Links, citations or other references to external websites or documents should not be seen as an endorsement on the part of the United Nations of external organizations not part of the United Nations system, including non-governmental organizations, or of commercial products or services.
United Nations system. LDCs are a priority for the United Nations system. Most assistance by UN entities is allocated based on country needs and vulnerabilities, determined by criteria relevant to the mandate of each organization, fund or programme, not LDC status alone, although LDCs as a group often receive a large share of the available resources. Information on support to LDCs provided by different organizations is available . Specific instruments for LDCs are described . Priority mechanisms and special terms for LDCs in the UN system are described .
Multilateral and regional financial institutions. Eligibility for concessional financing to developing countries by regional and multilateral financial institutions is generally based on factors such as GNI per capita and creditworthiness.
The World Bank, the International Monetary Fund (IMF), and most other international and regional financial institutions provide significant support to LDCs.
However eligibility for this support is not based on LDC status, and rather on criteria such as income and creditworthiness. For example, concessionary financing from the of the World Bank is granted to all countries below a certain threshold of per capita income. The IMF's various lending instruments are tailored to different types of balance of payments needs and the specific circumstances of its members.
The uses LDC status as a secondary criterion in determining, in some cases, the type of assistance the country can receive. The ADB classifies countries into groups that determine the type of financing provided. These groups are defined primarily in terms of income and creditworthiness, but whether or not a country is an LDC can, in some cases, affect their classification. For example an LDC that has a per capita income level above a certain threshold and is considered to lack creditworthiness will be classified in a category that receives concessional assistance only, whereas a non-LDC in the same situation might (depending on a range of factors such as risk of debt distress) be classified in a category that receives a blend of concessional and non-concessional resources.
Other organizations provide a large share of their resources to LDCs while not considering whether or not a country is on the LDC list as a factor in resource allocation. For example:
assists countries below a certain GNI per capita threshold and that meet certain conditions, assessed by an independent group of experts. Beyond this threshold, countries enter a transition phase towards self-financing.
, which mobilizes and invests funds aiming at ending AIDS, tuberculosis and malaria as epidemics, considers GNI and a disease burden index.
See also and for information on multilateral support to LDCs in these areas.
What happens when countries graduate?
- Because most multilateral and regional support, excluding LDC-specific mechanisms, is not based on whether or not a country is an LDC, a country’s graduation from LDC status does not normally lead to significant changes in the terms or volume of assistance. However, in a similar timeframe to that of LDC graduation, countries may be crossing other thresholds such as the ones that are, in fact, considered by these institutions. It is important to plan for these “simultaneous graduations” but also to clearly distinguish between the impacts of graduation from the LDC category from the impacts of meeting other criteria considered by these institutions.
- See the information for LDC-specific mechanisms .
- In general, graduation does not significantly affect country-level support by most UN system entities, with the exception of the and specific . Most organizations continue to support countries in their areas of specialization, based on persisting needs and vulnerabilities. Many graduating LDCs can expect assistance programmes to change over time as income levels rise and the variables considered by these partners improve sustainably.
- At the ADB, the impacts of graduation depend on the situation of the country in terms of income and creditworthiness, as outlined in the section on . According to current rules, for LDCs with a per capita income level above the IDA's operational cutoff threshold and is considered to lack creditworthiness, graduation may trigger a process of reclassification into a category that receives a blend of concessional and non-concessional resources. For an LDC with per capita income above the GNI cutoff threshold and that is considered to have adequate creditworthiness, graduation may trigger a process of reclassification into a category that receives non-concessional loans only. For other LDCs, graduation would not affect classification at the ADB. The reclassification process is not automatic, considers a range of factors including risk of debt distress, and is undertaken on a case-by-case basis.
Several organizations are committed to
Photo Asian Development Bank (ADB).