Nepal formally seeks three-year delay in LDC graduation amid economic pressures

KATHMANDU: The Government of Nepal has formally requested a three-year postponement in the country’s graduation from the Least Developed Country (LDC) category to developing nation status, citing growing domestic and global economic challenges.

The request was formally communicated to the Committee for Development Policy (CDP) under the United Nations through the Ministry of Foreign Affairs, seeking to defer Nepal’s scheduled graduation date from November 24, 2026, to November 2029.

Nepal was previously set to graduate from the LDC category in late 2026. However, the government has reconsidered the timeline in light of changing national and international economic and geopolitical conditions, officials said.

Speaking at a press conference organized by the Ministry of Foreign Affairs on Friday, Lok Bahadur Paudel Chhetri, spokesperson for the ministry, confirmed that Nepal had formally written to the CDP requesting the extension until November 2029.

According to the government, Shishir Khanal sent an official letter to the chair of the UN Committee for Development Policy on May 13, 2026, requesting an immediate pause to Nepal’s LDC graduation process.

Government Cites Five Major Reasons

The government has outlined five key reasons behind the decision to seek a delay, primarily focused on economic vulnerabilities and external shocks affecting Nepal’s recovery trajectory.

One of the major concerns is the impact of regional conflicts and disruptions in global supply chains, which authorities say have adversely affected Nepal’s fragile economy. The government has also referred to the World Bank’s projection that Nepal’s economic growth will remain limited to 2.3 percent in 2026, raising concerns over the country’s preparedness for graduation.

Officials further argued that graduating from LDC status could result in Nepal losing preferential trade benefits, including Duty-Free Quota-Free (DFQF) market access currently available to least developed nations. The government estimates that the loss of such privileges could reduce employment in productive sectors by as much as 35 percent, affecting exports, manufacturing, and industrial competitiveness.

Another reason highlighted is the slower-than-expected implementation of Nepal’s Smooth Transition Strategy, which was designed to prepare the economy for post-LDC graduation challenges.

The government also noted that Nepal’s post-pandemic economic recovery remains fragile, while geopolitical tensions and the growing impacts of climate change continue to create additional uncertainty for developing economies.

Furthermore, officials cited the recent instability in the Middle East as a potential threat to remittance inflows — one of Nepal’s primary sources of foreign exchange earnings. Rising prices of fuel, food, and fertilizers have also increased inflationary pressure, affecting tourism, domestic production, and the broader national economy.

Nepal’s move to delay graduation reflects growing concerns over balancing long-term development aspirations with short-term economic resilience. The decision, if accepted by the United Nations, could provide Nepal additional time to strengthen export competitiveness, industrial productivity, employment generation, and macroeconomic stability before transitioning out of the LDC framework.