AvailableNepali translation awaiting review

Foreign relations

The Constitution calls for an independent, non-aligned foreign policy. In FY 2024/25 India accounted for 62.27 per cent of Nepal's goods trade and China for 16.52 per cent, the goods trade deficit was Rs 1,527.09 billion, and treaties, a boundary question on which Nepal and India state different positions, development finance and the protection of migrant workers remain open questions.

Long-term goalAn independent foreign policy that protects sovereignty and the national interest and brings economic benefit

The Constitution names sovereignty, territorial integrity, independence, border security and economic wellbeing as basic elements of the national interest, and directs the state to conduct an independent foreign policy based on the UN Charter, non-alignment, the principles of Panchsheel, international law and the norms of world peace. This is a standing direction for every government, not a one-year task.5

Contested choiceHow to balance relations, connectivity and finance across the two neighbours and other partners

Official plans call for balanced relations: the 16th Plan speaks of a balanced relationship with international power centres, and the FY 2083/84 budget of balanced international relations based on mutual benefit and national dignity. Which projects to take up, with which partner and on what terms is debated. Recent examples include the Belt and Road cooperation framework signed with China in 2024, the US Millennium Challenge Corporation compact, approved by the House of Representatives in 2022 with an interpretive declaration, and Indian lines of credit.131511381821

Urgent problemA large trade deficit, and the timing of graduation from Least Developed Country status

The goods trade deficit was equal to 24.63 per cent of GDP in FY 2024/25. Nepal is scheduled to graduate from the UN's Least Developed Country category on 24 November 2026, which risks losing duty-free and quota-free market access. The government has formally asked the UN to defer graduation. The UN Committee for Development Policy concluded that an extension would be appropriate if linked to a clear, time-bound plan, and on 21 July 2026 the UN Economic and Social Council recommended that the General Assembly act before 24 November 2026. No General Assembly decision had been found when this page was checked, so trade and market-access arrangements need decisions within weeks.2282931

Contested choiceHow treaties and agreements are approved and made public

The Constitution requires a two-thirds majority of all members of both Houses for treaties on peace and friendship, defence and strategic alliance, boundaries, and natural resources. Under the Nepal Treaty Act, many other treaties take effect by a government decision and are only reported to the House, and only treaties ratified by Parliament must be published in the Nepal Gazette. Where to draw these lines balances parliamentary oversight against the government's flexibility to negotiate.79

Updated 2026-10-11 · Version 2 · Sources · Corrections & right of reply

Question 1

What is the issue, and why does it matter?

Nepal's trade is concentrated on its two neighbours. In FY 2024/25, India accounted for 62.27 per cent of Nepal's total goods trade, China 16.52 per cent and all other countries 21.22 per cent. Of Rs 277.03 billion of goods exports, Rs 224.68 billion went to India and Rs 2.63 billion to China. Imports were Rs 1,804.12 billion, including Rs 1,071.20 billion from India and Rs 341.10 billion from China. In the first eight months of FY 2025/26, India's share of trade was 59.49 per cent and China's 18.01 per cent.1

The goods trade deficit was Rs 1,527.09 billion in FY 2024/25, equal to 24.63 per cent of GDP. Remittances that year were Rs 1,723.27 billion, equal to 27.80 per cent of GDP.2

Foreign employment links Nepal to many countries beyond its neighbours. By mid-March 2026, 6,923,443 first-time labour permits for foreign employment had been issued in total. In FY 2024/25 there were 505,957 first-time permits; the largest destinations were the United Arab Emirates (39.76 per cent), Saudi Arabia (15.27 per cent), Qatar (9.72 per cent) and Kuwait (7.61 per cent).3

Development finance now comes mostly as loans from multilateral lenders. Foreign assistance received in FY 2024/25 was Rs 156.60 billion, 81.1 per cent of it loans. By mid-March 2026 external debt stood at Rs 1,530.18 billion, 53.2 per cent of all public debt; 90.68 per cent of external debt was owed to multilateral lenders and 9.32 per cent to bilateral lenders.4

Nepal is landlocked between two much larger economies, so foreign policy decisions reach into daily life: the price and supply of fuel and goods, how much farmers and factories can export, which roads, railways and power lines get built and on what loan terms, and how safe Nepali workers are abroad. The same decisions also touch sovereignty and the boundary, which makes them politically sensitive.

Question 2

What do current law and policy say?

Constitution, principles: Article 5 lists freedom, sovereignty, territorial integrity, nationality, independence and dignity, the rights of the Nepali people, border security, economic wellbeing and prosperity as basic elements of the national interest. Article 50(4) directs international relations on the basis of sovereign equality. Article 51(m) directs an independent foreign policy based on the UN Charter, non-alignment, Panchsheel, international law and the norms of world peace, and directs the state to review treaties concluded in the past and to conclude treaties and agreements based on equality and mutual interest.5

Constitution, aid and migration: the state is to make receiving foreign assistance transparent, base it on national needs and priorities, and include it in the national budget (Article 51(d)(11)); the Government of Nepal may obtain foreign assistance and loans in a way that keeps the economy stable (Article 59(6)); and the state is to regulate foreign employment so that it is free from exploitation, safe and orderly (Article 51(i)(5)).6

Constitution, treaties (Articles 278–279): only the federation may conclude treaties; it must consult the province concerned on treaties about provincial powers, and a provincial government may make contractual agreements on financial and industrial matters with federal consent. Treaties on peace and friendship, defence and strategic alliance, the boundaries of Nepal, and natural resources and the sharing of their use need a two-thirds majority of all members of both Houses, though an ordinary peace-and-friendship or natural-resource treaty that does not affect the nation extensively, seriously or in the long term may pass by a simple majority of members present in the House of Representatives. No treaty binds Nepal unless ratified as the Constitution provides, and no treaty detrimental to territorial integrity may be concluded.7

