The private sector has endorsed the government’s decision to postpone Nepal’s graduation from the Least Developed Countries (LDCs) category, arguing that the economy needs time to stabilize and regain investor confidence following the recent Gen Z protests and related disruptions.
Nepal was scheduled to graduate from LDC status by November 2026, having met several key criteria, including per capita income. The graduation process began in 2010 and has since undergone multiple evaluations.
With the deadline now approaching, the government plans to request a three-year extension from the United Nations. Chief Secretary Eaknarayan Aryal stated that the government must now divert significant resources to rebuilding infrastructure damaged during the September 9 Gen Z movement.
The private sector echoed these concerns, cautioning that premature graduation could harm domestic industries. Chandra Prasad Dhakal, president of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), urged a comprehensive assessment before taking the final step.
“If the transition happens without proper analysis, it will hurt domestic production and employment,” Dhakal said during an event organized by the National Planning Commission.
Referencing Bangladesh’s decision to delay its own graduation due to political instability, Dhakal noted that Nepal is experiencing similar challenges. He added that business confidence has weakened and market demand remains low.
Nepal previously sought a five-year extension in 2021 due to low per capita income. Although the figure has since increased from US$1,361 to US$1,496 annually, concerns remain.
Experts warn that upon graduation, Nepal may lose key trade benefits under schemes like the Generalized System of Preferences (GSP) and Duty-Free Quota-Free programs, which could raise export tariffs. The country may also face reduced access to concessional loans and grants.
While graduation is expected to bring increased investment, stronger trade partnerships, progress on sustainable development goals, and improved global standing, both the government and private sector remain cautious about potential economic risks.
Dhakal further emphasized that the shift could particularly impact small enterprises and women’s employment. “Nepal may also face tighter rules of origin under SAFTA, which could complicate trade,” he added.
