A leaked video showed Prachanda telling Maoist army commanders that some allocated money would be 'used for revolt' caused further unrest. The present government formed by the Communist Party of Nepal-Unified Marxist-Leninist (UML) and 21 other political parties does not include the Maoists.

'Trust and confidence are at a very low ebb,' said Landgren, calling for the Maoists to show their 'commitment to multi-party democracy'.

'The focus in recent months on competitive politics has drawn attention away from the business of key peace process issues,' she added.

The UN is also discouraging the Indian government from reinstating its military aid to Nepal, which may disrupt the frail peace between the government and the Maoists.

International observers are encouraging the nation's leaders to form a 'political consultative mechanism' that consistently negotiates the outstanding issues. It is hoped that a government of national unity can be formed, which will fortify the peace efforts.

The UN official also drew attention to the culture of impunity that had gripped the nation -- no prosecutions had taken place for the human rights violations committed during the decade-long civil war. In the midst of ongoing political turmoil, Nepal's economy has also become a cause for concern. Remittances, a major proportion of the country's income, have sharply declined.