Constitution, who does what: foreign and diplomatic affairs; international treaties, international borders and boundary rivers; foreign grants, aid and loans; international trade; and passports, visas and immigration are federal powers (Schedule 5). Provinces may handle foreign grants and assistance only with the centre's consent (Schedule 6).8

Nepal Treaty Act, 2047 (amended up to 2082): only the President, Prime Minister or Foreign Minister may sign treaties without full powers. Treaties on the four Article 279(2) subjects go to the Federal Parliament. Other treaties that require ratification, and treaties creating or joining an intergovernmental organisation or conflicting with existing law, need a resolution of the House of Representatives passed by a majority of members present. All other treaties take effect once signed by government decision, and must be reported to the House within a month of its meeting. A ratified treaty overrides conflicting Nepali law. Treaties ratified by Parliament must be published in the Nepal Gazette within 60 days; publication of others is at the government's discretion.9

Trade and transit treaties: the Treaty of Transit with India (renewed 5 January 1999) recognises that Nepal as a landlocked country needs access to and from the sea, grants freedom of transit on mutually agreed routes and exempts transit goods from customs and transit duties. It renews automatically for seven years at a time unless either side gives six months' notice, and its protocol is to be reviewed every seven years. With China, an Agreement on Transit Transport was signed during the Prime Minister's March 2016 visit, according to the Ministry of Foreign Affairs.1011

Foreign Aid Mobilization Policy, 2025 (approved by the Council of Ministers on 2082/01/08): prefers grants for project preparation, takes up foreign-aided projects only when they are ready and in the national project bank, avoids loans for land acquisition, government office buildings and vehicles as separate projects, and channels loans requested by provinces and local governments through subsidiary loan agreements, with those governments repaying.12

Current government priorities: the 16th Plan calls for maintaining a balanced relationship with international power centres, lowering transit costs, graduation-focused trade negotiations and stronger labour diplomacy. The FY 2083/84 budget speech commits to balanced international relations, a stronger role at the UN and in regional forums, economic diplomacy through missions abroad, review of labour agreements and new ones with new destination countries, and closing six missions abroad (embassies in Denmark, Brazil and South Africa, consulates general in Chengdu and San Francisco, and a branch office in Visakhapatnam).131415

Question 3

What is known, uncertain or disputed?

Known

Foreign assistance commitments in FY 2024/25 totalled Rs 273.05 billion: Rs 250.81 billion from multilateral partners (Rs 215.54 billion of it loans) and Rs 22.23 billion from bilateral partners, all of it grants.4

Exchange rates add to the cost of foreign loans: Nepal recorded a foreign exchange loss of Rs 65.55 billion on external debt in FY 2024/25. By mid-March 2026, 71.42 per cent of external debt was in Special Drawing Rights, 21.08 per cent in US dollars, 3.83 per cent in Japanese yen and 2.44 per cent in Chinese yuan.4

Electricity now flows both ways across the southern border. By mid-March 2026, 2,918 GWh had been exported to India in the current fiscal year and 590 GWh imported; in FY 2024/25, 2,332 GWh was exported and 1,712 GWh imported. The FY 2083/84 budget plans to speed up the Butwal–Gorakhpur and Inaruwa–Purnia cross-border lines and to start others, including Chilime Hub–Kerung to China, after feasibility studies.1615

With China: according to the Ministry of Foreign Affairs, the two countries share a 1,414 km border; a Belt and Road cooperation MoU was signed on 12 May 2017 and a Framework for Belt and Road Cooperation on 4 December 2024, under which ten projects have been preliminarily identified (including the Nepali section of the cross-border railway and the Jilong–Rasuwagadhi–Chilime 220 kV line). The ministry, citing the Ministry of Finance, records 19 projects with China's international development agency, with commitments of USD 1.3 billion and disbursements of USD 547.1 million, and notes that Pokhara Regional International Airport was built with Chinese EXIM Bank loans. The Economic Survey reports that about 90 per cent of geological exploration for the Kerung–Kathmandu railway feasibility study was complete by mid-March 2026.1116

With India: Nepal's Ministry of Foreign Affairs, in its former Nepal–India relations page (archived copy; the text dates from about 2018 and is no longer on the ministry's live website), states that diplomatic relations were established on 17 June 1947, that India is Nepal's largest trading partner and provides transit for third-country trade, that India pledged a USD 250 million grant and a USD 750 million soft loan for reconstruction at the June 2015 conference, and that the Boundary Working Group established in 2014 has taken over technical boundary work. The Government of India's own brief (July 2026) states that India has provided lines of credit worth USD 750 million since 2006, committed USD 1 billion for post-2015 earthquake reconstruction, and that the two countries have more than 40 bilateral mechanisms. It describes two operational cross-border railway lines, three operational integrated check posts (Birgunj, Biratnagar and Nepalgunj) and the Motihari–Amlekhgunj petroleum pipeline. Nepal's FY 2083/84 budget commits to operate the Bhairahawa integrated check post and finish the one at Dodhara Chandani within two years.171815

With the United States: the USD 500 million Millennium Challenge Corporation compact (electricity transmission and road maintenance) was signed on 14 September 2017, ratified by Nepal's Federal Parliament on 27 February 2022 according to MCC, and entered into force on 30 August 2023; MCC notified a further USD 50 million in December 2024 to cover a funding gap on the transmission lines. The Ministry of Finance reported that implementation was paused for review under a US presidential executive order of 20 January 2025, and that an MCC letter of 24 July 2025 said the review was complete and continuation of the Nepal compact had been recommended.192021

Boundary technical work continues through joint mechanisms: at the seventh meeting of the Nepal–India Boundary Working Group (New Delhi, 28–29 July 2025), led on Nepal's side by the Director General of the Survey Department, both sides adopted updated modalities for inspecting, repairing and maintaining boundary pillars. Both governments' press releases record this.2223

