Overview

Nepal is a landlocked Himalayan country in South Asia bordered by India and China. It has a population of 30 million and contains eight of the world's ten highest peaks, including Mount Everest the highest mountain in the world. Kathmandu is its capital and largest city.

There were 142 ethnicities according to its National Census in 2021, and 123 spoken languages in Nepal. While Hinduism and Buddhism represent 90% of the population, Nepal's constitution is secular.  The country is religiously diverse. Other religions practised in Nepal include Islam, Christianity, Kiratism, Sikhism, Om Shanti, Jainism.

Bilateral relations

Australia and Nepal will celebrate 65 years of diplomatic relations in 2025. Our relationship is built on a long‑standing history of development partnership and close people-to-people links.

The relationship grew with a range of high-level visits over the last year, a development cooperation focussed on climate change and governance.

Australia and Nepal share democratic values, a similar a commitment to the international rules‑based order, and a resilient, open, and stable Indian Ocean region.

In 2023-24, Australia provided an estimated $27.2 million in Official Development Assistance.  

A new Trade and Investment Framework Arrangement (TIFA) was signed on the margins of the Indian Ocean Conference in February 2024.

There were around 151,000 Nepal-born diaspora in 2022 and 62,000 Nepali students in Australia in 2023.

High-level visits and meetings

Recent bilateral visits and meetings include:

Then-Nepal Foreign Minister Saud's official visit to Australia in February 2024, the first visit since then‑Nepali Foreign Minister Mahat visited in 2016. He met Foreign Minister Penny Wong and Assistant Foreign Minister Tim Watts to discuss regional issues and growing bilateral relations.

On 9 February 2024, the Foreign Ministers witnessed the signing of a new Trade and Investment Framework Arrangement (TIFA), a milestone to increase economic engagement and commercial ties.

• Assistant Foreign Minister Tim Watts' visit to Kathmandu in May 2023 was the first ministerial visit to Nepal since Foreign Minister Bill Hayden in 1985.  He met with Nepal's Prime Minister Dahal, then Foreign Minister Saud, a wide range of business, civil society, alumni, students, academia, community, cultural and religious leaders, and extended consular outreach.
• Speaker of the House of Representatives Milton Dick led a first Australian parliamentary delegation visit to Nepal in October 2023, engaged with a range of Nepali senior politicians and interlocuters on good parliamentary practices and governance, and on Australia's development cooperation with Nepal.
• Australia welcomed the first Nepal parliamentary delegation on a study visit on governance arrangements in November-December 2023.
• Sunita Dangol, Deputy Mayor of Kathmandu Metropolitan City, visited Australia under the 2023 Special Visits Program in November‑December 2023. She gained an understanding of Australia's policies and institutions, women's rights, indigenous issues, creative arts, urban planning, and judicial issues.  She met federal members of parliament, the ACT Chief Minister, deputy mayors, local representatives, officials, private industry, and academia.

Economic and trade relations

Nepal was Australia's 33rd largest trading partner with two-way trade valued at $3.9 billion in 2022‑2023.  It ranked as our third largest trading partner in South Asia in 2022-2023, behind Bangladesh at $4.1 billion and India $45.0 billion.

As Australia's third largest source of international students, Nepal is our seventh largest services exports market with education services valued at $3.4 billion in 2022-23.

Nepal exported $160 million worth of goods to Australia in 2022-23, mostly in tourism.

Australia's merchandise trade with Nepal has increased in recent years with trend growth of 19 per cent over the last five years to 2022-2023.

According to Australian Bureau of Statistics (ABS) trade data, Australia's merchandise trade with Nepal was worth $161 million in 2022-23, with Australian exports accounting for $145 million.  Australia's exports of goods to Nepal, when including re‑exports via India and Singapore, is estimated to be higher than officially reported.

In 2022‒23, goods imports from Nepal were worth $16 million and included carpets, cereal, and jewellery.

Australia was Nepal's sixth largest source of foreign direct investment in 2021-22 and accounted for five percent of Nepal's total foreign investment.

There remain significant opportunities. The TIFA signed in February 2024 provides a framework for a new Business Advisory Group established by Australia's Embassy in Kathmandu to grow the trade relationship.

People-to-people links

Nepal-born people living in Australia is Australia's fastest growing and 10th largest migrant community.

Nepali-Australian diaspora communities, students and alumni in Australia make important contributions and play a vital role contributing to the community and bilateral relationship.  

They make an invaluable contribution back to Nepal at different levels of society.

