Gyan Chandra Acharya, former foreign secretary of Nepal, is United Nations Under Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS) since 5 September 2012. Nepal has set the vision of graduating into a Developing Country (DC) by 2022 from the status of the Least Developed Country (LDC). It is assumed that one of the reasons behind the decision of the country is inspiration of Acharya who was recently in Kathmandu for the Ministerial Meeting of Asia-Pacific LDCs on Graduation and Post-2015 Development Agenda. Acharya spoke to Janardan Baral of New Business Age on issues related to the achievements of the meeting and Nepal's status in the graduation process. Excerpts:
The Ministerial Meeting of Asia-Pacific LDCs has concluded by adopting The Kathmandu Declaration for Sustainable Graduation of Asia-Pacific LDCs. How do you evaluate the achievements of the meeting?
The meeting has been important in many ways. First, it has been important to understand the status of Asia–Pacific LDCs in the graduation process. All 13 LDCs in the region have discussed about the key drivers of graduation, the right steps in the graduation journey and design comprehensive and coherent support framework. The meeting was also focused on transforming LDC economies through a strong and coherent focus on productive capacity building- building of infrastructure, building of human asset, building climate resilience and others. These are very important issues for all the LDCs. When we look at the challenges that Nepal faces and opportunities that Nepal has, I think they are very important for Nepal as well.
The LDCs have all agreed that the issue of graduation should be taken into the global process. The post-2015 development agenda is being built. Therefore, now, this is the right time in terms of taking the issues of LDCs to the global level and to make sure that the process of development is accelerated, they are made more inclusive and there is a need for structural transformation in the economies. All of these things have come up very strongly. That is very important. Lastly, they all have emphasized that the national leadership and ownership is critical, which means that there has to be good governance, rule of law and institution building for development. And, many of the countries which participated in the meeting shared their experiences which were very useful to Nepal as well as other countries and for all development partners. So, from all perspectives, I think it was a very good meeting.
As you've rightly stated, graduation is not an easy process. What are the major challenges for the Asia-Pacific LDCs in the graduation process?
You know that graduation can take place only when an LDC has made progress in three criteria - human development, economic vulnerability and GNI (Gross National Income). If you look at the challenges of the LDCs, most of them have either challenges related to the EVI (Economic Vulnerability Index) or the GNI. They've made a lot of progress in human asset development. But, again they've to go a long way in terms of the challenge of developing human asset- youth unemployment, skill development, income generating activities, which is very closely linked with the economic activities. So, what we've seen is that the LDCs of the Asia-Pacific region need to have a structural transformation in their economies, which is the fundamental challenge and opportunity. That means, they have to develop their productive sector, infrastructure, agriculture and they have to have access to energy. So, from our point of view, while they've made some progress in human development, they need to accelerate that progress. At the same time, they should be looking at economic growth opportunities, by changing the structure of their economies and developing their productive capacity. These are the common challenges and the common opportunities for the Asia-Pacific countries.
Post-2015 development agenda seems challenging to achieve. What are the Asia-Pacific LDCs thinking about this?
Post-2015 development agenda would be different from the Millennium Development Goals (MDGs) in the sense that MDGs were focused on the human development aspect only. Post-2015 agenda will definitely have that human development pillar because there are lots of progress that has to be made in the education and health, which is fundamental. But they will be looking in the other pillars. The economic growth pillar will be the second pillar of the Post-2015 development agenda, which means not only economic growth should be accelerated but also it has to be made inclusive so that everybody should be the part of the economic development. And, third agenda, which has come out very strongly is environmental sustainability. That was there in the MDGs in terms of the bio-diversity protection but not in all of its dimensions, which is from climate change to the protection of natural capital- protection of land, water, air and so on. LDCs have lots of stake in it. Because many LDCs - whether it is in Asia-pacific or other regions - depend a lot on natural capital. Of course, everybody depends on the natural capital, but they depend directly because most of the people in the LDCs still depend on agriculture. On the other hand, the Post-2015 development agenda is very important for LDCs because they depend so much on the global framework for their development. Their dependence on external assistance and support is very high. All of these issues will come out very strongly in the post-2015 development agenda as part of the three pillars of sustainable development agenda- economic pillar, social and human development pillar and environmental sustainability pillar. This is how we see it and we hope that the international community will take this holistic approach when they look at the challenges and opportunities of LDCs.
The government aims to graduate Nepal to the status of a developing country from the status of an LDC by 2022. Do you think that is achievable?
We believe that Nepal will have graduated if it can achieve the targets it has set for itself. To graduate to the status of a developing country, an LDC consistently needs to have an economic growth rate of at least seven percent. Lately, Nepal has achieved an economic growth rate of 5-6 per cent. This needs to be increased and made more inclusive and sustainable. Nepal can become a developing country within the stipulated time if there is concerted effort from the Government of Nepal, Nepali people, business and industry sector and the civil society. However, graduation won’t be possible just like that. For this, the country needs to work as per the targets set. Lately, attraction towards investment has increased in Nepal; investment has come in the energy sector. Similarly, the country needs to increase investments in agriculture, tourism, infrastructure development, and industries. We should not forget that a country has to develop itself.
Nepal’s annual economic growth rate is far below seven percent. Economic vulnerability, too, is high. In this conext, what are the challenges that you see in Nepal’s graduation process?
There have been various assessments in Nepal itself regarding the graduation process and the tasks to be completed for that. The evaluation done by UN and that carried out by Nepal are almost similar. The Istanbul Programme of Action says that for graduation, an LDC needs to have at least 7 per cent economic growth rate. This is because, if an LDC can sustain seven percent economic growth rate for 10 years, the size of its economy will double. This increase in the size of the economy can address the situation even if the threshold for Gross National Income (GNI) requirement increases in this period. If you look at the countries which have achieved rapid development, then you will know that they were able to achieve that only after ensuring 7-10 percent of economic growth rate for 25-30 years. Therefore, an LDC consistently needs to achieve an economic growth rate of at least seven percent also to create the base of the economy. There are definitely some challenges to achieve this. However, the government has moved forward by attaching high priority to the development of sectors like agriculture, tourism and hydropower. Nepal can meet the challenges of graduation if it can develop these three sectors properly.
There are challenges in three-four sectors. First, the economy has become more and more remittance-dependant. But, there hasn’t been expected progress in the productive use of the remittance inflow. On the other hand, it is difficult to predict stability in the income from remittance; it fluctuates. Therefore, it is not good for any country to depend solely on remittance. More so for a country like Nepal where various kinds of resources are available. However, we should not forget that it is because of remittance that Nepal has sufficient foreign currency reserve. This is an opportunity. In such a situation, Nepal can accomplish major tasks even by borrowing loans. The policymakers need to think along this line.
Focusing on a single sector such as remittance may not be a problem for a country with a small economy. However, Nepal is not a small economy. It is a medium-sized economy. Such a country must create the bases of production. If that does not happen, and the economy is trade-centered, then the economy is in great risk.
Nepal has already identified its priority areas and that is appropriate as well. Now, Nepal needs to diligently follow the strategies and frameworks devised for the development of these priority sectors. A hydropower project gets delayed by 3-4 years if it is not moved forward in a pre-determined manner. Graduation of a country is a much wider issue. Therefore, we need to make consistent efforts to graduate within the stipulated time.