Multilateral and regional: Nepal joined the UN on 14 December 1955, has contributed to UN peacekeeping since 1958, and holds the ECOSOC presidency for 2025–2026. It is the current chair of SAARC; the Ministry of Foreign Affairs states that eighteen SAARC summits have been held to date, the 18th in Kathmandu on 26–27 November 2014. BIMSTEC has held six summits, the latest in Bangkok in April 2025, and is now chaired by Bangladesh. The Ministry of Foreign Affairs lists diplomatic relations with 188 countries.24252627

Uncertain

The timing of graduation from Least Developed Country status is unsettled, and official documents give different dates. The Ministry of Foreign Affairs says the Foreign Minister wrote to the chair of the UN Committee for Development Policy on 13 May 2026 asking to move graduation from 24 November 2026 to November 2029. The Economic Survey 2082/83, in both its English and Nepali versions, says the government requested graduation only in November 2030. The FY 2083/84 budget speech says Nepal will pursue graduation 'over the next two years'. The UN's LDC Portal records the request as made on 15 May 2026 and does not state the period requested. It says the Committee for Development Policy concluded that an extension of the preparatory period by the General Assembly would be appropriate, provided it is linked to a clear and time-bound plan to adjust and reprioritise the smooth transition strategy, and that on 21 July 2026 the Economic and Social Council recommended that the General Assembly act before 24 November 2026. No General Assembly decision was found on 10 October 2026.2829301531

Official counts of labour agreements differ. The Ministry of Foreign Affairs reported in July 2026 that labour agreements have been concluded with 13 countries. The 16th Plan gives 12 in its text (agreements signed with 12 destination countries) and 10 in its target table (baseline for FY 2022/23). The sources do not explain whether they count the same kinds of instruments. The labour migration page on this site discloses the same difference within the 16th Plan.2814

How much the northern route is used for trade with third countries is unclear. The Ministry of Foreign Affairs records that an Agreement on Transit Transport with China was signed in 2016 and that road links via Rasuwagadhi and Tatopani are used for trade and travel, but the official sources reviewed for this page give no figures for third-country cargo moving through China.11

The Constitution directs a review of past treaties. In July 2018 the Government of India told its Parliament that the Eminent Persons Group for Nepal–India Relations had met nine times since July 2016 but had not yet submitted its report to the two governments. No later official record of the report being received or published was found in the sources reviewed for this page.532

The Treaty of Transit text published by the Trade and Export Promotion Centre is the 1999 version; the treaty's protocol is meant to be reviewed every seven years, and this page did not find an official consolidated text that shows later changes.10

Disputed

Lipulekh, Kalapani and Limpiyadhura: the governments of Nepal and India state different positions, given here in their own published words. Nepal's Ministry of Foreign Affairs stated on 2082 Bhadra 4 (20 August 2025) that Nepal's official map has been included in the Constitution and that, in that map, Limpiyadhura, Lipulekh and Kalapani east of the Mahakali River are integral parts of Nepal; and on 2083 Baisakh 20 (3 May 2026) that they have been integral parts of Nepal since the Sugauli Treaty of 1816. Both statements say the Government of Nepal has asked the Government of India not to carry out any activities there such as road building or expansion and border trade (the 2026 statement adds pilgrimage), and that China has been informed (the 2026 statement says officially) that the area is Nepali territory. India's Ministry of External Affairs stated on 20 August 2025 that border trade between India and China through the Lipulekh Pass 'had commenced in 1954', and on 3 May 2026 that the pass has been a route for the Kailash Mansarovar Yatra since 1954; both statements say such territorial claims are 'neither justified nor based on historical facts and evidence' and that unilateral artificial enlargement of territorial claims is 'untenable'. On dialogue, Nepal's ministry states that the Government of Nepal is committed to resolving the boundary problem through diplomatic means on the basis of historical treaties and agreements, facts, maps and evidence; India's ministry states that India 'remains open to constructive interaction with Nepal on resolving agreed outstanding boundary issues through dialogue and diplomacy'. Separately, the Constitution's Schedule 3 (Coat of Arms of Nepal) is marked as amended by the Second Amendment (18 June 2020); this page does not interpret the image. No official public statement by the Government of China on this question was found in the sources reviewed.3334353637

Questions 4–5

What are the options, and what do they cost and achieve?

Options are listed in no particular order. Policy Nepal does not recommend one; real policies often combine them.

Diversify trade and transit routes and cut the cost of trading151310112831

Make more use of routes through both neighbours and beyond: finish and run integrated check posts, develop northern trade points and the transit transport arrangement with China, review transit terms with India on schedule, speed up customs, and prepare market access for after graduation from Least Developed Country status.

Benefits
  • Lower costs and fewer delays at the border make Nepali exports more competitive, in line with the 16th Plan's aim to lower transit costs.
  • More than one usable route reduces the effect of disruption on any single corridor on the supply of fuel and goods.
Costs
  • Northern routes cross high mountains, so roads, rail and border facilities there are expensive and slow to build.
  • Check posts, dry ports and customs systems need sustained budget, staff and agreement from the neighbouring country on each route.
Trade-offs
  • Most trade already moves through the south; money spent on new corridors competes with improving the routes that carry most goods today.
  • Deferring graduation keeps current trade preferences longer, while graduating on schedule may bring other benefits; the government has chosen to seek deferral, and no UN General Assembly decision had been found as of 10 October 2026.
What implementation needs
  • Operate the Bhairahawa integrated check post and complete Dodhara Chandani, as the FY 2083/84 budget commits; carry out the budget's customs reforms (Blue Lane clearance, online transaction-value clearance, pre-arrival information sharing with other countries' customs administrations); and use the Smooth Transition Strategy and the 16th Plan's graduation-focused trade negotiations.

Choose infrastructure and connectivity finance by terms and project readiness, whoever the partner124111819

Apply the same tests to offers from every partner, whether multilateral banks, India's lines of credit, China's Belt and Road framework, the US compact or others: grants first for preparation, loans only for ready, high-return projects in the national project bank, with attention to currency risk and repayment.

