This report is part of the United Nations Development Programme’s Regional Programme for Asia on the macroeconomics of poverty reduction. This case study of Nepal is one of the programmes that included several other countries such as Indonesia, China, Cambodia and Bangladesh, to name a few. The primary focus of this and the other case studies is macroeconomic policy and its impact of the poor. The case studies seek to identify macro policies that would generate a pattern of growth which is ‘pro-poor’ in the specific sense that the increment in growth becomes more equally distributed than initial income. The international community recognises the importance of equity and distribution as essential parts of a programme to rid the world of the scourge of poverty. This report is part of a regional UNDP project to place considerations of equity at the centre of the poverty reduction agenda.