In conformity with its objective offunctioning as a local Government, Kathmandu MetropolitanCity (KMC) sought the assistance of the World Bank for thepreparation of a City Development Strategy (CDS) forKathmandu. The various sectoral as well as integratedstrategies presented in this document seem to be anoverwhelming demand on KMC with its limited manpower andmoney. However, a CDS is essential if KMC is to focus itsdevelopment potential. The optimism lies in politicalleadership, enabling environment and necessary support thatwill be rendered to KMC from civil society. The vision forKathmandu stresses the need to develop the valley asadministrative, cultural and tourism center. The strategy tomove towards that vision through improvement in the overallsituation of the KMC, however, is likely to be a long drawnstruggle, yet achievable. The urban planning study stronglyrecommends that Kathmandu should be accorded special statusas a capital city and large polluting and manufacturingindustries should be discouraged immediately and ifpossible, re-location plans be drawn for existing industriesin the near future. Alternatively, service and lightindustries should be promoted to replace the economicopportunities. Urban areas in KMC are not designated by afunctional and occupational structure or contiguity criteriafor managing housing and squatter settlements. Housingproblems are a serious challenge in a situation where ahistorically planned city is fast transforming itself into atrade-cum-service center. On the other hand, it isencouraging to note that despite the absence of cityspecific policies and programs for housing, slums andsquatters, the communities are highly organized and aregradually improving their conditions at their own costs,which show their potential for mobilization in participatoryhome improvement programs.