Benefits
  • Reduces delays and cost overruns that the Foreign Aid Mobilization Policy itself identifies, such as agreements signed before projects are ready.
  • One set of rules for all partners keeps decisions focused on the project rather than on the partner.
Costs
  • Stricter screening means fewer projects start quickly, and some offers may lapse.
  • Loans carry exchange-rate risk: the foreign exchange loss on external debt was Rs 65.55 billion in FY 2024/25, and the policy expects concessional terms to tighten after graduation.
Trade-offs
  • Speed against scrutiny: large connectivity frameworks promise many projects, but each still has to pass readiness, cost-benefit and debt tests.
  • Grants are cheaper but smaller and harder to get; loans are larger but must be repaid by future taxpayers.
What implementation needs
  • Apply the policy's readiness checklist and national project bank, appoint a lead partner where several co-finance one project, keep procurement contracts in the currency of the financing agreement or in rupees, and publish financing agreements and their terms.

Clearer rules for approving and publishing treaties and agreements97381921

Update the Nepal Treaty Act so that it states more clearly which agreements need parliamentary approval and by which majority, requires every treaty, financing agreement and government-to-government memorandum to be published within a fixed time, and gives Parliament regular reports on agreements in force.

Benefits
  • Today only treaties ratified by Parliament must be published in the Nepal Gazette; publishing all agreements would let citizens and Parliament see the terms before debate.
  • Clear rules could reduce uncertainty over whether and how an agreement must be ratified; for example, the US compact was signed in 2017 and approved by the House of Representatives in 2022.
Costs
  • More agreements going to Parliament adds to its workload and can delay projects and cooperation.
  • Some partners prefer confidentiality while negotiating, and some security or law-enforcement arrangements may need limited disclosure.
Trade-offs
  • Parliamentary oversight against the executive's flexibility to negotiate; and where to draw the line between a binding treaty and a non-binding memorandum of understanding.
What implementation needs
  • Amend sections 6, 10 and 12 of the Treaty Act, set up an online register of treaties and agreements, and ask a parliamentary committee to review the notices the government must table under section 10.

Put the protection of Nepali workers abroad at the centre of diplomacy14152832

Sign and review labour agreements with more destination countries, add labour attachés and consular staff where most Nepalis work, and make consular and rescue services easier to reach.

Benefits
  • Responds directly to the scale of migration (over 6.9 million first-time labour permits) and to the remittances that equalled 27.80 per cent of GDP in FY 2024/25.
  • Follows existing official plans: the 16th Plan's programme to strengthen missions in labour destination countries and the budget's commitment to review agreements and add new ones.
Costs
  • More staff abroad costs money at a time when the budget is closing six missions to save resources.
  • Agreements depend on destination governments' willingness, and their terms may be hard to enforce.
Trade-offs
  • Diplomatic effort spent on labour destinations is effort not spent on trade, investment or neighbourhood issues; and better protection abroad does not by itself create jobs at home.
What implementation needs
  • Track the 16th Plan target of labour agreements with 15 destination countries by FY 2028/29, increase labour consulars and attachés in proportion to the number of workers as the Plan proposes, and coordinate the labour and foreign ministries.

Rely more on multilateral and regional forums24252615135

Pursue more of Nepal's interests through the UN, trade and climate negotiations and regional bodies such as SAARC and BIMSTEC, using roles such as the ECOSOC presidency and the SAARC chair, alongside bilateral relations.

Benefits
  • Rules agreed among many countries can protect a small, landlocked state and spread its reliance across many partners, consistent with the constitutional basis in the UN Charter and non-alignment.
Costs
  • Regional bodies move only as fast as their members: the Ministry of Foreign Affairs lists eighteen SAARC summits, the most recent in Kathmandu in November 2014.
  • Multilateral work needs skilled staff and missions in New York, Geneva and Vienna, which compete for the same limited foreign-service budget.
Trade-offs
  • Bilateral deals with neighbours usually deliver concrete roads, power lines and trade arrangements faster; multilateral forums shape rules and finance more slowly.
What implementation needs
  • Use the budget's commitment to strengthen Nepal's role in the UN and regional forums, the Smooth Transition Strategy for graduation, and Nepal's SAARC chairmanship and BIMSTEC membership.

Combining options

These options are not mutually exclusive, and official documents already mix them: the 16th Plan combines balanced relations, lower transit costs, graduation-focused trade talks and labour diplomacy, and the FY 2083/84 budget pairs economic diplomacy with closing some missions to save money. The real choices are about emphasis and order: how much diplomatic staff and money go to trade routes, finance, workers abroad or multilateral forums, and whether clearer treaty rules come before or after the next large financing agreements. Clearer treaty and financing rules would affect how every other option is carried out.

Question 6

Who is responsible?

Federal
Ministry of Foreign Affairs

Foreign and diplomatic affairs and international relations are federal powers. The Foreign Minister is one of three office-holders who may sign treaties without separate full powers. The ministry runs Nepal's missions abroad and consular services, states the government's position on the boundary, and handled the request to defer LDC graduation.892834

Federal
Ministry of Finance

Foreign grants, aid and loans are federal powers, and the Government of Nepal may borrow abroad in a way that keeps the economy stable. The ministry negotiates financing agreements under the Foreign Aid Mobilization Policy and makes subsidiary loan agreements with provinces and local governments.8612

Federal
Federal ministry responsible for commerce

International trade is a federal power. The 1999 Treaty of Transit with India was signed by the two commerce ministers, and the FY 2083/84 budget lists integrated check posts and trade logistics under its commerce and supply heading.81015

Federal
Federal Parliament

Ratifies treaties: a two-thirds majority of all members of both Houses for the four subjects in Article 279(2), and a House of Representatives resolution for other treaties that need ratification. It must be told when the government denounces or suspends such treaties, and must receive notice of treaties the government accepts by its own decision.79

Provincial
Provincial governments

A limited role: the federal government must consult the province concerned before a treaty on provincial powers; a provincial government may make contractual agreements on financial and industrial matters, and receive foreign grants and assistance, only with federal consent. Under the aid policy provinces propose projects through federal ministries and repay loans taken at their request.7812

Federal
Nepali embassies and labour attachés

Monitor workplaces and labour agreements in destination countries, help Nepalis in difficulty abroad, and promote trade, investment and tourism. The 16th Plan proposes more labour consulars and attachés in proportion to the number of workers.142815

Federal
Survey Department

Its Director General led Nepal's delegation at the seventh meeting of the Nepal–India Boundary Working Group (July 2025), the joint technical body set up to build, restore and repair boundary pillars.22

Question 7

What have parties and leaders said and done?

