Government and UN in Nepal review joint progress under UNSDCF to advance LDC graduation and SDGs attainment

The Government and the United Nations Country Team (UNCT) convened the annual meeting of the Joint Steering Committee of the United Nations Sustainable Development Cooperation Framework (UNSDCF) 2023–2027 in Kathmandu today. The meeting was co-chaired by vice chair of the National Planning Commission (NPC) Prof Dr Shiva Raj Adhikari and UN Resident Coordinator for Nepal Hanaa Singer Hamdy.

As Nepal moves closer to its historic graduation from Least Developed Country (LDC) status, the discussions highlighted the role of the UNSDCF in supporting the government’s Smooth Transition Strategy and in accelerating progress toward the Sustainable Development Goals (SDGs).

The meeting reflected on the progress achieved in 2024. These results demonstrate the breadth of joint efforts across health, livelihoods, climate resilience and governance, showing how the Cooperation Framework is delivering concrete benefits for people across Nepal. During this period, a nationwide measles-rubella campaign immunised 6.3 million children, enabling Nepal to eliminate rubella, while expanding access to health care, education, safe water and protection services.

Together, the government and the UN also advanced inclusive growth, created more livelihood opportunities, strengthened social protection, and supported recovery and resilience in communities affected by disasters. Ambitious climate commitments, ecosystem restoration, and expanded civic participation further reinforced Nepal’s path toward irreversible LDC graduation and accelerated SDG progress.

Speaking at the occasion, the UN Resident Coordinator in Nepal Hanaa Singer Hamdy said, “Seventy years of partnership between Nepal and the United Nations this year is a testament to shared values, resilience, and progress. "Today, as Nepal prepares for its historic graduation from LDC status, our Cooperation Framework serves as the roadmap to make that graduation irreversible, resilient, and inclusive," she said, adding, "together with government leadership, development partners, and communities, we are advancing systemic change, creating jobs, strengthening social protection, tackling climate risks, and harnessing digital transformation."

The UN remains a steadfast partner to Nepal in accelerating the SDGs and ensuring a future that is inclusive, sustainable, and prosperous,  she added.

The Co-chair of the Joint Steering Committee and vice chair of the NPC Prof Dr Shiva Raj Adhikari, expressed appreciation to the UNCT for their partnership and emphasized the importance of national ownership in advancing global commitment, strengthening data and enhancing institutional capacity through technical assistance. He further highlighted that joint collaboration is required in harnessing synergies and strengthening collaboration for shared goals through holistic and interconnected approach, strong focus on inclusivity, building capacity, commitment to evidence and accountability and strong multi-agency collaboration.

Concerted efforts required to mobilise finance for sustainable development

The government, private sector, and the UN in Nepal jointly emphasised on mobilising sufficient development finance to achieve Nepal’s key development targets including the Sustainable Development Goals (SDGs).

During 'The Financing for Development Dialogue: Nepal’s Road to the Summit of the Future' organised by the United Nations Nepal (UN Nepal) in partnership with the Finance Ministry and Federation of Nepalese Chambers of Commerce and Industry (FNCCI), here today the stakeholders in finance and development highlighted the requirement of additional investment to achieve sustainable development and accelerate structural transformation of the economy.

Speaking at the inauguration session, the deputy prime minister and finance minister Bishnu Prashad Poudel pointed out that in developing countries, a significant portion of revenue is spent on debt servicing, leaving little for development investment. He emphasised that Nepal is no exception and called for collaboration between the government, private sector, and development partners to mobilise resources. Poudel also stressed the importance of formulating a common position for the upcoming Summit for the Future at the UN and noted that this dialogue would contribute to that effort.

Four years after a series of global shocks – including the Covid-19 pandemic, geopolitical conflicts and economic instability – the SDG financing gap for developing countries like Nepal has ballooned to $4 trillion annually. The financing gap and accompanying debt challenges have worsened poverty and inequality, putting the world off track to meet international targets set in 2015.

The UN Resident Coordinator in Nepal Hanaa Singer-Hamdy, on the occasion, underlined that as Nepal spearheads towards graduation from its Least Developed Country (LDC) status, bold and decisive actions to strengthen economic foundations is needed by focusing on domestic reforms, advancing financial inclusion and gender equality, embracing digital transformation, and advocating for international cooperation.

Like FNCCI president Chandra Prasad Dhakal highlighted the need for efforts at all levels to mobilise investment for development, particularly in the context of declining foreign direct investment, revenue, and foreign aid. He also mentioned that the federation has been organizing special programmes to promote investment in Nepal and abroad and that a facilitation desk has been established to assist with foreign investment.

In the dialogue, participants dived deep into the most pressing issues for accelerating progress towards SDGs — financing or lack of it — at the time of rising geopolitical tension, post-pandemic weaker economic recovery, more frequent and intense climate-related crisis, existing inequalities and disparities including those related to gender and social marginalisation, and a new trade dynamic driven by protectionism and disengaged multilateralism, among others.

