Background

In 1951, the Nepalese monarch ended the century-old system of rule by hereditary premiers and instituted a cabinet system of government. Reforms in 1990 established a multiparty democracy within the framework of a constitutional monarchy. An insurgency led by Maoist extremists broke out in 1996. The ensuing ten-year civil war between insurgents and government forces witnessed the dissolution of the cabinet and parliament and assumption of absolute power by the king.

Several weeks of mass protests in April 2006 were followed by several months of peace negotiations between the Maoists and government officials, and culminated in a November 2006 peace accord and the promulgation of an interim constitution. Following a nation-wide election in April 2008, the newly formed Constituent Assembly declared Nepal a federal democratic republic and abolished the monarchy at its first meeting the following month. The Constituent Assembly elected the country's first president in July.

The Maoists, who received a plurality of votes in the Constituent Assembly election, formed a coalition government in August 2008, but resigned in May 2009 after the president overruled a decision to fire the chief of the army staff.

Nepal is a developing country with an agricultural economy. In recent years, the country's efforts to expand into manufacturing industries and other technological sectors have achieved much progress. Farming is the main economic activity followed by manufacturing, trade and tourism. The chief sources of foreign currency earnings are merchandise export, services, tourism and Gurkha remittances.

Location: Southern Asia, between China and India

Total Area: 147,181 sq km

Climate: The climate of Nepal varies from warm summers with mild winters in the low-lying southern region, to alpine conditions with very severe winters in the mountains. Between December and February temperatures drop well below freezing in the mountains. The best time to travel to Nepal for trekking is in early spring or late autumn, when the weather is dry and temperatures mild. The monsoon season on the coast occurs between June and September.

Terrain: Tarai or flat river plain of the Ganges in south, central hill region, rugged Himalayas in north

Population: 29,391,883 (July 2011 est.)

Ethnic groups: Chhettri 15.5%, Brahman-Hill 12.5%, Magar 7%, Tharu 6.6%, Tamang 5.5%, Newar 5.4%, Muslim 4.2%, Kami 3.9%, Yadav 3.9%, other 32.7%, unspecified 2.8% (2001 census)

Religions: Hindu 80.6%, Buddhist 10.7%, Muslim 4.2%, Kirant 3.6%, other 0.9% (2001 census)

Languages: Nepali 47.8%, Maithali 12.1%, Bhojpuri 7.4%, Tharu (Dagaura/Rana) 5.8%, Tamang 5.1%, Newar 3.6%, Magar 3.3%, Awadhi 2.4%, other 10%, unspecified 2.5% (2001 census)

Note: many in government and business also speak English (2001 est.)

Government Type: Federal Democratic Republic

Executive Branch:

Chief of State: President Ram Baran Yadav (since 23 July 2008); Vice President Paramananda Jha (since 23 July 2008)

Head of Government: Jhala Nath Khanal (since 6 February 2011); Deputy Prime Ministers Bharat Mohan Adhikhari and Krishna Mahara (since March 2011)

Cabinet: Cabinet was formed in May 2009 by a majority coalition made up of the Communist Party of Nepal-United Marxist-Leninist, Nepali Congress, Madhesi People's Rights Forum, Nepal-Democratic, and several smaller parties

Elections: President elected by Parliament; term extends until the new constitution is promulgated; election last held on 21 July 2008; date of next election NA

Election results: Ram Baran Yadav elected president by the Constituent Assembly in a second round of voting on 21 July 2008; Ram Baran Yadav 308, Ram Jaja Prasad Singh 282

Legislative Branch: Unicameral Constituent Assembly (601 seats; 240 members elected by direct popular vote, 335 by proportional representation, and 26 appointed by the Cabinet (Council of Ministers))

Elections: Last held on 10 April 2008 (next to be held NA)

Election results: Percent of vote by party - CPN-M 38%, NC 19%, CPN-UML 19%,Madhesi People's Right Forum 9%, Terai-Madhes Democratic Party and Sadbhawana Party 5%, other 15%; seats by party - CPN-M 220, NC 110, CPN-UML 103, Madhesi People's Rights Forum 52, Terai-Madhes Democratic Party 20, Sadbhawana Party 9, other smaller parties 56; note - 26 seats filled by the new Cabinet and are included in the seat totals above

Judicial Branch: Supreme Court or Sarbochha Adalat (the president appoints the chief justice on recommendation of the Constitutional Council; the chief justice appoints other judges on the recommendation of the Judicial Council)

Political Parties and Leaders: Chure Bhawar Rastriya Ekata Party [Keshav Prasad MAINALI]; Communist Party of Nepal (Maoist) [Matrika YADAV]; Communist Party of Nepal (ML) [C.P. MAINALI]; Communist Party of Nepal (Unified) [Raj Singh SHRIS]; Communist Party of Nepal (United) [Chandra Dev JOSHI]; Communist Party of Nepal/United Marxist-Leninist or CPN/UML [Jhalanath KHANAL]; Dalit Janajati Party [Vishwendraman PASHWAN]; Madhesi People's Rights Forum, Nepal [Upendra YADAV]; Madhesi People's Rights Forum, Nepal-Democratic [Bijay Kumar GACHHEDAR]; National Democratic Party or NDP [Pashupati Shumsher RANA] (also called Rastriya Prajatantra Party or RPP); Nepal Loktantrik Samajbadi Dal [Upendra GACHCHHADAR]; Nepal Pariwar Dal [Eknath DHAKAL]; Nepal Rastriya Party [Keshav Man SHAKYA]; Nepal Sadbhavana Party (Anandi Devi) [Sarita GIRI]; Nepal Workers and Peasants Party or NWPP [Narayan Man BIJUKCHHE]; Nepali Congress or NC [Girija Prasad KOIRALA]; Nepali Janata Dal [Harish Chandra SHA]; Rastriya Janamorcha [Chitra BAHADUR K.C.]; Rastriya Janamukti Party [Malwar Singh THAPA]; Rastriya Janashakti Party or RJP [Surya Bahadur THAPA]; Rastriya Prajatantra Party Nepal [Kamal THAPA]; Sadbhavana Party (Mahato) [Rajendra MAHATO]; Samajbadi Prajatantrik Janata Party Nepal [Prem Bahadur SINGH]; Sanghiya Loktantrik Rastriya Manch [Laxman THARU]; Terai-Madhes Democratic Party [Mahantha THAKUR]; Unified Communist Party of Nepal (Maoist) [Pushpa Kamal DAHAL, also known as PRACHANDA]

Economy | overview

Nepal is among the poorest and least developed countries in the world, with almost one-quarter of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for about one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain.

During the global recession of 2009, remittances from foreign workers abroad increased 47% to $2.8 billion while tourist arrivals only decreased 1% compared to the previous year. Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of feasible capacity, but political instability hampers foreign investment. Additional challenges to Nepal's growth include its technological backwardness, landlocked geographic location, civil strife and labor unrest, and its susceptibility to natural disaster.