What was said or promised is shown apart from what was recorded as done. Every entry needs a dated source. A missing entry means the position is not established, not that someone opposes or is neutral.

Party positions on foreign relations are still being researched. To keep coverage fair, they will be added for every party with seats in the House of Representatives at the same time, each from that party's own documents. The records above are government and parliamentary records (official statements, an agreement signed, a ratification vote, a policy and a budget) and do not represent any party. Statements by the Government of India appear only in the evidence section, where they record that government's own position; no official statement by the Government of China on the boundary question was found.

Said or promised

Stated position · 2083 Baisakh 20 (3 May 2026)

Government of Nepal (Ministry of Foreign Affairs)

States that Limpiyadhura, Lipulekh and Kalapani east of the Mahakali River have been integral parts of Nepal's territory since the 1816 Sugauli Treaty, that it has conveyed its position and concerns about the Kailash Mansarovar Yatra via Lipulekh to both India and China through diplomatic channels, and that it is committed to resolving the boundary question through diplomacy on the basis of historical treaties, facts, maps and evidence.34

Stated position · 13 May 2026 (reported 4 July 2026)

Government of Nepal (Ministry of Foreign Affairs)

The Foreign Minister wrote to the chair of the UN Committee for Development Policy on 13 May 2026 asking to defer graduation from Least Developed Country status from 24 November 2026 to November 2029, citing, among five reasons, effects on the economy and remittances, the risk of losing duty-free and quota-free market access, and slow implementation of the Smooth Transition Strategy. The UN's LDC Portal records the request as made on 15 May 2026.2831

Stated position · 2082/01/08 (April 2025)

Government of Nepal (Council of Ministers)

Approved the Foreign Aid Mobilization Policy, 2025, which replaces the 2019 policy and sets rules on project readiness, loan use, partner coordination and provincial and local borrowing.12

Stated position · 2026 (budget speech for FY 2083/84, 2026/27)

Government of Nepal (Ministry of Finance)

The FY 2083/84 budget speech commits to balanced international relations based on mutual benefit, national dignity and sovereign interests, a stronger role at the UN and regional forums, and economic diplomacy through missions, and announces the closure of embassies in Denmark, Brazil and South Africa, consulates general in Chengdu and San Francisco, and the branch office in Visakhapatnam.15

Recorded actions and outcomes

Implementation · 4 December 2024

Government of Nepal

Signed the Framework for Belt and Road Cooperation with China in Beijing on 4 December 2024, during a state visit at which ten memoranda of understanding were signed; ten projects have been preliminarily identified under it.11

Recorded vote · 2078 Falgun 15 (27 February 2022)

House of Representatives

Approved the Millennium Challenge Corporation compact with the United States, signed in 2017; MCC's own statement confirms that Nepal's Federal Parliament ratified the compact on 27 February 2022. As reported by Kantipur, the House also approved a 12-point interpretive declaration that allows Nepal to terminate the agreement on 30 days' notice if the project is found to be contrary to Nepali law.213819

Question 8

What would progress look like, and when do we check again?

IndicatorLatest official figureOfficial targetRevisit
Trade deficit in goods and services as a share of GDP13 27.7 per cent (16th Plan, FY 2022/23 actual). For comparison, the Economic Survey gives the goods-only deficit as 24.63 per cent of GDP in FY 2024/25; that is a different measure. (FY 2079/80 (2022/23))132 22.5 per cent (FY 2085/86 (2028/29))13 2027-06 (after the Economic Survey 2083/84)
Exports of goods and services as a share of GDP13 7.0 per cent (FY 2079/80 (2022/23))13 8.5 per cent (FY 2085/86 (2028/29))13 2027-06 (after the Economic Survey 2083/84)
Number of destination countries with a labour agreement1428 13 countries (Ministry of Foreign Affairs, July 2026). The 16th Plan gives 12 in its text and 10 in its target table (baseline for FY 2022/23); the counts may not be on the same basis. (July 2026)2814 15 countries (FY 2085/86 (2028/29))14 2027-06
Graduation from the UN Least Developed Country category282931 Scheduled for 24 November 2026. The government formally asked to defer it (a letter of 13 May 2026 according to the Ministry of Foreign Affairs, a request of 15 May 2026 according to the UN; to November 2029 according to the Ministry of Foreign Affairs, November 2030 according to the Economic Survey). On 21 July 2026 ECOSOC recommended that the General Assembly act before 24 November 2026. No new official date had been set as of 10 October 2026. (10 October 2026)282931 No official target found 2026-11, or when the UN General Assembly decides on Nepal's request

Sources

Grouped by type of evidence. Government plans show what government intends; they are not proof of results. Party material shows what a party says.

