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Date: May 12, 2009 Highlights

• The ongoing politburo meeting of the Unified CPN-Maoist - held at Administrative Staff College, Jawalakhel, Lalitpur - on Monday decided to intensify its “peaceful agitation”.

• India is blaming the growing gap between the Maoists' words and action, saying it caused the former guerrillas' own allies and major political parties to distrust them, and which precipitated the fall of the Prachanda government in Nepal last week.

• The European Union’s heads of mission on Monday expressed concern about the stalled peace process following the resignation of Prime Minister Pushpa Kamal Dahal ‘Prachanda’ and the revelation of his controversial videotape.

• Leaders of the Nepali Congress and the CPN-UML on Monday intensified legal and political consultations to form a new coalition government.

• The controversy over the number of PLA combatants following the release of a video tape of Prime Minister Pushpa Kamal Dahal's speech has alarmed the World Bank (WB). A WB official told the Post on Monday that the bank would seek a clarification on the exact number of Maoist combatants.

• Investors of Sunrise Bank are smelling a rat in the share allotment process handling by issue manager NMB Bank Ltd after discovering that chanawallahs and chat sellers have been using submitted applications as paper cones for their eatables four days after the Initial Public Offering (IPO) closed.

• Chinese exports fell 22.6 percent in April from a year earlier in the sixth straight monthly decline, state media said Tuesday, as the global financial crisis continued to take its toll.

• The Nepal Stock Exchange (NEPSE) index declined by 1.25 points on Monday after an impressive rise of almost 7 points on Sunday.

• The global economic crisis, which has led to millions of job losses worldwide, will not have a severe impact on Nepal´s tourism industry, as had been expected by many, says a snap survey conducted by Nepal Tourism Board (NTB).

• A senior Nepali Congress leader has claimed that they have secured the number of seats needed to form a coalition government under the leadership of CPN-UML, the third largest party in the Constituent Assembly.

• The Unified CPN (Maoist) has decided to escalate street agitation against the President's 'unconstitutional' step overturning the government decision to sack Army Chief Rookmangud Katawal.

• Parliament's Public Account Committee (PAC) has objected to government's excessive expenditure on travel of ministers and government officials, and unjustified transfer of budget from one heading to another.

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• Nearly one week after the resignation of Nepal's Maoist Prime Minister, the international donor community is questioning the effectiveness of continuing to fund Nepal's unstable peace process.

• You must have often wondered if it is worth being an artist in Nepal. • Donors have turned down the caretaker government's request to hold the

postponed Nepal Development Forum (NDF) meeting immediately after a new government is formed.

• J.D. Apparels Garment, one of the biggest companies to import knitted fabric to the leading business house in the U.S., has been shut down from Monday, all thanks to global economic crisis.

• Araniko Highway, the only highway that links the country to China, has been obstructed for last six days. Locals of Panchkhal VDC have been obstructing the road protesting the death of two youths in a road mishap.

BANKING / ECONOMY:

Recession to minimally impact tourism

The global economic crisis, which has led to millions of job losses worldwide, will not have a severe impact on Nepal´s tourism industry, as had been expected by many, says a snap survey conducted by Nepal Tourism Board (NTB). The findings were released at a time when the tourism industry has seen mixed results in tourist inflows, with declines recorded in the first three months of 2009 and a sudden increment recorded in April. Although the survey says that tourist arrivals will slightly decline this year and that the mood is not very positive, it adds, "business is better than what many have expected." Pessimism had shrouded this sector since the second half of last year, when the global financial crisis took its toll on households worldwide. Gloom continued to dominate the Nepali tourism industry too through the first quarter of 2009, with Nepal´s hotels reporting a 20 percent decline in occupancy rates and many travel and tour companies complaining about pre-bookings cancellations. In that period, the number of tourists coming to Nepal also declined by 17 percent. However, the survey has found that tourism-related businesses were in better shape in March this year than in February, with 13 percent of the respondents reporting that businesses had “improved a lot” in March and another 37 percent saying businesses had “somewhat improved.” But when asked whether business conditions would improve this year, only 26 percent of respondents answered "yes," 35 percent said "no," while 39 percent said they were "not sure."

