Recent poverty reduction in Nepal has been impressive. Despite the conflict it reduced from 42 per cent. in 1995-96 to 31 per cent. in 2003-04, the latest year for which data are available. A key driver of poverty reduction, according to the World Bank, was better rural infrastructure, in which DFID has invested £42 million since 2000 to build 1,500 km of rural roads and 2,200 bridges. We will invest a further £28 million in rural infrastructure over the next three years. DFID has supported poverty reduction and inclusive economic growth in other ways. In the last five years we have invested £20 million in education and £50 million in health, contributing to a 5 percentage point increase in school enrolments and a halving of child mortality over the last decade. DFID has invested £12 million over the last five years in rural livelihoods programmes which have benefited 550,000 people and lifted 130 thousand people out of poverty. DFID’s investment of £19 million over 10 years in community forestry will help almost one fifth of the population of Nepal to make a better and more sustainable living from forest resources.