Geneva, 9 November 2023 (TDI): The UN Conference on Trade and Development (UNCTAD) has released its Least Developed Countries Report for 2023.

The report highlights the urgent need to address the financial challenges faced by the 46 most vulnerable nations in the world.

These countries are grappling with various global crises, including the climate emergency, mounting debt burdens, reliance on commodities, and diminishing foreign investments.

This financial strain jeopardizes their progress toward achieving the Sustainable Development Goals (SDGs), including transitioning to a low-carbon economy.

The forthcoming Loss and Damage Fund, set to be introduced at the 28th UN Climate Change Conference (COP28), could have a significant impact if it prioritizes Least Developed Countries (LDCs), provided sufficient resources are available and disbursements are made promptly.

However, the financing needs of these countries extend beyond climate-related concerns, encompassing broader economic and social challenges.

The report advocates for a durable, multilateral solution to the debt crisis in these nations, along with the mobilization of both development and climate finance they require.

The report also stresses how important it is for domestic organizations, especially central banks, to help get more national resources used and direct money flows toward a green structural transformation in these countries.

The UN established the LDC category over five decades ago, with the initial list comprising 25 countries in 1971. This number peaked at 52 in 1991 and currently stands at 46, with only six countries having graduated from LDC status.

These countries are located across different regions:

Africa (33): Angola, Benin, Burkina Faso, Burundi, the Central African Republic, Chad, Comoros, the Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea-Bissau, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Uganda, the United Republic of Tanzania, and Zambia.

Asia (9): Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Myanmar, Nepal, Timor-Leste, and Yemen, Caribbean (1): Haiti; and Pacific (3): Kiribati, Solomon Islands, and Tuvalu.

Also read: UNCTAD, COP28 collaborate for climate finance dialogue

The list of LDCs undergoes a review every three years by the Committee for Development Policy (CDP), an assembly of independent experts who report to the UN Economic and Social Council (ECOSOC).

Following this triennial review, the CDP may suggest to ECOSOC the addition or graduation of countries from LDC status. The next triennial review is slated to occur in March 2024.

For a country to graduate from the LDC category, it must meet the established graduation thresholds for at least two of the three criteria in two consecutive triennial reviews.

These criteria include income per capita, an index of human assets, and an index of economic and environmental vulnerability.

Countries that are highly vulnerable or have deficient human assets can qualify for graduation only if they meet the other two criteria by a sufficiently high margin.

As an exception, a country whose per capita income is sustainably above the “income-only” graduation threshold, set at three times the graduation threshold (which is $3,918 for the 2024 triennial review), becomes eligible for graduation, even if it fails to meet the other two criteria.

Since the inception of the LDC category, six countries have successfully graduated from least developed country status:

Botswana in December 1994, Cabo Verde in December 2007, the Maldives in January 2011, Samoa in January 2014, Equatorial Guinea in June 2017, and Vanuatu in December 2020.