Economy to grow by 3.87 per cent, per capita income reaches $1456

The economy is going to grow by only 3.87 per cent at the consumer's price, in the current fiscal year.

According to National Statistics Office (NSO), the gross domestic production (GDP) is estimated to grow by 3.87 per cent despite the government's target of 6 per cent.

The economy will grow by 3.54 per cent at constant price in the current fiscal year, the report launched today reads.

Earlier, the government has projected the economy to grow by 4 per cent, whereas the World Bank (WB) has estimated it to grow by 3.3 per cent, the International Monetary Fund (IMF) by 3.1 per cent and Asian Development Bank (ADB) by 3.6 per cent due to slowdown in the economy.

Nepal’s economy will be the size of Rs 5.704 trillion by the end of the current fiscal year from Rs 5.348 in the last fiscal year, the report reads, adding that the per capita income is also expected to increase by $51 to $1456 in the current fiscal year from last fiscal year's $1405.

The increase in income is too low as Nepal is graduating to Developing Country (DC) status by 2026 from current Least Developed Country (LDC) status.

Due to the contraction in some sectors of the economy and the low capital expenditure has pulled the economic growth rate downwards, the report exposes.

Likewise, the report also shows that the share of service sector in the economy has reached 62.9 per cent. "The contribution of the secondary sector (industry-construction) is 12.5 per cent and the share of the primary sector (agriculture) is 24.6 per cent," it claims, adding that this fiscal year, the contribution of agriculture has increased slightly compared to last year, though the increase in agriculture sector alone cannot push the economic growth upwards.

Agriculture sector will grow by 3.05 per cent, while the non-agriculture sector will grow by 3.75 per cent, it adds.

The industrial sector has also contracted for the second year in a row due to the inability to increase production, according to the report. "This year, the industrial sector has contracted by 1.60 per cent, wheras last year there was a contraction of 1.98 per cent."

In 2021-22, the growth of the industry was 6.70 per cent, the report added estimating that there will be a contraction in the production of industries as there has been no significant improvement in the economy globally due to various adverse factors created in the economy in recent times.

Nepal-Switzerland Bilateral Consultations Mechanism discuss development partnership

The fourth meeting of the Nepal-Switzerland Bilateral Consultations Mechanism (BCM) held at the Federal Department of Foreign Affairs (FDFA) in Bern, Switzerland today discuss a gamut of issues including development partnership.

Head of the Europe-Americas Division of Ministry of Foreign Affairs of Nepal, Joint Secretary Ganesh Prasad Dhakal and Assistant State Secretary for Asia and the Pacific in the FDFA of Switzerland Heinrich Schellenberg led the delegations of their respective countries, according to a press note issued by the Embassy of Nepal in Geneva.

Nepali delegation included ambassador of Nepal to Switzerland Ram Prasad Subedi and the Embassy Officials whereas the Swiss Delegation included officials from the FDFA and the Swiss Agency for Development and Cooperation (SDC).

During the meeting, the two sides reviewed entire spectrum of Nepal-Switzerland relations including economic ties, development partnership, multilateral cooperation, and contemporary global issues such as climate change and human rights.

The two sides also discussed the exchange of high-level visits, Nepal’s graduation from LDC category, progress made towards meeting the Sustainable Development Goals (SDGs), and ways to further enhance bilateral cooperation on trade, investment, tourism, science and technology, and vocational training, among others, according to the press note.

On the occasion Joint Secretary Dhakal requested the Swiss side to encourage the participation of their investors in the upcoming Nepal Investment Summit being held in Kathmandu this month.

The Nepali side thanked the Swiss Government for consistently placing Nepal as a priority country for Swiss Development Cooperation. While expressing satisfaction over Nepal’s progress, the Swiss side assured of their continued support to Nepal’s development endeavours.

Following the meeting, the head of the Swiss delegation hosted a luncheon in honour of the visiting Nepali delegation.

Nepal-Switzerland Bilateral Consultations Mechanism was established in 2015 and the next meeting will be held in Kathmandu on mutually convenient dates.

Nepal-EU joint commission meeting discuss graduation from LDC, GSP

The 15th meeting of the Joint Commission (JC) between Nepal and the European Union (EU) discussed gamut of bilateral issues including graduation from LDC, GSP and investment promotion, in Kathmandu today.

A broad range of issues of mutual interest were discussed during the meeting, according to a press note issued by the Foreign Ministry.

Nepal and the EU are also celebrating the 50th anniversary of their diplomatic relations this year.

The meeting was co-chaired by foreign secretary Sewa Lamsal and deputy managing director for Asia and the Pacific of the European External Affairs Service of the EU Paola Pampaloni.

The two sides reiterated their commitment to work together in upholding democracy and human rights, promoting good governance, realising Sustainable Development Goals (SDGs), promoting investment, and coping against global challenges such as climate change.

