General 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. The refugee issue of some 100,000 Bhutanese in Nepal remains unresolved; 90% of these displaced persons are housed in seven United Nations Offices of the High Commissioner for Refugees (UNHCR) camps.

Area comparative: Slightly larger than Arkansas.

Climate: Varies from cool summers and severe winters in north to subtropical summers and mild winters in south.

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

Population: 25,873,917 (July 2002 est.)

Ethnic groups: Brahman, Chetri, Newar, Gurung, Magar, Tamang, Rai, Limbu, Sherpa, Tharu, and others (1995)

Religions: Hinduism 86.2%, Buddhism 7.8%, Islam 3.8%, other 2.2%
note: only official Hindu state in the world (1995)

Language: Nepali (official; spoken by 90% of the population), about a dozen other languages and about 30 major dialects; note - many in government and business also speak English (1995)

Government type: Parliamentary democracy and constitutional monarchy

Capital: Kathmandu

Legal system: Based on Hindu legal concepts and English common law; has not accepted compulsory ICJ jurisdiction.

Economic overview: Nepal is among the poorest and least developed countries in the world with nearly half of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for over 80% of the population and accounting for 41% of GDP. Industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. Textile and carpet production, accounting for about 80% of foreign exchange earnings in recent years, contracted significantly in 2001 due to the overall slowdown in the world economy and pressures by Maoist insurgents on factory owners and workers. Security concerns in the wake of Maoist activity, the June massacre of many members of the royal family, and the September 11 terrorist attacks in the US led to a decrease in tourism, another key source of foreign exchange. Agricultural production is growing by about 5% on average as compared with annual population growth of 2.3%. Since May 1991, the government has been moving forward with economic reforms, particularly those that encourage trade and foreign investment, e.g., by reducing business licenses and registration requirements to simplify investment procedures. The government has also been cutting expenditures by reducing subsidies, privatising state industries, and laying off civil servants. More recently, however, political instability - five different governments over the past few years - has hampered Kathmandu's ability to forge consensus to implement key economic reforms. Nepal has considerable scope for accelerating economic growth by exploiting its potential in hydropower and tourism, areas of recent foreign investment interest. Prospects for foreign trade or investment in other sectors will remain poor, however, because of the small size of the economy, its technological backwardness, its remoteness, its landlocked geographic location, and its susceptibility to natural disaster. The international community's role of funding more than 60% of Nepal's development budget and more than 28% of total budgetary expenditures will likely continue as a major ingredient of growth.

Communication/Telephone system: Poor telephone and telegraph service.

Places of interest:

Travel tips: The US State Department is advising US citizens to stay away if possible. The UK and Australian governments are advising their citizens to exercise caution in the area (especially due to its proximity to India and Pakistan). If you must go, remain cautious and avoid public gatherings.