Two-thirds of the country

A one-rupee banknoteAgriculture sustains 76% of the population and accounts for about 39% of the GDP; services comprise 41%, and industry 22%. Hilly and mountainous terrain in the northern two-thirds of the country has made the building of roads and other infrastructure difficult and expensive. There were just over 8,500 km of paved roads, and one 59 km railway line in the south in 2003. Aviation is in a better state, with 48 airports, ten of them with paved runways. There is less than one telephone per 19 people; landline services are not adequate nationwide but concentrated in cities and district headquarters; mobile telephony is in a reasonable state in most parts of the country with increased accessibility and affordability. There were around 175,000 Internet connections in 2005, but after the imposition of the "state of emergency", intermittent losses of service were reported. Uninterrupted Internet connections have resumed after the brief period of confusion as Nepal's second major people's revolution took place to overthrow the King's absolute power.
Its landlocked location (actually landlinked, since Nepal is not locked) and technological backwardness and the long-running civil war have also prevented Nepal from fully developing its economy. The country receives foreign aid from India, Japan, United Kingdom, United States, European Union, China, Switzerland, and Scandinavian Countries. The government's budget is about US$1.153 billion, with expenditures of $1.789bn (FY05/06). The inflation rate has dropped to 2.9% after a period of higher inflation during the 1990s. The Nepalese Rupee has been tied to the Indian Rupee at an exchange rate of 1.6 for many years. Since the loosening of exchange rate controls in the early 1990s, the black market for foreign exchange has all but disappeared. A long-standing economic agreement underpins a close relationship with India.
The distribution of wealth among people is consistent with that in many developed and developing countries: the highest 10% of households control 39.1% of the national wealth and the lowest 10% control only 2.6%.Terraced farming on the foothills of the HimalayasNepal's workforce of about 10 million suffers from a severe shortage of skilled labour. Agriculture employs 81% of the workforce, services 16% and manufacturing/craft-based industry 3%. Agricultural produce——mostly grown in the Terrai region bordering India——includes rice, corn, wheat, sugarcane, root crops, milk, and water buffalo meat. Industry mainly involves the processing of agricultural produce, including jute, sugarcane, tobacco, and grain. The spectacular landscape and deep, exotic culture of Nepal represents considerable potential for tourism, but growth in this export industry has been stifled by recent political events. The rate of unemployment and underemployment approaches half of the working-age population. Thus many Nepalese move to India in search of work, the Gulf countries and Malaysia being new sources of work. Poverty is acute.[10] Nepal receives US$50 million a year through the Gurkha soldiers who serve in the Indian and British armies and are highly esteemed for their skill and bravery. The total remittance value is worth around 1 billion USD, including money sent from Persian Gulf and Malaysia, who combined employ around 700,000 Nepalese.
Nepal's GDP for the year 2005 is estimated at just over US$39 billion (adjusted to Purchasing Power Parity), making it the 83rd-largest economy in the world. Per-capita income is around US$1,402, ranked 163rd. Nepal's exports of mainly carpets, clothing, leather goods, jute goods and grain total $822 million. Import commodities of mainly gold, machinery and equipment, petroleum products and fertilizer total US$2 bn. India (53.7%), the US (17.4%), and Germany (7.1%) are its main export partners. Nepal's import partners include India (47.5%), the United Arab Emirates (11.2%), China (10.7%), Saudi Arabia (4.9%), and Singapore (4%).
Government and politicsUntil 1990, Nepal was an absolute monarchy running under the executive control of the king. Faced with a people's movement against the absolute monarchy, King Birendra, in 1990, agreed to large-scale political reforms by creating a parliamentary monarchy with the king as the head of state and a prime minister as the head of the government.
Nepal's legislature was bicameral consisting of a House of Representatives and a National Council. The House of Representatives consists of 205 members directly elected by the people. The National Council had 60 members, 10 nominated by the king, 35 elected by the House of Representatives and the remaining 15 elected by an electoral college made up of chairs of villages and towns. The legislature had a five-year term, but was dissolvable by the king before its term could end. All Nepalese citizens 18 years and older became eligible to vote.
The executive comprised the King and the Council of Ministers (the Cabinet). The leader of the coalition or party securing the maximum seats in an election was appointed as the Prime Minister. The Cabinet was appointed by the king on the recommendation of the Prime Minister. Governments in Nepal have tended to be highly unstable; no government has survived for more than two years since 1991, either through internal collapse or parliamentary dissolution by the monarch.
The April movement of 2006 brought about a change in the nation. The autocratic King was forced to give up power. The dissolved House of Representatives was restored. The House of Representatives formed a government which had successful peace talks with the Maoist Rebels. An interim constitution was promulgated and an interim House of Representatives was formed with Maoist members. The number of seats were also increased to 330.