Change Initiative urges post-disaster review of Nepal's LDC graduation before UNGA vote

DHAKA: Change Initiative has urged a post-disaster review of Nepal’s planned graduation from Least Developed Country (LDC) status before the United Nations General Assembly votes, after a major flood struck central Nepal on August 26, 2026.

New findings in a paper titled 'The August 2026 Central Nepal Flood and the Case for a Net Capital Sustainability Test in the LDC Graduation Framework' estimate preliminary damage and foregone economic losses at between $1.38 billion and $2.70 billion. The research gives a central loss estimate of about $1.95 billion, or 4.3% of Nepal’s Gross Domestic Product, and recommends that graduation decisions assess whether the natural, physical and institutional capital underpinning progress is being maintained.

Nepal remains scheduled to graduate on November 24, 2026. The Government of Nepal requested a three-year extension in May; that request was assessed by the Committee for Development Policy (CDP) before ECOSOC acted on July 21, prior to the August flood. Change Initiative said its early loss estimate—comprising $805 million to $1.465 billion in physical asset damage and $575 million to $1.23 billion in foregone economic activity—is distinct from Finance Minister Swarnim Wagle’s August 29 indication that reconstruction and rehabilitation could require $4 billion to $5 billion.

The organisation noted that while Nepal met qualification thresholds through the Human Assets Index and the Economic and Environmental Vulnerability Index, standard income measures and vulnerability indicators do not capture sudden capital destruction or cryospheric hazards. It recommended introducing a 'Net Capital Sustainability Test' (NCST) to assess whether natural, physical and institutional assets are accumulating, remaining stable, or depleting.

M. Zakir Hossain Khan, Chief Executive of Change Initiative, said: "At a time of growing disaster and ecosystem degradation, the whole idea of LDC categorisation is in question. The category and its graduation method were designed for an earlier world, and the world has since become far more dangerous. Considering that we proposed this framework before the Nepal disaster rather than after it, the problem is systemic, not country-specific. Graduation Beyond GDP showed that countries can record genuine economic progress while the capital sustaining that progress remains exposed or is being depleted. Nepal now demonstrates why graduation decisions need a current view of that capital base, not only a record of past gains."

On the proposed assessment, Khan said, "The NCST is not another pass-or-fail barrier. Its purpose is to identify what must be protected for graduation to remain durable. An extension changes how much time a country has; a capital test helps determine what that time should safeguard."

Change Initiative urged the CDP to carry out a post-event vulnerability reassessment using verified interim evidence before the General Assembly votes. Other recommendations include establishing a 'graduation-with-conditions' mechanism, creating a standing 'late-shock' procedure for disasters occurring after CDP reviews, strengthening high-mountain hazard data, and increasing cooperation between Nepal and China on monitoring, data exchange and infrastructure standards along their shared mountain corridor.