The Nepali side, on the occasion, highlighted achievements and bottlenecks in the realisation of SDGs.

Likewise, the EU welcomed Nepal’s transition strategy to graduate from LDC status and expressed their commitment to continue their cooperation through the Multi-Annual Indicative Programme (MIP).

Nepal welcomed the EU’s MIP for the term 2021-2027. The Nepali side also appreciated the MIP for aligning with the plans and priorities of Nepal.

Nepal and the EU also reviewed the progress of EU’s development cooperation in various sectors.

The meeting acknowledged the sub-commission meeting on development cooperation held on March 6.

On regional and multilateral processes, Nepal and the EU also discussed about SAARC and BIMSTEC. The two sides underlined the importance of effective multilateral cooperation.

The EU praised Nepal’s contributions to UN Peacekeeping Operations, the press note reads, adding that Nepal and the EU reaffirmed their commitments to cooperate within the United Nations (UN), World Trade Organisation (WTO), and other global fora to promote effective multilateralism and the rules-based international order. "Human rights including social inclusion were also discussed at the meeting."

The Nepali side reaffirmed its commitment to upholding human rights and concluding transitional justice as soon as possible.

The EU expressed hope on the early conclusion of Nepal’s peace process. 

The two sides unanimously agreed that corruption, including money laundering and financing of terrorism, is a major impediment to sustainable development.

The EU took note of Nepal’s ongoing legislative efforts and underlined the importance of compliance and enforcement, the press note adds.

The EU commended Nepal’s remarkable strides on inclusive participation and women empowerment. Both sides praised the EU flagship action 'Empowered Women, Prosperous Nepal', launched last year by the EU and the Ministry of Women, Children and Senior Citizens of Nepal.

The EU commended Nepal for the child grant schemes and encouraged its expansion.

The EU also appreciated the achievements made by Nepal in its socio-economic transformation. The two sides appraised the recent developments in upholding the democratic processes and institutions, and stressed the important role of civil society and media for strengthening democracy and good governance.

"The Nepali side underlined their multiple vulnerabilities of natural disasters, exacerbated by the impacts of climate change, and discussed climate adaptation finance," it reads, adding that the EU complimented Nepal for its position on Climate Change and the ‘Mountain Agenda’ during COP28 and also on its ambitious goal of reaching net zero carbon status by 2045.

"The Nepali side expressed gratitude for the EU's generous assistance following the Jajarkot earthquake, in post-earthquake resilient reconstruction and recovery efforts, and appreciated the cooperative partnership in disaster risk reduction."

The two sides exchanged their views on bilateral trade relations, including the criteria for acceding to the Generalised Scheme of Preferences Plus (GSP+).

Nepal, on the occasion, also expressed appreciation for the exchanges under the Erasmus+ programme, and the scholarships offered for Erasmus Mundus Joint Master Degree programmes, including people-to-people contacts. 

The EU and Nepal underlined that air safety remains a key priority area in their bilateral relations. Nepal assured of addressing all observations of the EU’s assessment visit in September 2023, while the EU will support Nepal in this process. Both sides agreed to follow-up at technical levels.

The next Joint Commission meeting will take place in Brussels next year.

JICA, Dolma Impact sign $10 million investment pact to aid growth

Japan International Cooperation Agency (JICA) today signed a $10 million investment agreement with Dolma Impact Fund II, focusing investments in renewable energy, technology and healthcare in Nepal.

The fund also contributes to gender equality and fulfills the criteria in the ‘2X Challenge: Financing for Women’, an initiative adopted by the G7 development finance institutions, including JICA, on the occasion of the G7 Leaders' Summit in June 2018, according to a press note issued by JICA and Dolma Impact Fund, jointly. 

According to Dolma Impact Fund, the project will contribute to sustainable development goals – Goal 5 (Gender equality), Goal 7 (Affordable and clean energy), and Goal 8 (Decent work and economic growth).

Chief executive officer of Dolma Impact Fund Tim Gocher, while addressing the signing ceremony in Kathmandu through the virtual medium, said Nepal would see a huge increase in foreign direct investments in the coming future that would create more jobs, prosperity and stronger industrial development.

The Dolma Impact Fund has $100 million under management and has invested in 12 companies across energy, healthcare and technology.

“Nepal needs more aid in hospitals, trained doctors and nurses and medicines manufactured domestically, so that the country can support itself in a future crisis,” Gocher said, adding that Dolma is further investing in renewable energy apart from the existing 46.5 megawatt project (MW), with JICA. “We just do not promote and build renewable energy, we promote the capital markets too, so that more investors come into the sector.”

The Fund has invested in companies like CloudFactory, Fusemachines, Sastodeal, Upaya City Cargo, and Foodmandu. “About 15,000 employees have been created in companies that the Fund has invested in,” said Gocher.

“This is our first partnership with an investment partner in Nepal,” senior deputy director-general of the Private Sector Partnership and Finance Department of JICA Jin Wakabayashi said, adding that Dolma Impact Fund is a leading private equity fund and JICA is excited to partner with such a fund and contribute to the development of Nepal.

