‘Tell Me Why’: A Lesson for LDC Graduation

May 15, 2012

By Minh H. Pham

When my son was younger, I used to happily tease him by singing an old song: “Tell me why life is beautiful.” Yet when I meet the 8-year-old daughter of a Lao acquaintance these days, this refrain turns very melancholy: this girl’s family is struggling, for many reasons. The mother has had motorcycle accidents during her morning commute because of her rapidly deteriorating vision; she has been told she needs immediate surgery.  But as the sole support of her two children, she cannot afford to stop working.

I know this 8-year-old girl must have numerous questions, and not the happy one from the song. Tell me why my mother has a serious eye problem that may cause her to go blind. Tell me why we don’t have the money to fix that. Tell me why life is so difficult for us, while others get richer and richer.

Sadly, there are many people across Lao PDR who probably harbour similar thoughts, as economic and social inequities persist despite impressive overall national economic growth. Yet we know that serious human development initiatives are underway that place the reduction of such disparities as a top priority.  

Government and development partners must keep in mind the “tell me why” factor as we follow up on the critical May 16 and 17 conference, on development of a strategy for Lao PDR to progress toward graduation from Least Developed Country (LDC) status by 2020.  The success of such a strategy will depend on not only meeting the global criteria for graduation, which are based on national averages, but also addressing the often-hidden factor of equity, between and within regions, between rural and urban areas, between genders, and among vulnerable populations.

Lao PDR could be deemed formally eligible for graduation as early as 2018, if it meets the threshold requirements for two of the three graduation criteria by 2015. If so, 2018 would initiate a three-year “smooth transition” period, during which continued development gains must be ensured despite loss of preferential LDC treatment in 2021. If Lao PDR succeeds, it will make history and join a very select group: since the LDC category was begun in 1971, only three countries have actually graduated so far. 

Building on the Government’s longstanding commitment to LDC graduation, the country will need to continue with “structural transformation” that ensures wider opportunities for a better quality of life for all. A key challenge for the Government will be to manage several policy choices as Lao PDR aims for graduation and the post-graduation era. 

In particular, this includes how to integrate LDC graduation into the heart of the country’s Vision 2020, so that graduation serves as a first step toward longer-term sustainable development for all.  Critical actions will require sound management of debt  as the country shifts away from receiving grants to concessional loans and, eventually, to quasi-commercial loans. Linked to this will be the need to increase budget revenues from Foreign Direct Investments in natural resources development  to deal with higher repayments expected on the expanding number of loans.

At the same time, “smoothing out” the curve of fiscal management will be crucial in a multi-year framework so that the country can manage the impact of volatile commodity prices on revenues and continue to prioritize additional investments for achievement of the Millennium Development Goals (MDGs). This will be necessary especially in such areas as nutrition, child mortality, secondary school enrolment, and adult literacy. Rebalancing dependence on the natural resource sector will require special focus on sectors such as agriculture and rural development, with direct linkages to reduction of poverty and hunger, and on small industry development to also boost employment in modern industry.

Strengthening national resilience through improved Disaster Risk Management will be critical as well. For example, in my experience in the Maldives – one of the three countries to graduate from LDC status – the country had been declared eligible for graduation but had to be granted an exceptional postponement by another three years so it could cope with the economic devastation of the 2004 Indian Ocean tsunami.  

Lao PDR has every reason to look forward to LDC graduation with hope, since the Government and people alike do not wish to remain trapped in the status of being underdeveloped. The country is potentially poised to “take off” in the long term, with LDC graduation just the first step. And if the country is successful in its ambition, far fewer people in Lao PDR will need to plead “tell me why.”

Minh H. Pham is the Resident Coordinator of the United Nations System in Lao PDR and the Resident Representative of the United Nations Development Programme.  

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