The World Bank says that frequent changes of government in Nepal have hampered efforts to reduce poverty there.

A new Bank report also said that corruption has become widespread in Nepal, and that this discourages investment.

The Bank has warned that the volume of its future loan assistance to Nepal will depend on the stability of the government and its economic reforms.

A BBC correspondent in Khatmandu says the report comes in the wake of growing dissatisfaction among donor countries over Nepal's recent economic performance.

The country depends on foreign aid for more than half of its budget.