JICA has been supporting the Investment Board of Nepal to strengthen sources for investments, he said, adding that JICA has also been in technical cooperation for hydropower projects. “Recently, JICA has started a new technical cooperation project to support entrepreneurs in Nepal.”

JICA's investment will be mainly utilised for equity investment in healthcare companies, IT and digital companies, and renewable energy projects in Nepal. JICA’s investment is part of the final close of Dolma Impact Fund II, which brings the fund corpus to $71.96 million.

“Nepal is facing the challenge of a hollowing out of industry caused by the increased number of migrant workers, which, in turn, is due to a lack of promising domestic industries and job opportunities in Nepal,” the press note reads, adding that the fosterage of promising industries such as healthcare and the IT and digital sector, therefore, is urgently needed in Nepal. 

Dolma Fund Management contributes to the development of the stock market and the private equity fund market in Nepal.

Although Nepal experienced a temporary economic downturn due to the earthquake in 2015, the economy has revived since then and the country is now expected to graduate from the Least Developed Countries (LDC) category by 2026. On the other hand, Nepal is facing the

challenge of a hollowing out of industry caused by the increased number of migrant workers, which in turn is due to the lack of promising domestic industries and job opportunities in Nepal.

Therefore, the fosterage of promising industries such as healthcare and the IT/digital sector is urgently needed in Nepal, the press note reads. “In some areas, however, Nepal has a natural advantage, being blessed with abundant water resources and an economically viable hydropower generation potential estimated at around 42,000 MW. Hence, Nepal is expected to expand its renewable generation capacity to contribute to the reduction of greenhouse gas emissions in South Asia.”

DFM manages impact investment funds that promote industrial development, employment creation, and renewable energy development.

Nepal’s graduation from LDC will not impact development cooperation hugely

Nepal’s graduation from Least Development Country (LDC) status will impact development cooperation modestly only, according to a research report “Nepal’s graduation from the LDC category: Implications for international trade and development cooperation”.

The impact on development cooperation will be modest as most of the development partners – multilateral and bilateral – have indicated that LDC status is not the main criterion for aid flows, concludes the study conducted by South Asia Watch on Trade, Economics and Environment (SAWTEE) to investigate the implications of graduation for Nepal in the areas of market access, development cooperation, and trade-related policy space. As, the motive of the study was also to offer recommendations in these areas for the government to consider when formulating the transition strategy, the study highlights that Nepal could lose access to specific instruments and funds dedicated exclusively to LDCs, particularly with regard to climate change-related funds, after a transition period.

Some development partners may switch from grants to concessional loans or increase interest rates for concessional loans, it reads, recommending that the government should explore new forms of finance, including blended finance, public-private partnerships, private philanthropies and co-financing, among others, and work with development partners for new forms of support mechanisms such as dedicated funds for graduated countries, disaster insurance, and technology transfer mechanisms.

Nepal is scheduled to graduate from the LDC category in 2026. While this is an important milestone in Nepal’s development journey and a testament to its achievements in socio-economic progress, Nepal’s exit from the category will result in the loss of a variety of international support measures that the international community has provided to help Nepal overcome development-related challenges. The government is also in the process of formulating a transition strategy to ensure smooth, sustainable, and irreversible graduation.

The study has also suggested that graduation from LDC status will have trade implications in terms of higher tariffs and more stringent rules of origin provisions in preference-granting countries. The projected loss in total exports emanating from the increase in tariffs is moderate, it reads, adding, however, the loss emanating from more stringent rules of origin, while uncertain, could be significant, especially in the garments sector.

The study has also recommended the government to aspire to become a party to the more generous preferential schemes such as the EU’s Generalised System of Preferences Plus (GSP+) and the UK’s GSP Enhanced Framework, while studying the implications of acceding to the additional conventions that Nepal needs to ratify to qualify for these schemes. “Nepal should also initiate dialogue with other trading partners seeking an extension to LDC-specific concessions and preferences for another 3-5 years following graduation,” it reads, adding that Nepal should lobby for lenient rules of origin (RoOs) for LDCs for a period sufficient for the private sector to adjust to the new RoOs. “To realise the untapped export potential of Nepal, the government should prepare trade strategies, in consultation with the private sector, to strengthen the overall competitiveness of the economy, upgrade exporter’s capabilities, diversify export products and markets, simplify and streamline processes to attract more foreign direct investment and encourage enterprises to participate in regional, global value chains.”

Likewise, the graduation could result in a loss of policy space, either through the loss of current flexibilities and special treatment, such as in the area of intellectual property rights, or through greater scrutiny of certain practices, such as the subsidy regime, the study reads, adding that the policy space to promote infant industries and exports, and pursue public health objectives, could be squeezed.