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The survey also shows that one-star, two-star, three-star and tourist-class hotels performed better than four- and five-star hotels, indicating a shortage of high-end tourists. Likewise, tour operators seem to be in a comparatively better position than trekking agencies -- 72 percent of trekking agencies said business was lower this year, while only 53 percent of tour operators said that business was worse this year. Trekking agencies are less optimistic because they have seen a decline in the number of European and American tourists, who are more adventurous and who constitute their most lucrative clients. The survey, however, notes that an increment in tourist arrivals will depend on the country´s ability to promote Nepal as a value-for-money destination, just as Thailand has. The survey also suggests that the government prepare short- and medium-term measures keeping in mind the Visit Nepal Year 2011 plan. And "Tourism may not bounce back by 2011," states the survey, warning that the government´s target of attraction one million tourists in that year may remain unfulfilled if concrete measures are not taken now. Nepal currently attracts only around 500,000 tourists a year, but this sector provides employment to around 240,000 people and contributes around three percent of the GDP. The survey was conducted among 95 tourism-related institutions, including hotels, tour operators, trekking agencies and airlines

Source: The Himalayan Times Date: 05/12/2009 BUSINESS:

Petro pipeline talks from Wednesday

Nepal and India are set to hold bilateral negotiations on constructing 40-kilometer petroleum pipeline between Amlekhgunj and Raxaul from Wednesday in Kathmandu. The meeting will last for two days, during which officials from Nepal Oil Corporation (NOC) and Indian Oil Corporation (IOC) will finalize the capital, technical and institutional structure of a joint venture company that they will form to execute the project. NOC chief Digambhar Jha told myrepublica.com that the IOC team is arriving here later Tuesday and the two sides will negotiate the structure and modus operandi of the JV company and also the technicalities of construction and operations of the pipeline. Going by a three-month old cabinet decision, the NOC has already proposed IOC to

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join into the project with 30 percent share investment. It has also forwarded a draft of an agreement that will govern the JV and also the operations of the pipeline. Government officials, however, expressed skepticism over the start of the negotiations on the project, which they considered ´politically sensitive´ and need government´s approval at every step, at a time of present political void. Jha, however, said it was being initiated as per the decision of the cabinet. "Besides, the need of the pipeline has become so stark, I do not think any government will refute it in the present context," he said. Amlekhgunj-Raxaul pipeline is a decade-old project that was first mooted by the IOC in 1995. Although the two governments have principally agreed on it and signed agreements to pursue it repeatedly, Nepal has lingered the project due to the lack of clear-cut vision from political leaders. A technical study conducted by USAID in 2006, meanwhile, has tagged the project as financially viable. It has estimated that the cost of constructing the pipeline could stand at about Rs 1 billion. Given the land acquisition and other factors, NOC says the project cost could actually go as high as Rs 2 billion. However, technical details and cost of the project would be known only when the JV develops a detailed project report.

Source: The Himalayan Times Date: 05/12/2009

NEPALI PAINTING WORTH 20 MILLION!

KATHMANDU, May 11 - You must have often wondered if it is worth being an artist in Nepal. But this question never occurred to Jit Bahadur Rayamajhi. Rayamajhi, a senior artist who is also the first person in Nepal to get an M.A. degree in Fine Arts from Banaras has given Nepali art value as a collector's item. If the painting made by this veteran artist is sold at the quoted price, he'll be a millionaire with Rs. 20 millions added to his bank balance.

"The reason behind putting Rs. 20 million tag on my painting is because I want people to realise the aesthetic value of art which can't be translated into money. It took me over 45 days to complete this painting. I had to work very hard, both mentally and physically," says Rayamajhi. He says an artist has every right to set a price to his creation.

Anyone could enjoy the aesthetic pleasure of the variety of art displayed on a bright white wall in Nepal Art Council gallery at Babarmahal. The open art exhibition-cum-competition inaugurated by Tourism and Civil Aviation Minister Hisila Yami ran

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through May 4-10. Hundreds flocked to the exhibition to bask in the artistic pleasure with people of different age groups seen gazing at the delightful creations.

S.K. Shrestha, the programme coordinator and editor-in-chief of Alfresco magazine said, "The main purpose of the exhibition was to provide young artists the support of established ones so that their hidden talents could be brought to the fore."

The exhibition, categorised into different groups, had 32 sketches of senior artists in the first row. These works of art were abstract and philosophical.

Group 'A' was represented by young artists. "Though made by emerging artists, some of the sketches are mind-blowing," said Sabitri Shrestha who came to see the exhibition from Ganeshthan.

Similarly, Group 'B' consisted of portraits of intermediate students of Fine Art college, in addition to plus two and A-level students of different colleges inside the valley. Group 'C' had works of school students.

