Dhakal calls for postponing Nepal’s LDC transition

By A Staff Reporter,Kathmandu, Feb. 28: President of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Chandra Prasad Dhakal has called for postponing Nepal’s graduation from the Least Developed Country (LDC) category to a 'developing nation'. 

Nepal is scheduled for graduation in November 2026. Speaking at a meeting with newly appointed United Nations Resident Coordinator Lila Peters Yahya in Kathmandu on Friday, Dhakal said that Nepal remains structurally unprepared for the transition. 

According to him, the FNCCI has formally requested that the graduation be deferred by three years, until November 2029, following extensive consultations with the business community.

"The objective of this request is to ensure that Nepal’s graduation is sustainable and beneficial to the population, rather than symbolic. Nepal only recently met the per capita income threshold and continues to face high economic vulnerability," said Dhakal. 

He added that while banks have liquidity and private sector investment appetite remains weak, a premature graduation could create additional challenges.

Referring to Bangladesh’s request for a similar extension, he said Nepal’s private sector demand is also relevant. Bangladesh and Laos are scheduled to graduate together. 

Dhakal highlighted challenges faced by small and medium-sized enterprises, stating that around 300,000 agro-based industries could be affected by rising costs and the withdrawal of trade preferences in European markets following graduation.

Likewise, Yahya suggested that discussions involving the UN, the World Bank, the International Monetary Fund, the government and private sector could help reach a conclusion on the proposed extension. 

She also emphasised the need for predictable policies and trust in national institutions to support economic development, the FNCCI informed in a statement. 

She suggested aligning strategies for import substitution and export promotion accordingly and expressed interest in the upcoming elections and the post-election economic outlook.