Nepal is the poorest country in South Asia and internal conflict has limited its economic growth. The restoration of peace in 2006 brought some stability and a basis for new growth.
The country’s main difficulty is building foundations for its new nationhood, notably a solid and robust democratic system of good governance and a sustainable economic development strategy. European Union cooperation is helping to improve the living conditions of the Nepalese, particularly in rural areas, and is enhancing the country’s economic performance. The consolidation of democracy and mitigation of internal conflicts are vital to the country's development.
The EU-Nepal Country Strategy Paper (2007-13) details the priorities for cooperation.
Under the Multi-annual Indicative Programme (MIP), 2011-13, €56.1 million will be allocated as follows:
- €8.5 million to support the electoral process,
- €31.6 million for the school sector reform plan,
- €10 million to support the public finance management reform plan,
- €6 million for trade and economic capacity building.
The initial €60 million MIP (2007-10) allocated €60 million:
- €36 million for education (human rights, gender, conflict prevention and the environment,
- €22 million for stability and peace building and
- €2 million for trade facilitation and capacity building in the sphere of economic development.
Nepal has also benefitted from the EU-supported Global Climate Change Alliance Facility (€8.6 million, including €0.6 million as a transfer from Cyprus) and from the Food Facility (€4 million to enhance food security monitoring and analysis systems).