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. A Maoist insurgency, launched in 1996, gained traction and threatened to bring down the regime, especially after a negotiated cease-fire between the Maoists and government forces broke down in August 2003. In 2001, the crown prince massacred ten members of the royal family, including the king and queen, and then took his own life. In October 2002, the new king dismissed the prime minister and his cabinet for "incompetence" after they dissolved the parliament and were subsequently unable to hold elections because of the ongoing insurgency. While stopping short of reestablishing parliament, the king in June 2004 reinstated the most recently elected prime minister who formed a four-party coalition government. Citing dissatisfaction with the government's lack of progress in addressing the Maoist insurgency and corruption, the king in February 2005 dissolved the government, declared a state of emergency, imprisoned party leaders, and assumed power. The king's government subsequently released party leaders and officially ended the state of emergency in May 2005, but the monarch retained absolute power until April 2006. After nearly three weeks of mass protests organized by the seven-party opposition and the Maoists, the king allowed parliament to reconvene on 28 April 2006. Following the November 2006 peace accord between the government and the Maoists, an interim constitution was promulgated and the Maoists were allowed to enter parliament in mid-January 2007. Constituent elections are planned for June 2007.

Location:  Southern Asia, between China and India

Geographic coordinates:  28 00 N, 84 00 E

Area:   total: 147,181 sq km
land: 143,181 sq km
water: 4,000 sq km 

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

Natural resources:  quartz, water, timber, hydropower, scenic beauty, small deposits of lignite, copper, cobalt, iron ore

Population:  28,901,790 (July 2007 est.)

Ethnic groups:  Chhettri 15.5%, Brahman-Hill 12.5%, Magar 7%, Tharu 6.6%, Tamang 5.5%, Newar 5.4%, Muslim 4.2%, Kami 3.9%, Yadav 3.9%, other 32.7%, unspecified 2.8% (2001 census)

Religions:  Hindu 80.6%, Buddhist 10.7%, Muslim 4.2%, Kirant 3.6%, other 0.9% (2001 census)
note: only official Hindu state in the world

Languages:  Nepali 47.8%, Maithali 12.1%, Bhojpuri 7.4%, Tharu (Dagaura/Rana) 5.8%, Tamang 5.1%, Newar 3.6%, Magar 3.3%, Awadhi 2.4%, other 10%, unspecified 2.5% (2001 census)
note: many in government and business also speak English (2001 est.)

Capital name:  Kathmandu

Administrative divisions:  14 zones (anchal, singular and plural); Bagmati, Bheri, Dhawalagiri, Gandaki, Janakpur, Karnali, Kosi, Lumbini, Mahakali, Mechi, Narayani, Rapti, Sagarmatha, Seti

National holiday:  in 2006, Parliament abolished the birthday of King GYANENDRA (7 July) and Constitution Day (9 November) as national holidays

Flag description:  red with a blue border around the unique shape of two overlapping right triangles; the smaller, upper triangle bears a white stylized moon and the larger, lower triangle bears a white 12-pointed sun

Political parties and leaders:  Communist Party of Nepal/United Marxist-Leninist or CPN/UML [Madhav Kumar NEPAL]; National Democratic Party or NDP [Pashupati Shumsher RANA] (also called Rastriya Prajantra Party or RPP); Nepal Sadbhavana (Goodwill) Party or NSP - Mandal [Bhadri Prasad MANDAL]; Nepal Sadbhavana Party - Ananda Devi [Ananda DEVI]; Nepal Workers and Peasants Party or NWPP [Narayan Man BIJUKCHHE]; Nepali Congress-Democratic [Sher Bahadur DEUBA]; Nepali Congress or NC [Girija Prasad KOIRALA]; People's Front Nepal (Amik Sherchan Group); People's Front Nepal (Chitra Bahadur Ale Group); People's Front Nepal (Chitra Bahadur K.C. Group); Rastriya Janashakti Party or RJP [Surya Bahadur THAPA] (split from RPP in March 2005); Samyukta Janmorcha Nepal (merged with People's Front Nepal or PFN in 2002); United Leftist Front or UFL [C.P. MAINALI]

Economy - overview:  Nepal is among the poorest and least developed countries in the world with almost one-third of its population living below the poverty line. Agriculture is the mainstay of the economy, providing a livelihood for three-fourths of the population and accounting for 38% of GDP. Industrial activity mainly involves the processing of agricultural produce including jute, sugarcane, tobacco, and grain. Security concerns relating to the Maoist conflict have led to a decrease in tourism, a key source of foreign exchange. Nepal has considerable scope for 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, its civil strife, and its susceptibility to natural disaster.