Constitution & law

  1. The Constitution of Nepal (English translation, incl. first and second amendments) — Nepal Law Commission, Government of Nepal, Gazette publication 20 September 2015; amended 2016 and 2020. Article 5(1) (p. 3); Article 50(4) (p. 23); Article 51(m)(1)–(2), policies relating to international relations (pp. 32–33). Checked 2026-10-10
  2. The Constitution of Nepal (English translation, incl. first and second amendments) — Nepal Law Commission, Government of Nepal, Gazette publication 20 September 2015; amended 2016 and 2020. Article 51(d)(11) (p. 26); Article 51(i)(5)–(6) (p. 30); Article 59(6) (p. 36). Checked 2026-10-10
  3. The Constitution of Nepal (English translation, incl. first and second amendments) — Nepal Law Commission, Government of Nepal, Gazette publication 20 September 2015; amended 2016 and 2020. Article 278 (power to conclude treaty) and Article 279 (ratification of treaties), pp. 164–165. Checked 2026-10-10
  4. The Constitution of Nepal (English translation, incl. first and second amendments) — Nepal Law Commission, Government of Nepal, Gazette publication 20 September 2015; amended 2016 and 2020. Schedule 5 items 5, 6, 7, 18 and 22 (pp. 193–194); Schedule 6 item 2 (p. 196). Checked 2026-10-10
  5. नेपाल सन्धि ऐन, २०४७ (Nepal Treaty Act, 2047), consolidated text amended up to the Act amending some Nepal Acts, 2082 — Nepal Law Commission, Government of Nepal, 2047/08/01 (1990); amended 2066, 2072 and 2082 (2082/04/14). Sections 3, 4, 5, 6, 7, 9, 10 and 12 (PDF pp. 2–5). Checked 2026-10-10
  6. Treaty of Transit, 1999 - India (text of the Treaty of Transit between Nepal and India, with protocol and letters of exchange) — Trade and Export Promotion Centre, Government of Nepal, Treaty done at Kathmandu, 5 January 1999. Preamble; Articles I, IV and XI; letters of exchange dated 5 January 1999. Checked 2026-10-10
  7. The Constitution of Nepal (English translation, incl. first and second amendments) — Nepal Law Commission, Government of Nepal, Gazette publication 20 September 2015; amended 2016 and 2020. Title page (amendment dates: Second Amendment 18 June 2020); Schedule 3, Coat of Arms of Nepal, with footnote 'Amended by the Second Amendment' (p. 189, read from the rendered page image). Checked 2026-10-10

Government plans & policy

  1. Nepal-China Relations — Ministry of Foreign Affairs, Government of Nepal (North East Asia Division), March 2026 (page dated 11 March 2026). Sections 'Political' (1,414 km border), 'Exchange of visits' (March 2016 Agreement on Transit Transport; December 2024 state visit, ten MoUs), 'Economic/Development Cooperation' (BRI MoU 12 May 2017; Framework for Belt and Road Cooperation 4 December 2024; ten identified projects; CIDCA 19 projects, USD 1.3 billion committed, USD 547.1 million disbursed, citing the Ministry of Finance; Pokhara airport EXIM loans), 'Tourism' (road connectivity via Rasuwagadhi and Tatopani). Checked 2026-10-10
  2. Foreign Aid Mobilization Policy, 2025 (English translation) — Ministry of Finance, Government of Nepal, Approved by the Council of Ministers 2082/01/08; English translation posted 2082 Shrawan 13. Sections 1.2–1.3 (pp. 4–6); 2.7.9(a) (pp. 17–18); 2.7.11(a)–(b) incl. items 11–13 (pp. 19–20); 3.3.3 role of provincial governments (p. 28). Checked 2026-10-10
  3. The Sixteenth Plan (Fiscal Year 2024/25–2028/29), English unofficial translation — National Planning Commission, Government of Nepal, 2081 BS / 2024. Table 2.11, Impact indicators on external sector, rows 1–2 (p. 49); chapter 14, section 14.4 transformative strategies (1), (3)–(6) (pp. 223–224). Checked 2026-10-10
  4. The Sixteenth Plan (Fiscal Year 2024/25–2028/29), English unofficial translation — National Planning Commission, Government of Nepal, 2081 BS / 2024. Chapter 4: text on labour agreements with 12 countries (p. 73); section 4.5 programmes (4) foreign employment management and (5) strengthening missions in labour destination countries (pp. 79–80); section 4.6 quantitative targets, row 12 (pp. 81–82). Checked 2026-10-10
  5. Budget Speech of Fiscal Year 2026/27 (2083/84), English unofficial translation — Ministry of Finance, Government of Nepal, 2026. Paras 37 (pp. 16–17, LDC graduation), 43(g) (p. 22, cross-border transmission lines), 54(c) (p. 34, labour agreements), 56(c) (p. 36, integrated check posts), 58 (pp. 37–38, soft power and diplomacy), 61(f) (p. 40, mission closures), 71–72(b) (p. 46, customs and trade facilitation). Checked 2026-10-10
  6. Nepal-India Relations (archived web page) — Ministry of Foreign Affairs, Government of Nepal (archived copy via the Internet Archive's Wayback Machine), Undated page; the content refers to events up to May 2018 and its trade table ends with FY 2016/17. Snapshot captured 10 November 2024.. Sections 'Overview' (diplomatic relations established 17 June 1947), 'Nepal-India Economic Relations' (June 2015 reconstruction pledge: USD 250 million grant and USD 750 million soft loan), 'Trade, Transit and Investment' (India is Nepal's largest trading partner; transit for third-country trade), 'Security Cooperation and Boundary Management' (Boundary Working Group established in 2014). Checked 2026-10-10
  7. India-Nepal Bilateral Relations (bilateral brief) — Ministry of External Affairs, Government of India, July 2026. Paragraphs 5 (more than 40 mechanisms), 7 (railways, ICPs, pipeline), 11 (USD 1 billion reconstruction), 15 (lines of credit USD 750 million since 2006), 16 (trade). Checked 2026-10-10
  8. Congressional Notification: proposed increase in assistance to the Nepal Compact — Millennium Challenge Corporation (United States Government), 18 December 2024. p. 2 (USD 50 million); p. 3, Background (USD 500 million compact signed 14 September 2017, entered into force 30 August 2023; two projects). Checked 2026-10-10
  9. प्रेस विज्ञप्ति - एमसीसी (Press release on the MCC compact review) — Ministry of Finance, Government of Nepal, 2082/04/12 (28 July 2025). Whole press release (one paragraph; read from the rendered page image). Checked 2026-10-10
  10. MCC Statement on Nepal Compact Ratification — Millennium Challenge Corporation (United States Government), 1 March 2022. Paragraph 1. Checked 2026-10-10
  11. Press Release: 7th meeting of Nepal-India Boundary Working Group (BWG) — Ministry of Foreign Affairs, Government of Nepal, 29 July 2025. Whole press release (Nepali delegation led by the Director General, Department of Survey; updated modalities for boundary pillars; BWG constituted in 2014). Checked 2026-10-10
  12. Seventh meeting of the India-Nepal Boundary Working Group (BWG) — Ministry of External Affairs, Government of India, 29 July 2025. Paragraphs 1–5. Checked 2026-10-10
  13. Nepal's Multilateral Affairs — Ministry of Foreign Affairs, Government of Nepal. Section 'Nepal and the United Nations', paras 1 and 3 (UN membership 14 December 1955; peacekeeping since 1958; ECOSOC presidency 2025–2026; missions in New York, Geneva, Vienna). Checked 2026-10-10
  14. Nepal and SAARC — Ministry of Foreign Affairs, Government of Nepal. Paragraphs on Nepal as current Chair and on summits (eighteen held; 18th in Kathmandu, 26–27 November 2014). Checked 2026-10-10
  15. Nepal and BIMSTEC — Ministry of Foreign Affairs, Government of Nepal. Section 'Institutional Mechanisms' (six summits; Bangladesh chair since April 2025). Checked 2026-10-10
  16. परराष्ट्र मन्त्रालयको एक सय दिनको कार्यसम्पादन (The Ministry of Foreign Affairs' performance in one hundred days) — Ministry of Foreign Affairs, Government of Nepal, 4 July 2026. Items 10 (India visit, 5–7 June 2026), 11 (China visit, 14–17 June 2026), 16 (LDC graduation deferral letter of 13 May 2026, to November 2029, with five stated reasons), 20 (labour agreements with 13 countries). Checked 2026-10-10
  17. Lok Sabha Unstarred Question No. 1293: Eminent Persons Group — Ministry of External Affairs, Government of India, 25 July 2018. Answer to parts (a) and (b). Checked 2026-10-10
  18. नेपाली भूमी लिपुलेक हुँदै भारत-चीनबीच सीमा व्यापारका विषयमा मिडियाबाट सोधिएका प्रश्नका सम्बन्धमा परराष्ट्र प्रवक्ताको जवाफ (Foreign spokesperson's response on India–China border trade via Lipulekh) — Ministry of Foreign Affairs, Government of Nepal, 2082 Bhadra 4 (20 August 2025). Points 1–3 (whole statement). Checked 2026-10-10
  19. नेपाली भूमि लिपुलेक हुँदै कैलाश मानसरोवर यात्राका विषयमा मिडियाबाट सोधिएका प्रश्नका सम्बन्धमा परराष्ट्र प्रवक्ताको जवाफ (Foreign spokesperson's response on the Kailash Mansarovar Yatra via Lipulekh) — Ministry of Foreign Affairs, Government of Nepal, 2083 Baisakh 20 (3 May 2026). Points 1–6 (whole statement). Checked 2026-10-10
  20. Official Spokesperson's response to media queries regarding comments made by Nepal on border issue — Ministry of External Affairs, Government of India, 20 August 2025. Whole statement. Checked 2026-10-10
  21. Official Spokesperson's response to media queries regarding comments made by Foreign Ministry of Nepal on border issue in the context of the Kailash Mansarovar Yatra — Ministry of External Affairs, Government of India, 3 May 2026. Whole statement. Checked 2026-10-10

