Salient Features: Underdeveloped with economy tied to India as result of geographic position and historical relationship. Predominantly agricultural limited industrial activity services-- particularly related to tourism, growing part of economy. In FY 1989, tourism provided more than 3.5 percent of GDP and about 25 percent of total foreign exchange earnings. Services, remittances of Nepalese working outside the country, and foreign loans and grants finance the deficit. Economic prospects poor--projected population growth expected to outpace growth rate of agricultural production. Underemployment estimated at 25-40 percent in 1987 unemployment averaged 5 percent. Foreign aid averaged 64 percent of development from 1956-90 44.4 percent of FY 1991 budget from foreign loans or grants. Real growth averaged 4 percent annually in early 1980s, almost 5 percent in late 1980s, but plummeted to between 1.5 percent and 2.3 percent in FY 1989 and FY 1990 because of trade and transit dispute with India. No labor laws as of 1991 limited activity of labor unions, but trade unions legalized following prodemocracy movement.

Gross National Product: Per capita income for 1988 US$158-180 range.

Gross Domestic Product (GDP): US$3 billion in FY 1990. GDP increase at constant prices averaged 3.7 percent annually FY 1975-86 increased 2.1 percent in FY 1990. Foreign aid as percentage of GDP increased from less than 8 percent in 1984 to almost 13 percent in 1987. Major share of GDP from FY 1979 to FY 1987 from agricultural sector.

Agriculture: Dominated economy livelihood for more than 90 percent of population approximately 60 percent GDP and 75 percent of exports in late 1980s. Some parts of country food deficit areas although enough generally produced to feed population production dependent on weather conditions-- particularly monsoons, distribution of inputs, scarcity of new lands, and continued environmental degradation. Tarai Region main agricultural belt. Paddy (rice) and corn major food crops, also wheat and millet potatoes, oilseed, sugarcane, jute, and tobacco major cash crops.

Industry: Limited industrial base--less than 20 percent of total GDP in 1980s 7 percent in FY 1990--established with foreign aid. Industries used agricultural products and/or dependent on various imported inputs, particularly from India. Traditional cottage industries such as basket-weaving and production of cotton fabrics approximately 60 percent of output.

Manufacturing: Larger plants generally in public sector. Major industries include jute, sugar, cigarettes, beer, matches, shoes, chemicals, cement, and bricks. Small mineral industry most commodities used for domestic construction cement, clay, limestone, garnet, magnesite, and talc most important mineral resources.

Energy: As of late 1980s, about 95 percent of energy consumed from traditional sources--fuelwood, 76 percent (hence deforestation). Tremendous potential for hydroelectric power inhibited by terrain, lack of infrastructure, and in90d insufficient capital investment.

Foreign Trade: Traditionally predominantly with India although decreased from more than 70 percent in 1975 to 37 percent of total trade in 1989. Also unrecorded border trade with India. As a result of trade and transit dispute, India's share of exports, 25 percent in FY 1989, dropped to approximately 9 percent in FY 1990 imports fell to only 25 percent FY 1990. Persistent and growing trade deficit with India. Other primary trading partners the United States, Bangladesh, China, Britain, former Soviet Union, West Germany, South Korea, Japan, Singapore, Thailand, Hong Kong, and Pakistan. Major exports clothing, carpets, grain, and leather goods. Major imports petroleum products, fertilizer, and machinery.

Balance of Payments: Improvement in 1980s as a result of foreign loans and assistance although increasing foreign debt. Mid1989 , official foreign debt outstanding and disbursed about US$1.3 billion. In FY 1988, exports US$187 million imports US$630 million.

Currency/Exchange Rate: 1 Nepalese rupee (NR) or rupee (R) = 100 paisa. Coins issued in denominations of 1, 5, 10, 25, 50 paisa, and 1 rupee notes issued in denominations of 1, 5, 10, 100, 500, and 1,000 rupees. In 1989, Rs per US$1=27.19 in 1990, 29.37 in January 1991, 30.8. Linked to Indian rupee.

Fiscal Year: 16 July-15 July.

Data as of September 1991