Those who bagged top honours at the end of the exhibition were: Kishwor Nakarmi from Group A, Madan Shrestha from Group B and Suman Astani from Group C.

A - Level student Sujan Ghimire pointing to his sketch said "In my picture I have presented people's poverty, hunger and depression." Ayush Shrestha, a seven grader, said "I love to sketch in my spare time. But had I not been supported by my parents, my sketch would not be here today"

In the exhibition, the least a picture was going for was Rs. 300. Altogether, 171 sketches were up for exhibit. "These paintings are not based on a fixed topic. Artists are expressing their art without any boundary," says Deepa Bishwokarma, regional coordinator of the programme.

Source: ekantipur.com

LEADING GARMENT COMPANY SHUT DOWN IN BIRATNAGAR

BIRATNAGAR, May 12 - J.D. Apparels Garment, one of the biggest companies to import knitted fabric to the leading business house in the U.S., has been shut down from Monday, all thanks to global economic crisis.

With the closure of the garment industry along with its washing, pasting and embroidery plants located in Katahari VDC of Morang district, 1,277 workers have lost their jobs.

The company management said that they chose to close it after GAP Inc., a leading garment company in the U.S. that had been receiving its production from its

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inception, wrote that the latter was no longer ordering its production due to global recession recently.

The garment had been operating with a major reduction in production from the last three years owing to constant strikes, bandas and load shedding. During this period, the company had also been forced to lay off many employees. "After we received no orders from GAP, our US-based supplier company, we're forced to down the shutter," said Manager Bidur Pokharel. "Continuous bandas, strikes and prolonged load shedding in the country are also the other factors that led to the closure eventually."

According to him, they also wrote to Department of Labour for the permission to close the garment and to give retirement to 35 permanent employees, besides other staff.

Source: ekantipur.com

MARKET:

NEPSE SLIDES BY 1.25PTS

KATHMANDU, May 12 - The Nepal Stock Exchange (NEPSE) index declined by 1.25 points on Monday after an impressive rise of almost 7 points on Sunday. The sensitive index too dropped.

The banking, trading and insurance sub-indices witnessed a decline of 3.68, 3.94 and 3.42 percent respectively.

Monday saw a total turnover of Rs. 53.57 million with 66,674 shares being traded. About 65 scripts of various companies were traded on NEPSE.

The top gainers in Monday's trading include Machhapu-chchhre Bank, Capital Merchant Bank and Finance, Nepal Development and Employment Promotion Bank, Lord Buddha Financial Institution and Prabhu Finance Company.

Meanwhile, the biggest losers on Monday were Everest Bank, Laxmi Bank; Triveni Bikas Bank, Gandaki Bikas Bank and Nepal Credit and Commerce Bank. In terms of total turnover, Standard Chartered Bank stood on top with Rs. 6.087 million followed by Nabil Bank, Bishal Bazaar Company, Lumbini Bank and the Bank of Kathmandu.

Among the banks that witnessed a decline in their share prices were the Bank of Kathmandu, Everest Bank, Global Bank, Himalayan Bank, Laxmi Bank, Nabil Bank, Nepal Bangladesh Bank, Nepal Credit and Commerce Bank, NMB Bank and Siddhartha Bank. The price of Everest Bank's fell by 135 points. Meanwhile, Standard

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Chartered Bank, Machhapuch- chhre Bank, Lumbini Bank, Nepal Industrial & Co Bank and Nepal SBI Bank saw their share prices go up.

Source: ekantipur.com

Only road link to China remains cut

Raj Kumar Parajuli

KAVRE: Araniko Highway, the only highway that links the country to China, has been obstructed for last six days. Locals of Panchkhal VDC have been obstructing the road protesting the death of two youths in a road mishap.

Badri Subedi (33) and Murari Adhikari (32) of Panchkhal VDC-4 had died on the spot when a bus hit their motorbike before six days. Manaram Sapkota, who was also on the bike, has sustained serious injury in his head and is undergong treatment at Norvic Hospital, Kathmandu. According to eyewitnesses, the bus had dragged the trio for more than 30 feet. Following the incident, the locals had brought the bus at Tamaghat and burnt it. The locals have been obstructing the highway by felling trees at Panchkhal bazaar and near the local post.

