KATHMANDU, Nov 11: The private sector has backed the government’s move to defer Nepal’s graduation from the Least Developed Countries (LDCs) category, citing the need to stabilize the economy and rebuild investor confidence following the recent Gen Z movement and related unrest.
Nepal had been preparing to graduate from LDC status by November 2026 after meeting key criteria, including per capita income. The country’s graduation process formally began in 2010 and has since undergone several evaluation stages.
With the deadline now less than a year away, the government is planning to ask the United Nations for a three-year extension. According to Chief Secretary Eaknarayan Aryal, the government has been compelled to reconsider its plan as it must divert resources toward rebuilding physical infrastructure damaged during the Gen Z movement on September 9.
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Echoing the government’s stance, the private sector has argued that graduation at this stage could hurt domestic industries. Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), urged the government to reassess the implications before making a final decision.
“If the transition happens without a proper assessment, it will negatively affect domestic production and employment,” said Dhakal, speaking at a program organized by the National Planning Commission on Monday.
Citing Bangladesh’s decision to delay its graduation following political upheavals last year, Dhakal said Nepal is facing similar instability. “The recent incidents have eroded business confidence, while the economy is suffering from weak demand,” he added.
Nepal had earlier requested the United Nations in 2021 to postpone its graduation by five years due to low per capita income at that time. Since then, the figure has risen from US$1,361 to US$1,496 per year.
Experts have repeatedly warned that after graduation, Nepal may lose trade privileges under the Generalized System of Preferences (GSP) and Duty-Free Quota-Free schemes, which could result in higher tariffs on exports. The country may also lose access to concessional loans and grants from international donors.
While graduation to developing-country status is expected to attract greater investment, foster trade partnerships, support sustainable development goals, and enhance Nepal’s global image, both the government and the private sector remain cautious about potential economic repercussions.
Dhakal also cautioned that the transition could particularly affect small enterprises and women’s employment. “In addition, Nepal may face stricter conditions related to the rule of origin under the SAFTA clause,” he said.