Nepal-Australia sign Water resource management cooperation agreement

Nepal and Australia today signed a five-year memorandum of understanding (MoU) on Cooperation in Water Resource Management.

The MoU has been signed during the second bilateral consultation mechanism (BCM) between the Australia Government Department of Foreign Affairs and Trade (DFAT) and the Government of Nepal Ministry of Foreign Affairs (MoFA) held today in Canberra of Australia.

DFAT secretary Jan Adams AO PSM, and the secretary of the Water and Energy Commission Secretariat Dinesh Kumar Ghimire signed the five-year memorandum on behalf of their respective countries.

Under the MoU, Australia will provide training, technical assistance and share internationally recognised expertise on water governance. It will complement’s Australia’s existing partnership with the International Center for Integrated Mountain Development (ICIMOD) to strengthen transboundary river basin management, localise climate action and promote green livelihoods, aligned to Government of Nepal’s transition to Green, Resilient and inclusive Development (GRID) for sustainable recovery, growth and jobs.   

The BCM was co-chaired by DFAT’s deputy secretary of Geostrategic Group Justin Hayhurst and secretary at the Ministry of Foreign Affairs Bharat Raj Paudyal.

DFAT’s deputy secretary Hayhurst was pleased to open the second meeting of the Bilateral Consultation Mechanism and thanked secretary Paudyal and the Nepal delegation for travelling to Australia. During his opening remarks deputy secretary Hayhurst welcomed Australia and Nepal’s strong people-to-people links with over 120,000 Nepali calling Australia home. He also congratulated Nepal on its recent democratic local elections and reiterated the two countries’ strong commitment to democracy, domestically and internationally. “Australia supports a free, open and resilient Indo-Pacific and the international rules-based order,” he said, welcoming  Nepal’s strategic outlook. 

Both sides, on the occasion, also noted mutual climate change and energy challenges and the importance of achieving net-zero emissions. In addition to talks on Nepal’s development priorities and future cooperation agenda, Australia undertook to share its expertise in forest fire management, and search as rescue initiatives through a new package of development support. 

The Bilateral Consultation Mechanism was established in 2017 between the Australia Government Department of Foreign Affairs and Trade, and the Government of Nepal Ministry of Foreign Affairs.

The two sides also reviewed the bilateral relations between Nepal and Australia and exchanged views on further strengthening the bilateral relations and cooperation in different fields including education, energy, investment, trade, tourism, technology transfer, migration, cooperation in climate action, and disaster risk reduction, among others. Both sides agreed to prioritise the exchange of high-level visits, promote people to people contacts, and facilitate trade, investment and transfer of technology. They also discussed cooperation in multilateral forums, including the exchange of experiences in UN Peace keeping operations.

While appreciating Australian cooperation to Nepal, foreign secretary Paudyal requested the Australian side to place Nepal as a priority country for Australian aid, support for post-Covid economic recovery, graduation from the LDC status, and realize the Agenda 2030 for Sustainable Development (SDG), and consider issuing visa services from the Australian Embassy in Kathmandu.

Bilateral Consultation Mechanism between Ministry of Foreign Affairs of Nepal and Ministry of Foreign Affairs and Trade of Australia was established on 14 July, 2017 and its first meeting was held in Kathmandu on 16 August 2018.

After 50 years, Nepal to graduate from LDC

After being in a category of least developed country (LDC) for five decades since 1971, Nepal is finally graduating to the developing country category as the United Nations General Assembly (UNGA) on Wednesday approved a proposal of Nepal's graduation to a middle-income developing country by 2026.

The 40th plenary of the 76th Session of the UNGA unanimously adopted a resolution endorsing the graduation of Nepal from the LDC category with the preparatory period of five years, according to press note issued by the Permanent Mission of Nepal to the United Nations in New York.

"As a result, Nepal will graduate from the LDC category by December 2026 and until then will continue to receive all concessions and support measures as LDC,” the press note reads.

In addition to Nepal, the graduation of Bangladesh and the Lao People’s Democratic Republic has also been endorsed by the UNGA.

Nepal now needs to prepare smooth national transition strategy, with the support of the UN system and in cooperation with their bilateral, regional, and multilateral development and trading partners. After the graduation from LDC category, a country will not get grant, and also loses preferences it is getting as LDC, thus pressuring for strong domestic production base.

After the adoption of the resolution, permanent representative of Nepal to the UN Amrit Bahadur Rai reiterated Nepal’s commitment to making all-out efforts for a smooth graduation with the enhanced level of support from the development partners, including the UN system. "Nepal graduating from LDC status in 2026 is a great milestone, indeed," he added.

But Nepal should make efforts that it won't slip backwards. Rai also pledged for Nepal to do its best to undertake all required procedures for its structural changes for the same within the next five years. "The Government of Nepal has completed strategic efforts for the graduation," he said, adding that it is an opportunity for the country to raise its image in the international forum by creating structures for its economy within the next five years. "We have also urged for addressing challenges that may emerge after 2026, and will reach a conclusion to this effect after holding a dialogue with development partners."

