Criteria for Graduation from LDC Category The graduation threshold for any two of the following three graduation criteria must be met over two consecutive triennial reviews for graduation from LDC status: Graduation Criteria Nepal Progress vs. Criteria GNI per capita >US$ 1,242 Per capita income US$ 753 (avg. 2015–2017)* (three-year average) Human assets Human Assets Index (HAI) >66 68.7 (2015) Economic vulnerability Economic Vulnerability Index (EVI) <32 26.2 (2015) Source: UN Committee for Development Policy; *GNI per capita, Atlas method (current US$) While Nepal’s Gross National Income (GNI) per capita is well below the threshold for graduation out of the LDC category, the country’s significant progress in human asset- and economic vulnerabilityrelated KPIs have made it eligible for graduation from LDC. However, Nepal has decided not to rely on the non-income criteria framed by the United Nations to graduate from the LDC category, fearing that such a transition would reduce the flow of foreign aid and deprive the country of other international support measures. The expected economic growth rate of 5%–6% is unlikely to help Nepal to achieve its objectives of:   Meeting income criteria for graduation from the LDC category by 2022 Becoming a middle-income country by 2030 To realize its aspiration to become a middle-income country by 2030, Nepal will require substantial infrastructure development alongside a consistent growth rate of 8% to 10% annually. Maintaining a GDP growth rate of 8% to 10% will require broad-based growth spanning infrastructure development, supporting policies, fiscal reforms, and greater foreign participation Agriculture remains the mainstay of the Nepali economy, accounting for the largest share of total valueadd at ~32.1%. ● Future growth is projected to be led by the reconstruction of damaged irrigation facilities and sufficient agricultural supplies. However, unseasonal rainfall in August 2017 that resulted in severe flooding and landslides, and affected paddy production has created significant food shortages which may slowdown sector growth. Trade, transport, and construction are other sectors experiencing strong momentum in Nepal. ● ● Wholesale and retail trade and transport sectors have picked up with the normalization of trade activities and are expected to grow further in the import-driven economy. Construction sector growth in 2017–2018 is expected to be boosted by continued momentum in post-earthquake reconstruction and large infrastructure projects. 8