Official data

  1. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Annex 5.1, Direction of Foreign Trade (statistical annex p. 88; PDF p. 363), columns 2024/25 and first eight months 2025/26; paras 5.3 and 5.6 (pp. 77–78). Checked 2026-10-10
  2. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Macroeconomic Indicators table, '4. External Sector' rows (merchandise export, import, trade deficit, remittance income; as percent of GDP), column 2024/25 (PDF pp. 261–262). Checked 2026-10-10
  3. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Paras 6.8–6.11 and Table 6(b), Details of issued New Labor Permit (pp. 83–84). Checked 2026-10-10
  4. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Paras 2.60 (p. 46), 2.62–2.63 (p. 47), 2.68–2.70 (p. 49); Annex 2.20, Approved Foreign Assistance by Source (annex p. 36; PDF p. 311), column 2024/25. Checked 2026-10-10
  5. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Para 9.23 (pp. 136–137, electricity exports and imports); para 10.24 (p. 143, Kerung–Kathmandu railway feasibility study). Checked 2026-10-10
  6. Bilateral Relations (list of countries with diplomatic relations) — Ministry of Foreign Affairs, Government of Nepal. Table, rows 1–188 (last entry: Senegal, 26 September 2026). Checked 2026-10-10
  7. Economic Survey 2025/26 (English) — Ministry of Finance, Government of Nepal, 2026. Para 15.3 and Table 15(a) (p. 214). Checked 2026-10-10
  8. आर्थिक सर्वेक्षण २०८२/८३ (Economic Survey 2082/83, Nepali) — Ministry of Finance, Government of Nepal, 2083 BS / 2026. Para १५.३ (p. 229; PDF p. 263). Checked 2026-10-10
  9. Nepal graduation status — United Nations, LDC Portal (International Support Measures for Least Developed Countries), Undated web page (records an ECOSOC decision adopted on 21 July 2026). Paragraphs 1–2 (scheduled graduation 24 November 2026; Nepal's request of 15 May 2026; CDP crisis assessment conclusion; ECOSOC decision of 21 July, document E/2026/L.24). Checked 2026-10-10

News reports

  1. नेपालको कानुनविपरीत भए एकतर्फी रद्द गर्ने घोषणासहित एमसीसी सम्झौता अनुमोदन — Kantipur (ekantipur.com), 2078 Falgun 16 (28 February 2022). Opening paragraphs and the summary of the 12-point interpretive declaration. Checked 2026-10-10

