences extended by European Union (EU) called ‘Everything But Arms (EBA)’allows LDCs to enjoy market preferences till three years after the graduation,”he said.

“Inthe context of the United States, it has provided trade preferences throughendorsement of a separate law from Congress till 2025. Hence, Nepal haspresented its logic to the UN that it is not the right time to graduate to theleague of developing nations for the country, which has emerged from the longarmed conflict and was shattered by the devastating earthquakes of 2015.”

Expertshave said that the country has to face negative consequences and cannot sustainthe achievements if it hurries to graduate to the league of developing nations.

Asper the criteria set by UN, to graduate to the league of developing nations,PCI should be $1,230; HAI should be above 66 and EVI should be below 32, as perthe review of 2018.

Nepal’sHAI and EVI stand at 68.7 and 26, respectively, as per NPC. However, thecountry’s PCI stood at just $865 in fiscal year 2016-17.

 Source: The Himalayan Times, 28th February2018

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