UN Watch

Bhutan is a very interesting success story: UN panel

Famous for its pursuit of Gross National Happiness, Bhutan has a new cause for joy: In recognition of its Gross National Income (GNI) growth and social development, the kingdom is poised to graduate from the UN category of the world's poorest known as the Least Developed Countries (LDC), writes Arul Louis

Mar 17, 2018
By Arul Louis
 
Famous for its pursuit of Gross National Happiness, Bhutan has a new cause for joy: In recognition of its Gross National Income (GNI) growth and social development, the kingdom is poised to graduate from the UN category of the world's poorest known as the Least Developed Countries (LDC). However, two other South Asian nations, Nepal and Bangladesh, will continue in the LDC category although they have recorded progress, the UN panel that recommends changes to the list said Thursday.
 
The Committee on Development Policy (CDP) announced that it was recommending that the tiny and reclusive Himalayan nation was ready to move out of the LDC pool “because of its increasing national earning power as well as access to better health care and education.”
 
“Bhutan is a very interesting success story of social progress and also economic progress,” CDP chair Jose Antonio Ocampo told reporters. “They have done very big investments in human development.”
 
Countries that are classified as LDC have preferential access to development assistance and trade but an interim arrangement spread over many years will smooth their transition when they graduate.
 
To graduate out of the LDC list, a country has to meet two of the three criteria during two successive triennial reviews.
 
Bhutan met tow of them, the criteria for income, with its GNI tripling between 2003 and 2018, and for the human assets index, which measures health and education, with falling under-five mortality rate and a doubling of secondary enrollment, CDP said.
 
It did fall short in the third category that measures economic vulnerability, which Ocampo explained was because “they are very specialised economically” dependent on electricity exports.
 
“They are diversifying, but they are still highly dependent on the export of electricity to India, the major export sector of Bhutan," he said. But “they are in the process of diversifying. Tourism is one of the major new sectors for them.”
 
He said that the CDP agreed to make the LDC graduation effective after the conclusion of its 12th five year plan in 2023 to ensure a smooth transition.
 
Nepal met the criteria to graduate this year, but the CDP decided against recommending it because it is “a country with a very low per capital income, much lower than our threshold, and also they are in political transition (as) they are doing major constitutional change," Ocampo said.
 
Nepal met two of the criteria this year in a second successive review because it reduced vulnerability by making the economy less specialised and it made progress in human development.
 
Ocampo said that he expected Nepal to be ready to graduate at the next triennial review in 2021.
 
Bangladesh met the graduation for the first time and will graduate if it keeps up the standing at the next review.
 
Maldives moved off the LDC list in 2011.
 
The recommendation for Bhutan to be dropped from the LDC list – along with three others, Kiribati, Solomon Islands and Sao Thome and Principe – now goes to the UN Economic and Social Council.
 
If approved by it, the General Assembly will make the final decision later this year.
 
(Arul Louis can be reached at arullouis@spsindia.in)

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