Country Partnership Strategy: Nepal 2013-2017 Highlights

Abstract

Nepal has been undergoing landmark political changes since the past 2 decades toward a historic social and economic transformation. There are high public expectations that the second Constituent Assembly and new elected government will deliver a new constitution in a timely manner. Early conclusion of this political transition will pave the way for achieving the Nepali people’s aspirations for accelerated, inclusive and sustainable economic growth and prosperity. Despite the prolonged political transition, Nepal maintained macroeconomic stability with modest economic growth. Annual real gross domestic product growth averaged 4.4% since 2008. Poverty level fell sharply from 42% in 1996 to 25% in 2011. Nepal will also likely meet more than half of the Millennium Development Goals. The county, however, continues to face significant development challenges with high poverty and wide socioeconomic disparities across its geographic areas and population groups. Tackling the disparities requires higher and more inclusive and employment-centric growth, for which the country has a great potential. However, the binding constraints to growth need to be addressed, including infrastructure bottlenecks, inadequate human capital, underdeveloped labor market, and weak governance.