Organising a press meet on the highway yesterday, the struggle committee had demanded the government to punish the driver and provide compensation to the victims’ family. “We will close the highway indefinitely if our demands are not addressed on time,” they said. However, the locals have been allowing ambulance and vehicles of tourists and mediapersons to ply.

The struggle committee has demanded Rs 1 million compensation to each family of the deceased, compensation for the damaged motorcycle, free treatment for the injured, life imprisonment to driver Sunil Basnet and cancellation of his driving licence. A marathon talk held between the representatives of Araniko Highway Transport Entrepreneurs Committee and the local administrations of Kavre and Sindhupalchowk to resolve the issue had ended inconclusively on Friday.

Shuva Adhikary, president of the struggle committee, said the talk couldn’t reach to a decision, as the entrepreneurs’ committee were willing to discuss only on their issues. “We will sit for talks only if they are ready to give priority to our demands,” he added. The struggle committee has threatened to launch stern programmes if their demands are not addressed by Tuesday. The committee provided Rs 100,000 for the treatment of victim on Wednesday. Meanwhile, locals today obstructed traffic at Pakucha in Dhulikhel-1, saying that the vehicles were fleecing them. They also took over a dozen vehicles for charging exorbitant fares.

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Source : THT Online Last Updated : 2009-04-19 China exports down 22.6% in April: state media Agence France Presse

BEIJING: Chinese exports fell 22.6 percent in April from a year earlier in the sixth straight monthly decline, state media said Tuesday, as the global financial crisis continued to take its toll. Exports from the world's third-largest economy totalled 91.94 billion dollars last month, the Xinhua news agency reported, citing figures from the customs bureau. The drop was larger than that recorded in March, despite hopes that China's exports performance would start to improve. Commerce ministry spokesman Yao Jian said in April that China was confident exports would improve "on the basis of the gradual recovery seen in the first quarter." Exports in March fell by 17.1 percent year-on-year, narrowing from a 25.7 percent dive in February, the worst slump in more than a decade. China's massive export machine -- on which the nation's economy depends -- has been hit hard since late last year as the global financial crisis has hurt overseas demand. The slowdown has led to the closure of thousands of exporting factories in the country's manufacturing heartlands. Chinese authorities in November unveiled a four trillion Yuan (580 billion dollar) stimulus package to combat the crisis and to stimulate domestic demand.

Source: THT Online Last Updated : 2009-05-12 POLICIES:

DONORS WANT NDF DEFERRED TILL SEPT

KATHMANDU, May 12 - Donors have turned down the caretaker government's request to hold the postponed Nepal Development Forum (NDF) meeting immediately after a new government is formed.

At a meeting with caretaker Prime Minister Pushpa Kamal Dahal on Monday, the international benefactors said that the NDF meeting should be held after some months instead of right after a new administration takes over.

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According to a senior official of an influential donor agency, the donors said that it would be better to hold the NDF in September or October so that a high level of participation could be attained.

Representatives from major donor agencies and countries including the World Bank, the Asian Development Bank, the United States, Germany, France, Norway, the United Kingdom and Norway participated in the gathering.

The last meeting of the cabinet had decided to defer the NDF meet previously scheduled to be held on May 12-14.

Finance Minister Dr. Baburam Bhattarai, who was also present at the meeting, told the media that the next government would hold the NDF in September or October. He, however, claimed that the donors were in favour of holding the NDF at the earliest.

Bhattarai said that the donors appreciated the Development Strategy Paper, foreign aid policies and other policy papers prepared by the government to be present at the NDF meeting.

"We also requested them to continue their support to peace building in Nepal as peace and development are complementary," he added.

Kapildev Ghimire, joint secretary of the Ministry of Finance who oversees the foreign aid department, said that there had been no formal talks on a date for the next NDF.

He added that the finance minister had informed the donors that the conference had been cancelled because of a "constitutional crisis" that erupted after President Ram Baran Yadav overruled the cabinet's decision to remove Chief of Army Staff Rookmangud Katawal.

Source: ekantipur.com

World Bank wants Maoist clarification By Prithvi man shrestha KATHMANDU, May 12 - The controversy over the number of PLA combatants following the release of a video tape of Prime Minister Pushpa Kamal Dahal's speech has alarmed the World Bank (WB). A WB official told the Post on Monday that the bank would seek a clarification on the exact number of Maoist combatants before it reimburses the government for their salaries.

The WB had promised approximately Rs. 3.95 billion (US$ 50 million) as grant under the emergency peace support programme (EPSP), part of which is being used to pay the salaries of 19,602 PLA fighters housed in 28 cantonments across the country.