Corrections & right of reply

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Change history
  1. 2026-10-10 — First researched draft of the foreign relations issue page (status: review). (New topic page for the National Agenda; all figures taken from sources opened on 2026-10-10. Party positions intentionally not included pending all-party research. The Lipulekh, Kalapani and Limpiyadhura question is presented only through each government's own published statements. Differing official dates for the LDC graduation deferral request (2029 in the Foreign Ministry's report; 2030 in the Economic Survey) and differing counts of labour agreements are shown side by side, not reconciled.)
  2. 2026-10-10 — Independent fact-check of every figure, date, legal provision and factual claim against the cited sources, re-downloaded and re-read on 2026-10-10. (Verification before owner sign-off. Economic Survey, budget, 16th Plan, Constitution, Treaty Act, Treaty of Transit, Foreign Aid Mobilization Policy, MoFA, MEA and MCC figures were checked at their locators. Items not listed below were confirmed unchanged.)
  3. 2026-10-10 — Law and policy, Article 51(m): reworded to 'review treaties concluded in the past and conclude treaties and agreements based on equality and mutual interest'. (The previous English ('a review ... so that treaties are based on equality ...') implied a purpose that is not in Article 51(m)(2), which lists two separate policies. The Nepali already matched the Constitution.)
  4. 2026-10-10 — Evidence, Eminent Persons Group: removed 'set up in 2016'; it now says 'had met nine times since July 2016'. (India's 2018 Lok Sabha answer gives meetings 'since July 2016' but no founding date.)
  5. 2026-10-10 — Option on trade routes: 'pre-arrival information sharing with neighbouring customs' changed to 'with other countries' customs administrations'. (Budget para 72(b) refers to 'inter-country customs administrations', not specifically to neighbours.)
  6. 2026-10-10 — Evidence, boundary: rewritten so that each government's statement is given separately, with its date and closer to its exact wording. India's dialogue sentence is now quoted verbatim. Removed 'which includes a map of Nepal' from the Schedule 3 sentence. (Neutrality. The earlier text merged the 2025 and 2026 statements (it attributed the Sugauli basis and the constitutional-map basis to both) and interpreted the coat of arms image. Each claim now matches its own statement.)
  7. 2026-10-10 — Position record (MoFA, 3 May 2026): 'Nepal's territory on the basis of' changed to 'integral parts of Nepal's territory since' the 1816 Sugauli Treaty. (Matches the statement's own wording (१८१६ को सुगौली सन्धिबाट नै ... अभिन्न भू-भाग).)
  8. 2026-10-10 — Evidence, India: added Nepal's own Ministry of Foreign Affairs account, from an archived copy of its former Nepal–India relations page (new source fr-mofa-india-archived), alongside India's brief. (Source asymmetry: China was described from Nepal's MoFA but India only from India's MEA. The live MoFA India page returns 404, so the Wayback Machine snapshot of 10 Nov 2024 is used. It is labelled as archived and dated, and is used only for long-standing facts. The remaining asymmetry for current figures is disclosed in the source notes.)
  9. 2026-10-10 — LDC deferral: added the UN LDC Portal record (new source fr-un-ldc-nepal). It records the request as dated 15 May 2026, the CDP's conclusion that an extension would be appropriate with a time-bound plan, and ECOSOC's recommendation of 21 July 2026 that the General Assembly act before 24 November 2026. No General Assembly decision was found. Classification, evidence, the option trade-off, the position record and the progress item were updated. The MoFA (Nov 2029) and Economic Survey (Nov 2030) dates are both still shown. (The brief required a check of UN sources. The UN record does not state the requested period, so the 2029/2030 discrepancy remains disclosed, not resolved. The UN gives 15 May and MoFA gives a letter of 13 May; both are shown.)
  10. 2026-10-10 — Labour agreements: the progress baseline now leads with 13 countries (MoFA, July 2026), noting the 16th Plan's 12 (text) and 10 (table). The evidence item notes that the labour-migration page discloses the same difference. (The brief asked for the MoFA count to be shown, with the 16th Plan discrepancy disclosed consistently with the labour-migration page.)
  11. 2026-10-10 — MCC compact: added MCC's own statement of 1 March 2022 (new source fr-mcc-stmt-2022), which confirms ratification by Nepal's Federal Parliament on 27 February 2022. The interpretive declaration is still attributed to Kantipur's report. (No Nepali official record (Parliament or MoF) of the vote was found online. The MCC statement is an official US-government confirmation of the date only.)
  12. 2026-10-10 — Responsibility, Survey Department: 'Leads Nepal's side' changed to 'Its Director General led Nepal's delegation at the seventh meeting'. (The MoFA press release records who led that meeting only, not a standing role.)
  13. 2026-10-10 — Evidence, SAARC: now states, as MoFA does, that eighteen summits have been held to date, the 18th in Kathmandu on 26–27 November 2014. (Replaces the inference 'last summit' with the ministry's own wording.)
  14. 2026-10-10 — Option on treaty rules: replaced 'long public disputes' with 'uncertainty', and stated the compact's 2017 signing and 2022 approval as facts. (Neutrality: avoids characterising the debate.)
  15. 2026-10-10 — Positions note: no longer says that statements by the Government of China appear in the evidence section. (The page uses no official Chinese statement.)
  16. 2026-10-10 — Nepali spelling: राष्ट्रसंघ changed to राष्ट्रसङ्घ throughout (19 places). (House spelling rule सङ्घ/सङ्घीय. Wording is otherwise unchanged.)
  17. 2026-10-11 — Published after independent source-by-source verification. Owner waived the separate sign-off review; conservative editorial defaults applied. Party positions not yet included (to be added for all House parties together). Nepali text awaiting native review. (Editorial decisions: Each government’s positions in its own dated words; boundary statements kept separate; archived MoFA India page labelled; both LDC deferral dates disclosed pending the UN General Assembly; One China/Tibet language not included.)