Following a decade-long insurgency, a Comprehensive Peace Agreement has been in place in Nepal since 2006. Although progress on implementation of the Agreement has been uneven, some major steps toward instituting democratic constitutional rule have been achieved. The monarchy has been abolished and a representative Constituent Assembly has been elected to draft a new constitution. There is a broad national consensus on the need for political reform and to address critical development challenges.

However, further consolidating the current peace process, drafting a new, more inclusive constitution, and building a functioning government with sufficiently broad legitimacy and authority to uphold the rule of law and carry out national development remain significant challenges for Nepal.

Constrained by rugged terrain and limited resources, this small, landlocked country is one of the poorest in the world. Poverty is widespread - 31% of the population subsists on less than $1 per day, the workforce is largely unskilled, unemployment is high; and there is a high vulnerability to natural disasters – floods, landslides, and earthquakes.

Sustainable peace and lasting democracy hinge on economic recovery and development gains in the countryside. Economic opportunities and local government services need to be expanded in order to restore public faith in government.

U.S. assistance is playing a crucial role in supporting the transition to peace, building strong and representative government, establishing the rule of law, ending human rights abuses, strengthening equitable social service delivery, and addressing poverty through programs in agriculture, vocational education, and small scale infrastructure.