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Towards Sustainable Graduation of South Asian LDCs in the aftermath of COVID-19: Challenges, Prospects and Policy Lessons

Three of the least developed countries (LDCs) of South Asia - Bangladesh, Bhutan, and Nepal - are currently at various progressive stages of graduation from LDC status. LDC graduation will bring about a significant milestone in their development journey and new opportunities along with it, while also posing certain challenges with respect to meeting the demands of sustainable transition into the next stages of socio-economic development.

Prepared as part of the UNESCAP Framework on Socio-Economic Response to COVID-19, and also under UNESCAP’s mandate for supporting countries with special needs in the Asia-Pacific region, this paper examines graduation challenges and prospects of the three South Asian LDCs, taking also into account potential impacts of the COVID-19 outbreak. It points out that South Asian LDCs have important avenues and options to enhance preparedness for graduation, utilizing the transition period, through focused planning, domestic institutional reforms, strong governance, sustained pursuit of economic diversification and structural transformation, building public and private capacities, expansion and diversification of trade structures, infrastructural and technological upgradation, consolidation of development financing sources, and by harnessing global partnerships for development. However, the COVID-19 pandemic and its pervasive socio-economic impacts may have adverse consequences for planning and preparations for graduation. The devastations caused by the crisis may exacerbate pre-existing vulnerabilities and slow down recovery. This unprecedented situation calls for due considerations in the graduation processes and timelines, allowing for adequate flexibilities and additional transitional support as required by graduating LDCs.

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