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“We have not given the government any funds for the salaries so far, but we will need clarification before we make reimbursement,” said Rajeeb Upadhya, external affairs specialist at World Bank Nepal.

According to the Ministry of Peace and Reconstruction, through which Maoist combatants are paid, Rs. 1.7 billion for allowance and Rs. 383 million have been spent on allowance and food expenses respectively for PLA combatants.

“We are now in the process of getting this amount reimbursed from the World Bank,” Hari Kumar Shrestha, the ministry spokesman said.

Officials from donor agencies were invited by Prime Minister Pushpa Kamal Dahal at his residence on Monday to explain his party’s position on a controversial videotate and the postponement of Nepal Development Forum (NDF). According to officials, they asked Dahal about the authenticity of the video tape.

As per the project agreement signed between the government and WB a year ago, the bank would fund expenses related to salaries of all the combatants, benefits for families of those killed during the decade-long conflict and for building institutional structures in support of the peace process.

The bank will reimburse the government as per the statement of expenses submitted by the government. The bank was to begin reimbursements from October 2008 under the 18-month project.

Source: Kantipur Online Posted on: 2009-05-11 POLITICS: Maoists to intensify street protest The ongoing politburo meeting of the Unified CPN-Maoist - held at Administrative Staff College, Jawalakhel, Lalitpur - on Monday decided to intensify its “peaceful agitation”. The venue will shift from the legislative-parliament to the streets. The ex-rebels are up in arms against President Dr Ram Baran Yadav for the latter’s “unconstitutional move” of reinstating Chief of Army Staff (CoAS) Rookmangud Katawal. Prime Minister Pushpa Kamal Dahal ‘Prachanda’ sacked General Katawal on May 3 on charges of defying the government’s orders. However, Prachanda had to step down the very next day after the President overruled the cabinet’s decision. The Maoists will hold rallies in Biratnagar, Kathmandu, Nepalgunj and Dhangadhi on May 17 to drum up nationwide support for its tirade against the President. “We will continue with our stir. We will now take to the streets till the President corrects his move,” said Dina Nath Sharma, spokesperson, Unified CPN-Maoist. He ruled out the formation of a new government till the President revokes his decision. Asked whether the Maoists would continue to obstruct the House, Sharma said: “If

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attempts are being made to form the next government from outside the parliament, then it is unacceptable to us.” Quoting party chairman Prachanda, the spokesperson said that the nation’s polity had been polarised into democratic and patriotic forces — represented by the Maoists — and those opposed to it that had been championed by other parliamentary parties. Devendra Poudel, one of the politburo members, told The Himalayan Times, that a majority of the speakers stressed the need to take “consolidated steps” in view of the repercussions. The party’s immediate strategy was discussed at length. Emphasis is being laid on strengthening the organisation. The meeting also reviewed the performance of the Maoist-led eight-month-old government. “We concluded that we could not perform well as per the people’s expectations due to our own inexperience. But it definitely did well in some areas, which will have far-reaching impact in the society,” said Poudel. It is learnt that discussions were held whether it was feasible to build a new Nepal on federal democratic line. Talks also centred on the party’s seventh general convention. Prachanda is expected to come up with a concrete plan tomorrow. Source: The Himalayan Times Date: 05/12/2009 EU heads of mission call on Koirala

The European Union’s heads of mission on Monday expressed concern about the stalled peace process following the resignation of Prime Minister Pushpa Kamal Dahal ‘Prachanda’ and the revelation of his controversial videotape.

The team on Monday called on Nepali Congress (NC) president Girija Prasad Koirala and discussed about the alleged arms trafficking in the country.

“The tape revealed that the Maoists had a plan to buy weapons by using the money that was allocated for their combatants. This might have led to the escalation of arms trafficking in the country,” a source close to Koirala told The Himalayan Times about the topic of discussion in the meeting. “It is a matter of concern that the leader of a party (Unified CPN-Maoist), which was a part of the government at that time, spoke in such a manner,” added the source about the thrust of the conversation. “The EU heads took exception to the activities of the Maoist cadres such as forming the parallel government and intimidating cadres of other parties to leave their districts while their party was still in the government,” said Dr Suresh Chalise, press advisor to Koirala. The visitors laid stress on persisting with the peace process on the basis of political consensus. Koirala, in turn, expressed confidence that the new coalition would be led by the CPN-UML.

