Nepal’s transition to democracy, following the end of a decade-long civil conflict in April 2006, had been complex and sometimes halting because of the deep ideological, social, and economic divisions that propelled the conflict.
In August 2008, a massive flood on the Koshi River in Nepal breached its east embankment, damaging a vast area of farmlands and standing crops in the Sunsari district in the eastern region. Less than a month later, incessant heavy rains caused severe landslides and flooding, ravaging the Kailali and Kanchanpur districts in the far western region.
The macroeconomic environment in Nepal became upbeat, as peace set in after a decade−long conflict. Gross domestic product grew by 4.7% in 2008. Poverty incidence fell from 42% in 1996 to 31% in 2004. Nevertheless, until subprogram 2 preparation in 2009, severe poverty had persisted in various parts of the country and economic growth had been uneven.