In Nepal poverty is widespread with 31 percent of the population estimated to be living under the national poverty line. Several factors contribute to poverty including political, institutional and cultural factors, such as access to education and health facilities, hygiene or employment facilities as well as differences in geography. Therefore, as one the biggest providers of development aid to Nepal, the European Union's overall objective in its cooperation is poverty reduction, through the promotion of sustainable development and economic growth in line with the Millennium Development Goal's (MDGs), with special attention being given to social inclusiveness and the environment.
Due to the current period of transition in Nepal, from conflict to peace, efforts have been made to strengthen the cooperation strategy in line with the commitments and fundamental principles underlying European Union cooperation policy. Nepal needs a solid and robust democratic system of good governance and a sustainable economic development strategy. In an effort to support this framework and as set out in the Country Strategy Paper 2007-2013 , the European Union has chosen to focus its activities on three focal areas: Education; Stability and Peace Building; and, Trade Facilitation and Economic Capacity Building. The financial allocation under this bilateral assistance EU-Development Cooperation Instrument (DCI), will reach approximately €120 million. As estimated in the Multi-annual Indicative Programme 2011-2013 , which has been designed in close consultation with the Government of Nepal and the donor community, the country will receive an indicative budget of €60 million in these three main areas of support. This financial envelope is about 33 per cent higher than that of 2007-2010.
Additionally, and in view of the challenges facing Nepal, other cooperation projects and actions under complementary financial instruments or thematic programmes will be supported in non-focal areas.