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“There should be a high-level mechanism, represented by top leaders of major parties, including Maoist chairman Prachanda and UML president Jhala Nath Khanal, to run the new government, coordinate the peace process and the process of drafting the new constitution on time,” Dr Chalise quoted Koirala as saying. The veteran NC leader recalled the onset of the peace process. He said that he had initiated it despite repeated warnings from various quarters not to join hands with the Maoists. “I have seen the tape. I deeply regret that the Maoists used the peace process as a strategy to fulfil their vested interests. I’m in talks with the Maoist leaders. I hope that the peace process will reach a logical conclusion,” Koirala told the dignitaries. There are six heads of EU mission in Nepal. Five of them took part in today’s meeting.

PM allays diplomats’, donors’ fears

KATHMANDU: Foreign diplomats and representatives of various donor countries on Monday called on Prime Minister Pushpa Kamal Dahal and expressed concern about the political deadlock following his resignation and revelations of his controversial videotape. Prachanda and Finance Minister Dr Baburam Bhattarai assured the delegates that they were committed to establish peace and democracy. But the duo had a pre-condition: The Maoists would be involved in the process of forming the new government only after the President revoked his decision. The PM is believed to have accused CoAS Katawal for indulging in rumour-mongering and the videotape expose. He felt that the entire exercise was out of content. “We made it clear to them about the then structure of the PLA combatants. All the diplomats and delegates were satisfied with our clarification on the issue,” said Dr Bhattarai after the meeting. Twenty-five representatives, including those from the World Bank, Asian Development Bank, DFID, UNDP, US and UK and diplomatic missions, attended the meeting.

Source: The Himalayan Times Date: 05/12/2009

NC, UML in political pow-wows

Leaders of the Nepali Congress and the CPN-UML on Monday intensified legal and political consultations to form a new coalition government. The NC and UML leaders jointly held discussions with more than five constitutional experts about the President’s decision to reinstate Chief of Army Staff(CoAS), Rookmandud Katawal, and formation of the new government. Legal experts Radhe Shyam Adhikari, Tika Ram Bhattarai, Dr Bhimarjun Acharya, Agni Kharel, Madhav Basnet and Nilamber Acharya told the leaders that the

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President’s move was constitutional. Speaking to this daily, advocate Adhikari said the leaders of both the parties asked them the legal and constitutional questions related to the President’s move on the army chief issue. “We told them that the President’s decision was constitutional,” he added. Meanwhile, UML leaders today held talks with leaders of the Tarai Madhes Democratic Party about the formation of the new coalition. Following the meeting, Jitendra Sonal, joint general secretary of the TMDP, said his party decided to support the new coalition led by the UML. However, some fringe parties today met leaders of UCPN-Maoist and expressed their commitment to support the party to form the new government, according to UCPN-M leader Posta Bahadur Bogati. The NC and the UML also held intra-party talks on the formation of the new government

Source: The Himalayan Times Date: 05/12/2009

NC CLAIMS ENOUGH SEATS SECURED FOR UML-LED GOVT

A senior Nepali Congress leader has claimed that they have secured the number of seats needed to form a coalition government under the leadership of CPN-UML, the third largest party in the Constituent Assembly.

NC vice-president Ram Chandra Poudel said at a program organized in the capital Monday that the government under UML will have support from both his party and Madhesi Janadhikar Forum and that "it will be formed soon".

However, even if the seats of the three parties - UML, NC and MJF - are combined, it still falls short of the 301 seats necessary in the 601-seat Constituent Assembly to form a majority government.

On Sunday, President Dr Ram Baran Yadav called on all political parties to form a majority government after attempts to reach consensus to form a unity government failed.

The senior NC leader further said that since the attempts to form a “government of consensus" under the leadership of UML is to establish sustainable peace in the country, "Maoists should also extend support to the government."

However, the Maoists have now lately started to say that there's possibility that the party might again try to form a new government under its leadership despite the fact that it recently resigned from the current government reasoning that other political parties are incapable of mustering up enough support to form a new government.

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On the other hand, MJF, TMDP and Sadbhavana Party - who have flocked under United Madhesi Democratic Front - have renewed their demand for the implementation of the eight-point agreement reached with Madhesi parties.

One of the key demands of the three Madhesh centric parties is to declare the entire Madhesh as one state. They have said that its support for the new government will hinge on its ability to fulfill their demands.