Nepal has twice deffered its graduation due to devastating earthquake in 2015 and lack of preparation in 2018. Usually, graduation from LDC status becomes effective three years after the UNGA takes note of the recommendation made by the Committee for Development Policy under the United Nations Economic and Social Council to graduate a country. But due to Covid-19 pandemic, this time, the countries have been given five years of preparatory period on an exceptional basis.

The five-year preparatory period, however, is provided for a smooth transition, recognising the effect of the Covid-19 pandemic and the resulting need to implement policies and strategies to reverse the pandemic’s damage to the economic and social sectors, the press note reads.

The resolution has mandated the Committee on Development Policy, a subsidiary body of the Economic and Social Council, to analyse the adequacy of the preparatory period at its 2024 triennial review and recommend further extension, if necessary, the press note adds.

In the last two triennial reviews conducted in 2015 and 2018, Nepal had met two of the three criterion related to the human asset index (HAI) and economic vulnerability index (EVI), though it couldn’t meet the per capita income (PCI) criteria. A country must have HAI more that 66 to graduate from LDC. But Nepal has scored 68.7 in 2015, 71.2 in 2018, and 75 in 2021. Likewise, a country must have EVI less than 32 to graduate. Nepal has scored 26.8 in 2015, 28.4 in 2018, and 24.2 in 2021.

A country becomes eligible to graduate from LDC after meeting two of the three criterion but a country can also graduate on the basis of per capita income alone, if it can meet the PCI creteria. The gross national per capita income of a country needs to be at least $1,222 for it to be accorded developing country status, according to the UN. But Nepal’s per capita income stands at $1,027 in 2021, whereas it had $745 in 2018, and $659 in 2015, according to National Planning Commission (NPC) data presented at the UNGA.

Norway commits NOK 45 million to EIF to spur economic recovery in the LDCs

Norway's Ministry of Foreign Affairs is contributing NOK 45 million (CHF 4.8 million) to the Enhanced Integrated Framework (EIF) to support projects aimed at helping the world's poorest countries recover from the Covid-19 crisis. The new contribution was announced at the EIF's steering committee meeting today, attended by director-general Ngozi Okonjo-Iweala and Norway's WTO ambassador Dagfinn Sørli.

"Through its generous contribution to the EIF, Norway is supporting LDCs in playing a more active role in international trade and helping their people to benefit from the higher incomes and better jobs that trade can bring," said Dr Okonjo-Iweala.

The world's poorest countries have been particularly hard hit by the Covid-19 crisis due to the fragility of their economies and to disruptions in trade flows caused by a variety of trade-restrictive measures implemented by governments.

"Norway is pleased that its substantial contribution to the EIF’s important work will help least-developed countries use trade as a tool for sustainable economic growth and poverty reduction," Ambassador Sørli said, adding that it is vital to help these countries overcome the enormous challenges, which the pandemic has exacerbated.

Since the Covid-19 pandemic started, the EIF and its country partners have adapted their projects to address pressing  needs, from strengthening nascent tourism sectors to building the e-commerce capabilities of micro, small and medium-sized enterprises and women-owned businesses, the EIF's executive director Ratnakar Adhikari said, thanking Norway for helping LDCs forge ahead with developing their trade capabilities.

Norway has been an EIF donor for 12 years. The latest contribution brings Norway's total EIF funding to NOK 345 million since the programme started in 2009.

The EIF's biannual steering committee serves as a forum for information exchange and a platform for LDC representatives, donors and development partners to provide guidance to ensure that the EIF can effectively deliver on its goals.

Private sector suggests postponement graduation from LDC

The private sector has asked the government to postpone the graduation of Nepal to the Developing Country (DC) status from the current Least Developed Country (LDC) status.

Submitting a written recommendation to the Ministry of industry, Commerce and Supplies today, Federation of Nepalese Chambers of Commerce and Industry (FNCCI) president Shekhar Golchha said that Nepal should not hurry to graduate from LDC. If Nepal graduates from LDC, it will not be able to enjoy the benefits including zero tariff and grants from the development partners. The developing country will get loan, and it will also be exempted from zero tariff, provided for LDCs by India, China, US and the EU. “Nepal will also not receive any development grants, if it graduates,” he said,” asking the government not to hurry.

Earlier too, Nepal had postponed its graduation from LDC till 2021, though the country had met two of the three criterion that are necessary to graduate to graduate from LDC. Nepal had fulfilled two criterion – Human Assets Index (HAI) and Economic Vulnerability Index (EVI) – in 2015, which was enough for graduation. The HAI should be 66 or above, EVI 32 and below, and per capita income should be $1,222. Nepal’s HAI and EVI scores stood at 68.7 and 26.8, respectively, which was enough for graduation from LDC, though the per capita income was less. But writing a letter to UNDP, Nepal asked to postpone its graduation as the country wanted to graduate on the basis of per capita income, which is thought to be more sustainable graduation. 

