In perspective: Nepal’s LDC graduation: Implications,opportunities,and pathways

Abstract

In this paper, Nepal’s journey toward graduating from the Least Developed Countries (LDCs) category, a significant milestone anticipated for November 2026, is discussed. It evaluates Nepal’s progress in meeting the three key criteria for LDC graduation: the income criterion, Human Assets Index (HAI), and Economic and Environmental Vulnerability Index (EVI). A comparative analysis with Bhutan, which graduated in 2023, and Bangladesh, aiming for graduation in 2026, highlights the different economic paths and development challenges each country encounters. The article also discusses the potential consequences of Nepal’s LDC graduation, including the loss of preferential trade benefits and concessional aid. It outlines Nepal’s preparations, which involve the Smooth Transition Strategy (STS) and the 16^th Five-Year Plan, both emphasizing macroeconomic stability, economic transformation, and social inclusion. While the article identifies key opportunities, such as increased foreign investment and an improved international reputation, it also underscores the challenges Nepal will need to address to ensure sustainable growth after graduation, particularly through strategic international partnerships and development diplomacy.