The government has put its plan for Bhutan to graduate from the United Nation’s category of Least Developed Country (LDC) in 2023 on the back burner due to the Covid-19-induced economic disruptions.
The country was supposed to cross the last mile economic challenges in all sectors during the 12th Plan. But the government believes that economies would have gone back by decades and that bringing back the development activities back on track would not be easy.
Addressing the 75th UN General Assembly virtually from Thimphu, Prime Minister Dr Lotay Tshering last week requested the UN to reset the LDC graduation path to help the country regain its grip on a smooth transition from the LDC category.
The prime minister said that it would be extremely challenging especially for developing countries to reverse their economies. He said that governments and agencies around the world were realigning their programmes with the realities of Covid-19.
He said the pandemic had derailed Bhutan off the LDC graduation track. The plan for graduation from the LDC and a lower middle-income country was supposed to coincide with the completion of the present government’s term.
“Now everything is changed. Our focus has shifted to saving lives and livelihoods from the challenges posed by the pandemic,” the prime minister said. He added that millions in the world have been pushed back to poverty and more have lost jobs.
The thresholds for the three criteria for graduation are a gross national income (GNI) per capita of USD 1,242 based on a three-year average, a human assent index (HAI) score of 66 or more and an economic vulnerability index (EVI) score of 32 or below. A country becomes eligible for graduation if it meets the threshold levels for graduation for at least two of the three criteria.
When countries graduate, an element they lose in the transition period is the preferential access to markets mainly in developed economies. Generally, a country also loses foreign grant aids and technical assistance that are linked to LDC status.
However, graduating from LDC indicates that the country is doing well with a stable political and social setting, which could attract FDI. The other benefits of graduation could mean that the country would be more positively viewed by international investors, leading to increased access to international private finance for both public and private sectors.
In a recent interview with Kuensel, secretary of GNH Commission, Thinley Namgyel, was optimistic that the country would still be able to meet some of the criteria despite the economic downfall.
“The GDP has been impacted by the Covid-19. But still we will probably meet the GDP threshold,” he said.
Thinley Namgyel said that Bhutan could fulfil the income level and the human asset criteria. “If we fulfil the criteria, we qualify, if we don’t fulfil we will not qualify,” he said.
In an earlier interview before the August lockdown, the Prime Minister had said that he did not expect much change in terms of our deadline to graduate from the LDC.
Bhutan had qualified to graduate from LDC in 2021. But the country had requested that the UN body kept 2023 as the graduation year so that the country could time it with the 12th Plan.
The country’s request for extension of the graduation timeline by two years was endorsed by the 73rd session of the UN General Assembly held in New York on December 13, 2018.