Any country meeting two of the three criterion – HVI, EVI and per capita income – could be graduated from LDC, or a country can graduate, fulfilling only one criteria, if it has $2,444 per capita income.  Nepal’s per capita income currently hovers around $1,000 but in the changed context of coronavirus pandemic, there is a doubt that the per capita income even remains same, as some 6 million Nepalis lost their employment, during the lockdown imposed by the government – from March 24 for 120 days – and subsequent prohibitory orders aimed at containing the spread of Covid-19.

According to the latest UNCTAD report on LDCs too, the world economic crisis brought by the Covid-19 pandemic may affect the previously planned graduation of LDCs that is the exit of some countries from the group of LDCs. 

The LDCs that have better weathered the Covid-19 pandemic from a health policy perspective are those with a broader and more sophisticated base of productive capacities in their economy, the UNCTAD report reads, adding that more generally, the same reasoning also applies to their capacity to respond to other shocks like medical, economic or natural disasters. “Countries that have been able to develop a denser and more diversified fabric of productive capacities have shown greater resilience and have been better prepared to weather different types of shocks.”

The Covid-19 pandemic is estimated to contract the GDP per capita LDCs by 2.6 per cent in 2020 from already low levels, as these countries are forecast to experience their worst economic performance in 30 years, according to the UNCTAD report. “At least 43 out of the 47 LDCs will likely experience a fall in their average income,” it reads, adding that extreme poverty in LDCs is projected to expand by 32 million in 2020 to reach 377 million people. “The poverty rate will rise from 32.5 per cent to 35.7 per cent in 2020, due to the Covid-19-induced economic crisis.”

Meeting the criterion is not only enough for any LDC to graduate, but it also has to prepare a transition plan, so that it keeps sailing above, otherwise, the country could again demoted to LDC. Nepal also has to prepare a transition strategy as it will lose some preferential treatment.

According to a report prepared by the National Planning Commission (NPC) and the United Nations Development Programme (UNDP) also, the Covid-19 pandemic may have profound impacts on the graduation criteria, with new risks of rising trade and export costs impacting external markets, and the need for more concessional aid, including debt relief, to overcome multiple crises. With new impact analysis, Nepal also need to bring a transitional strategy.

Graduation from LDC status becomes effective three years after the United Nations General Assembly (UNGA) takes note of the recommendation made by the Committee for Development Policy (CDP) under the United Nations Economic and Social Council (UNESC) to graduate a country. Though, the government is in hurry to graduate Nepal, Nepal’s graduation will be effective in 2024, if the committee recommends graduation at its next triennial review in 2021. 

The largest regional group to boost post-Covid-19 recovery

 The 15 nations in the Indo-Pacific region today signed Regional Comprehensive Economic Partnership (RCEP) agreement – one of the world’s largest trade and investment pacts – that could give a significant boost to foreign direct investment (FDI) in the region.

According to the agreement, the investment provisions in the agreement mostly consolidate existing market access as contained in myriad bilateral agreements. “However, the provisions related to market access and disciplines in trade, services and e-commerce are highly relevant for regional value chains and market-seeking investment,” it claims, adding that the RCEP is already an important FDI destination. “It accounts for 16 per cent of global FDI stock and more than 24 per cent of flows, while global FDI has been stagnant for the last decade, the RCEP group has shown a consistent upward trend until last year.”

The agreement comes at a time of major upheaval caused by Covid-19. The pandemic will lead to a drop in FDI in the region of about 15 per cent. However, this compares favourably to a fall of 30 per cent to 40 per cent in global FDI, and the region looks set to lead the FDI recovery.

“A key challenge for RCEP will be to follow through on economic integration efforts at a time of global and intra-regional geopolitical and trade tensions,” it reads, adding that the global economic recession caused by the pandemic will also limit the potential of RCEP to expand trade, investment GVCs in the short term. “However, a key opportunity lies in the diversity within RCEP, which can lift investment prospects through complementary locational advantages and catch-up development potential.”

Among the members, FDI stock relative to the size of the economy ranges from less than 5 per cent to a multiple of GDP.

The Intra-regional investment – at about 30 per cent of total FDI in RCEP – has significant room for further growth. It is relatively low compared to other major economic partnerships. The ASEAN group, at the heart of RCEP, will play an important role. Already about 40 per cent of investment in ASEAN comes from RCEP members. The agreement is signed by 10 member states of ASEAN, apart from Australia, Japan, China, New Zealand and South Korea. 

According to the agreement, the likely investment policy priorities for the partnership will include boosting investment in sustainable post-pandemic recovery. This requires investment in infrastructure, clean energy and healthcare, all of which rely on increasing international project finance. RCEP includes several top source countries for project finance. There is room for growth, for example RCEP attracts projects in line with its global FDI share but accounts for only about 12 per cent of projects in renewable energy.

