Criteria for Identification and Graduation of LDCs

The Committee for Development Policy (CDP), a subsidiary body of the UN Economic and Social Council, is – inter alia – mandated to review the category of LDCs every three years and monitor their progress after graduation from the category.

The identification of LDCs is currently based on three criteria: per capita gross national income (GNI), human assets and economic vulnerability to external shocks. The latter two are measured by two indices of structural impediments, namely the human assets index and the economic vulnerability index (for more details see: LDC Criteria):

Income criterion, based on a three-year average estimate of GNI per capita for the period 2011-2013, based on the World Bank Atlas method (under $1,025 for inclusion, above $ 1,230 for graduation as applied in the 2018 triennial review).
Human Assets Index (HAI) based on indicators of: (a) nutrition: percentage of population undernourished; (b) health: mortality rate for children aged five years or under; (c) education: the gross secondary school enrolment ratio; and (d) adult literacy rate.
Economic Vulnerability Index (EVI) based on indicators of: (a) population size; (b) remoteness; (c) merchandise export concentration; (d) share of agriculture, forestry and fisheries; (e) share of population in low elevated coastal zones; (f) instability of exports of goods and services; (g) victims of natural disasters; and (h) instability of agricultural production.

In the review process, the Committee determines threshold levels on each of the three criteria to identify the countries to be added to or graduated from the category. The thresholds for graduation are higher than for inclusion. In the identification process, the HAI and EVI thresholds are fixed by the Committee.

INCLUSION: To be included in the category of LDCs, a country must satisfy all three criteria. In addition, since the fundamental meaning of the LDC category, i.e. the recognition of structural handicaps, excludes large economies, the population must not exceed 75 million.

GRADUATION: To reach eligibility for graduation, a country must reach threshold levels for graduation in two consecutive triennial reviews for at least two of the aforementioned three criteria, or its GNI per capita must exceed at least twice the threshold level ($2,460 in the 2018 triennial review), and the likelihood that the level of GNI per capita is sustainable must be deemed high (income-only criterion).

After a country has become eligible for graduation for the first time, an ex-ante impact assessment and a vulnerability profile by DESA and UNCTAD are produced and delivered to the Committee as inputs for its deliberations at the next triennial review.

If the country is found to be eligible at two consecutive triennial reviews, the CDP may recommend it for graduation. The views of the country are taken into account in this process.

A country graduates from the LDC category three years after the General Assembly takes note of the ECOSOC endorsement of the recommendation of the CDP. Under exceptional circumstances the General Assembly may grant the country a longer preparatory period.

During this preparatory period, the country remains on the list of LDCs and continues to benefit from the special support measures associated with LDC status.

During the preparatory period, graduating countries are invited to prepare a national smooth transition strategy, with the support of the United Nations system and in cooperation with the country’s bilateral, regional and multilateral development and trading partners. It is recommended that the graduating countries establish a consultative mechanism to facilitate the preparation of a smooth transition strategy. The strategy is to be implemented only after the effective date of graduation and aims to ensure that the country’s sustainable development efforts are not disrupted by the loss of LDC-specific support measures after graduation (A/RES/67/221).

2018 triennial review, ECOSOC and UNGA decisions

At its triennial review in March 2018, the CDP found Bhutan, São Tomé and Príncipe and Solomon Islands eligible for graduation for the second consecutive time and recommended them to ECOSOC for graduation from the list.

On 13 December 2018, the UN General Assembly (A/73/L.40/Rev.1) took note of ECOSOC’s endorsement of the CDP recommendations (E/RES/2018/27) and decided the following:

Bhutan will graduate in December 2023, after a five-year preparatory period;
Salomon Islands will graduated in December 2024, after a six-year preparatory period;
São Tomé and Príncipe will graduate in December 2024, after a six-year preparatory period.

Furthermore, as decided at its 2015 triennial review, the Committee considered Kiribati again and found it eligible for graduation for the third consecutive time. It recommended the country for graduation and further recommended the creation of a category of countries facing extreme vulnerability to climate change and other environmental shocks. Kiribati, Tuvalu and similarly vulnerable countries within that category should receive support targeting these vulnerabilities.

ECOSOC decided not to endorse the Committee’s recommendation to create a category of countries facing extreme vulnerability and decided to defer the consideration of the graduation of Kiribati and Tuvalu not later than 2021.

Nepal and Timor-Leste were also found eligible, at the 2018 triennial review, for the second consecutive time, but were not recommended for graduation, due to concerns about the sustainability of their development progress. The Committee decided to defer a decision on the graduation of Nepal and Timor-Leste at the 2021 triennial review. At that time, it will also consider Bangladesh, Lao People’s Democratic Republic and Myanmar which were found eligible for graduation for the first time at the 2018 triennial review.

For further information on the 2018 triennial review, see the 2018 CDP Report.

Equatorial Guinea graduated from the category the LDC category on 4 June 2017, following a transition period of three and a half years after the adoption by the United Nations General Assembly of resolution A/RES/68/18 of 4 December 2013, which took note of the decision of the Economic and Social Council E/RES/2012/32 to endorse the recommendation of the CDP on this matter.

2015 triennial review

At the 2015 triennial review of the list, Angola met the criteria for graduation for the second consecutive time. The Committee recommended Angola for graduation from the LDC category. ECOSOC endorsed that recommendation (E/RES/2015/11) and the General Assembly (A/RES/70/253) decided that Angola would graduate out of the LDC category after a five-year period, e.i. in February 2021.

The Committee also noted that Kiribati met both the income and HAI criteria for second consecutive time. The Committee did not recommended, however, Kiribati to be graduated from the LDC category due to its extreme high vulnerability and decided to defer consideration on the graduation of Kiribati to its 2018 session. According to the EVI, Kiribati is the most vulnerable country in the world.

Additionally, five countries met the eligibility criteria for graduation for the first time: Bhutan, Sao Tome and Principe, Solomon Islands, Timor-Leste and Nepal. According to present rules, if these countries meet the criteria for graduation during the 2018 triennial review, the may be recommended for graduation by the Committee.

The Committee noted the high vulnerability, as illustrated by the country’s EVI, of Tuvalu, which was recommended by the committee for graduation at its 2012 triennial review, and requested to the international community to provide Tuvalu with adequate technical assistance and concessional financing to address the climate change challenge. ECOSOC decided to defer the consideration of the graduation of Tuvalu to its session of 2018 to allow the Council “to have an opportunity for further consideration of the particular challenges that Tuvalu faces”.

Vanuatu, which has been found eligible for graduation in 2006, 2009 and 2012, was recommended for graduation in the 2012 triennial review. The General-Assembly decided to grant an additional preparatory period of one year before the start of the three-year preparatory process and invited the country to prepare its national smooth-transition strategy, with the support of the United Nations system and in cooperation with its bilateral and multilateral development and trading partners. (See resolution A/RES/68/18)

For further information on the 2015 triennial review, see the 2015 CDP Report.

The four countries to have graduated out of the LDC category up to 2015 are: Botswana in 1994, Cape Verde in 2007, Maldives in 2011 and Samoa in 2014.

UN-OHRLLS

UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States

Criteria for Identification and Graduation of LDCs