The failure to redistribute gains of economic growth has been the net cause of civil war that erupted in Nepal in 1995. Bias in favour of urban-based growth attracted resources away from rural areas where86% of the population live. This resulted in a fall in agricultural productivity and exports. This,together with the lack of alternative employment opportunities particularly in rural areas, significantlyincreased poverty and inequality in both political and economic dimensions. This unequal growth pattern forced disadvantaged young people from rural areas to join radical left wing forces (known as Maoists) to fight against the political system and economic policy. The costs of war have been highand rising day by day. The Nepalese economy is on the verge of collapse. International actors (donorcommunity) can play an important role in bringing the country out of the current crisis through the peace process and development assistance