Likewise, supporting resilience-seeking FDI is also a part of agreement. The need for multinational enterprises (MNEs) to diversify supply sources and strengthen regional value chains should translate not only in shifting FDI patterns within the region but also in renewed overall growth of international investment in industry. Greenfield investment in trade-exposed manufacturing in the region has decreased by more than 40 per cent over the last decade.

The agreement also aims at promoting investment for development. “The least developed country (LDC) signatories including Cambodia, Myanmar and Lao People’s Democratic Republic respectively receive more than 70 per cent, 80 per cent and 90 per cent of their FDI from other RCEP members,” the agreement reads, adding that economic cooperation under the partnership could further boost both project finance in infrastructure and industrial investment to increase their GVC participation.

Newly appointed EU envoy presents credentials to President

 Newly appointed ambassador and head of the Delegation of the European Union (EU) to Nepal Nona Deprez today presented her credentials to President Bidya Devi Bhandari, at a function held at the President’s Office.

“I am extremely honoured and happy to take up my duties as the EU ambassador to Nepal and look forward to discover the country, to meet the Nepalese and to work closely with all Nepali institutions, civil society, private sector, media, international partners and all relevant political, social and economic stakeholders,” ambassador Deprez has been quoted in a press note issued by the Delegation of the EU to Nepal.

Nepal and the EU have developed more than four decades of diplomatic and friendly relations, the ambassador said, stressing the need to work jointly on global issues in the wake of new challenges such as pandemics, climate change and threat to multilateralism has become an urgency.

The EU has been a reliable development partner and one of the biggest donors to Nepal for around half a century. 

The Delegation of the EU to Nepal – in the press note – said that EU has been cooperating on three priorities agreed with the government of Nepal: rural development, education and finally democracy and decentralization. “Furthermore, the EU supports Nepal in achieving the Sustainable Development Goals (SDGs), in graduating from LDC status and in improving Nepal’s resilience to the adverse effects of climate change,” the Delegation of the EU to Nepal claimed, adding that the total assistance for the current programming cycle – 2014 to 2020 – amounts for Euro360 million, which is around Rs 50 billion. “When the Covid crisis hit Nepal, the EU provided immediate response in mobilising a package of Euro75 million, which is Rs 10 billion.”

The support was closely coordinated with the EU member states working as one in a streamlined ‘Team Europe Initiative’. The EU also helped raise Euro16 billion globally to finance research on vaccines, tests and treatments for the whole world.

UN forges technological cooperation to tackle Covid-19 in Asia and the Pacific

 Collaboration at the regional level is a critical force for scaling up effective technologies and increasing innovation capacity in the fight against Covid-19, according to high-level officials and key stakeholders at the third session of the Committee on Information and Communications Technology (ICT), Science, Technology and Innovation.

Convened by the United Nations (UN) Economic and Social Commission for Asia and the Pacific (ESCAP), the two-day Committee meeting highlighted how digital inclusion and resilient digital networks across the entire region have become the foundation for government measures to effectively stem the worst impacts of the pandemic.

“Digital has taken on a compelling new meaning in the region; people, planet and prosperity are all increasingly dependent on access to digitally-driven technological innovations and seamless connectivity,” said UN under-secretary-general and executive secretary of ESCAP Armida Salsiah Alisjahbana. 

“As we are planning to chart our future in the post-Covid-19 world, we need to address the digital and technology divide with urgency,” she said, adding that they cannot let this divide drive new forms of socio-economic inequalities. “More than half of the region’s 4.1 billion people remain offline and in least developed, landlocked developing and Pacific island countries, less than 5 per cent of the population has access to high-speed and affordable Internet.”

Women and girls, regardless of location, level of income or age, have lower access than men, she added.

“We need to accelerate the digital transformation that has happened before the Covid-19 pandemic,” minister for Research and Technology and Chairman of the National Agency for Research and Innovation of Indonesia Bambang Brodjonegoro sid, adding, “We need to make sure that quality telecommunications infrastructure is made available.”

The committee discussed a set of guidelines for inclusive technology and innovation policies for sustainable development, and committed to developing policies that promote inclusive technology and innovation to ensure that innovations are accessible, relevant and affordable for all, to leave no one behind.

The Committee also underscored the importance of harnessing the entrepreneurial spirit of the private sector to focus on developing innovations to address social and environmental challenges as well as provide economic opportunities. Social innovators and entrepreneurs have stepped up in response to the Covid-19 pandemic. 

A regional launch of the 2020 United Nations E-Government Survey published by the United Nations (UN) Department of Economic and Social Affairs (DESA) was held on the sidelines of the Committee. The survey finds that among the world’s least developed countries (LDCs) Bhutan, Bangladesh and Cambodia have become leaders in digital government development, advancing from the middle to the high E-Government Development Index group in 2020. At the launch, ESCAP further highlighted the challenges and opportunities of digital government in the Asia-Pacific region and emphasized the use of ICT during all phases of disaster risk management.