Joint UN Workshop on Preparing for a Smooth Graduation from the LDC Category
Solomon Islands joined the category of least developed countries (LDCs) in 1991. The country was found eligible for graduation for the first time in 2015 and for the second time in 2018 based on its Gross National Income (GNI) per capita and its achievements on the human assets index (HAI). However, Solomon Islands does not meet the Economic Vulnerability Index (EVI) threshold, as is generally the case for graduating LDCs in the Pacific. In December 2018, the General Assembly took note of the endorsement of the Economic and Social Council (ECOSOC) of the recommendation of the Committee for Development Policy (CDP) that Solomon Islands be graduated. The General Assembly decided to provide Solomon Islands, on an exceptional basis, with an additional preparatory period of three years before the start of the regular three-year preparatory period leading to graduation. Solomon Islands will graduate from the LDC category in December 2024 (see GA resolution A/RES/73/133).
Meeting the criteria for graduation constitutes an important milestone for Solomon Islands. It reflects the efforts made by the country and progress achieved in key areas for sustainable development. Despite this important step forward, important challenges remain. The preparatory period of six years, which started in December 2018, constitutes an opportunity for Solomon Islands and its development partners to build on progress so far and to consolidate development gains to advance further as well as to identify critical areas where further support is needed. Aligning these transitional efforts with national development goals and plans will make them more effective.
While graduation is a remarkable achievement, it also brings about the need to prepare for the withdrawal of LDC-specific international support measures (ISMs), which include, among others, modalities and access to certain concessional finance instruments as well as preferential market access for exports. The Ex-ante Impact Assessment of likely Consequences of Graduation of Solomon Islands from the LDC Category prepared by the Secretariat of Committee for Development Policy, United Nations Department of Economic and Social Affairs,2 finds that, given the country’s trade structure and the nature of its main cooperation partnerships, the impact of graduation is expected to be limited. However, graduation could have some impact on European market access for tuna as well as for coconut and palm oil, even though the ongoing accession of Solomon Islands to the European Union-Pacific States interim Economic Partnership Agreement might mitigate any possible impact in this regard. Graduation could also entail some costs of compliance with WTO agreements such as with the agreement on trade-related aspects of intellectual property rights (TRIPs). A more detailed analysis of the consequences of graduation is needed in order to prepare a smooth transition strategy.
As a small island developing State, Solomon Islands experiences major development challenges associated with the small size and remoteness from major markets, which are compounded by inadequate domestic infrastructure. This has contributed to an export structure that is highly concentrated in wood. Consequently, Solomon Islands continues to face structural bottlenecks that hamper the development of adequate productive capacities, making sustainable development difficult and expensive.
In addition, the country remains highly vulnerable to external shocks. It is estimated that the country has incurred an average loss of US $20 million per year as a result of earthquakes and tropical cyclones over the past years. Thus, its need for dedicated support continues. In this regard, the Solomon Islands need to prepare and implement an adequate transition strategy to manage its graduation from the LDC category, especially in view of the large and growing need for financing for development to support the implementation of the National Development Strategy 2016-2035 and the 2030 Agenda for Sustainable Development.
It is thus of importance that policymakers and Government officials have the capacity to fully understand the implications stemming from graduation from the LDC category, including the availability of existing international smooth transition measures and the scope for improved international assistance. This capacity will enable them to develop national economic policies, financing for development strategies and institutional arrangements to minimize possible negative impacts, harness potential benefits and effectively mainstream graduation into national development planning.