Australian remittances, approximately US$466.6 million in 2021, provide strong support to Nepal's economy.

The Australian Chapter of the Non-Resident Nepali Association (NRNA) is recognised by the Government of Nepal.  It helps promotes Nepali culture and supports increasing trade and investment ties between Australia and Nepal amongst other broad objectives. The second largest Nepali diaspora organisation is the Federation of Nepalese Community Associations of Australia (FeNCAA).

Development program

In 2023-24, Australia provided an estimated $27.2 million in ODA, focused on governance, climate and disaster resilience, gender equality and social inclusion. Australia's development program supports Nepal's development pathways and their graduation from Least Developed Country status in 2026.

The flagship Subnational Governance Program (SNGP) supports Nepal's transition to federalism through institutional capacity building. It clarifies functions among the different levels of government including local, provincial, and federal, facilitates dispute resolution related to the roll‑out of federalism, and promotes inclusive decision-making and service delivery.

Through a Memorandum of Understanding on Water Resource Management led by Nepal's Water Energy Commission Secretariat, Australia shares lessons and expertise in areas of mutual interest such as river basin planning and governance, the energy-water nexus, climate change and disaster risk reduction.

Under a partnership with the International Centre for Integrated Mountain Development (ICIMOD), Australia helps respond to challenges faced by mountain communities in the Hindu Kush Himalayas, complementing the work of other development partners, including the Government of the United Kingdom.  We provided $5 million between April 2022 and March 2027.

Under the Australian NGO Cooperation Program, Australian NGOs in partnership with local organisations deliver more than 40 projects in Nepal in areas such as: communicable diseases, disability, disaster risk reduction, economic development, education, eye health, food security, gender, health, human rights, livelihoods, microfinance, inequality reduction and rural development.

In May 2021, Australia provided an additional $7 million to assist Nepal respond to COVID-19 for medical equipment and supplies; storage and distribution of relief supplies; coordination and other essential services.

The Australian Centre for International Agricultural Research (ACIAR) and CSIRO are active in Nepal, focusing on improved integration of soil, water, crop, livestock and forestry components of farming systems and river basin management.

Over 1,000 Nepalis have participated in the Australia Awards program to date, with alumni now in key leadership positions in government and business.

Political overview

Following a 10-year civil war (1996-2006), in 2008, the then newly elected Constituent Assembly declared Nepal a Federal Democratic Republic, abolishing their 240-year-old monarchy.  Nepal now has a President as Head of State and a Prime Minister heading the Government.   Their new Constitution was adopted in 2015.

Following their 2022 Nepali general election, Communist Party of Nepal Maoist Centre (CPN-MC) Chairman, Pushpa Kamal Dahal, assumed office as Prime Minister from 26 December 2022. He formed a 10-party coalition government with the Nepali Congress Party. On 4 March 2024, Dahal ended this coalition and formed a new coalition with the CPN (UML) and other smaller parties.

Nepal – Heads of Government listing

Economic overview

Nepal has a Gross Domestic Product (GDP) of approximately USD40.8 billion and a per capita annual income of USD 1,336 (2022 data). Building on GDP growth of 1.9 per cent in 2022‑2023, the economy is projected to grow by 5.1 per cent in 2023-2024, on the back of stronger overseas remittances, tourism recovery and lower inflation.

In 2022, just over 52.3 percent of Nepal's GDP came from its service sector.  Agriculture contributed the second largest, and eleven percent came from the industry sector. Nepal's GDP is reliant on overseas remittances. Other key components of their GDP include tourism, carpets, textiles, processed seed oils and small rice.

Nepal has been a member of the World Trade Organisation (WTO) since April 2004.  The WTO membership helps Nepal integrate with the global trading system.

The Government of Nepal took steps to attract investment, including from foreign investors. The 3rd Nepal Investment Summit in Kathmandu on 28-29 April 2024 is an example of these efforts.

Human Rights

Australia is strongly committed to advancing the global protection and promotion of human rights through our bilateral relationships, development assistance and engagement with civil society, as well as our engagement in regional and multilateral fora.

Australia engages Nepal on a range of human rights issues, including refugees, transitional justice, human trafficking, and modern slavery, and LGBTQIA+ issues. Australia is Co-Chair of the Refugee Core Group in Nepal, which leads international community cooperation and advocacy.

We encourage Nepal to ratify the 1951 Convention Relating to the Status of Refugees (including the 1967 Protocol) and to develop national asylum legislation.