Criticizing the Maoists for disrupting the House proceedings which has delayed the formation of new government, Poudel urged the former rebel party to open the doors for the formation of new government.

"If the Maoists continue to disrupt parliamentary proceedings then we will have to start discussion on the alternatives available for the formation of the new government," Poudel said.

Maoists lawmakers have vowed to obstruct House proceedings until President Yadav rectifies his decision to reinstate the Army chief by overturning the government's decision.

On this, Poudel said that this demand of Maoists would only invite political and constitutional crisis in the country.

nepalnews.com

MAOISTS DECIDE TO INTENSIFY STIR

The Unified CPN (Maoist) has decided to escalate street agitation against the President's 'unconstitutional' step overturning the government decision to sack army Chief Rookmangud Katawal.

A meeting of the Maoist politburo took this decision Monday. Rallies and mass meetings would be organized across the country as part of the protest programme.

Likewise, the party has also arrived at the conclusion that new "government with civilian supremacy" cannot be formed unless the current "constitutional crisis" is resolved.

Earlier today, during a meeting with representatives of donor agencies and UNMIN officials, caretaker Prime Minister and party chairman Pushpa Kamal Dahal reiterated that his party was not in a mood to relent unless the President's step is reserved.

nepalnews.com

PAC OBJECTS TO EXCESSIVE EXPENDITURE ON TRAVELS

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Parliament's Public Account Committee (PAC) has objected to government's excessive expenditure on travel of ministers and government officials, and unjustified transfer of budget from one heading to another.

PAC members during Sunday’s meeting said the government misappropriated massive funds allocated under the miscellaneous heading of the current fiscal year.

In their preliminary discussion on the finance ministry’s report, PAC members said most funds were spent on foreign travels. Members said the report also indicated that government distributed certain amount to some District Development Committees without consulting local development ministry.

Kathmandu and Gorkha DDCs received such budgets.

Against the initial allocation of Rs 375 million under miscellaneous, the government spent Rs 4.06 billion under that heading, the finance ministry document reads.

It further says, government released additional Rs 1.10 billion for DDCs by transferring budget allocated for other purposes. Kathmandu received Rs 63.7 million and Gorkha, the home district of finance minister, received Rs 57 million additional budget.

nepalnews.com

RESIGNED NEPAL PM ASSURES MULTINATIONAL DONORS

Nearly one week after the resignation of Nepal's Maoist Prime Minister, the international donor community is questioning the effectiveness of continuing to fund Nepal's unstable peace process. Nepal's recently resigned prime minister assured multinational donors and international envoys from 16 countries that he is still committed to Nepal's peace process.

Speaking to representatives from the World Bank and Asian Development Bank and Envoys from the United States, Germany, France, Britain, Norway, China and India, caretaker Prime Minister Pushpa Kamal Dahal, known as Prachanda, also addressed concerns over a recently leaked video tape. In the tape, Prime Minister Dahal is seen boasting to Maoist cadres that he would capture state power once the Maoist rebel forces are integrated into the Nepal army. He told donors he was trying to "boost the morale of the cadres" at the time the video was recorded, but said he is now fully committed to the peace process. Nepal remains in political deadlock since he resigned last week after his call to oust

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the head of the Nepali Army was revoked by the president. As a result of the political instability, The Nepal Development Forum (NDF) - where donors meet to determine the country's aid stream - has been postponed from this week to September. The chief the U.N. Mission in Nepal Karin Landgren, also at today's meeting, says the donor community discussed whether they should continue to put significant resources into the country. She says the mission has more funding in support of the peace process than it can actually disperse mostly due to Nepal's ongoing security issues. "There are several reasons for bottlenecks in the distribution of funding, but certainly donors are feeling that this is backed up and this probably is not the moment to put more resources in if they cannot be dispersed," said Landgren. Nepal, situated between two of the world's growing economies India and China, relies heavily on foreign aid for development. Source: http://www.voanews.com INDIA CONCERNED OVER MAOIST DOUBLESPEAK IN NEPAL

India is blaming the growing gap between the Maoists' words and action, saying it caused the former guerrillas' own allies and major political parties to distrust them, and which precipitated the fall of the Prachanda government in Nepal last week.

Stung by Nepal's Maoist caretaker Prime Minister Pushpa Kamal Dahal Prachanda's allegation that India bumbled in its Nepal policy by failing to rush a high-level envoy to defuse the row over the army chief, knowledgeable sources Monday said "India cannot be blamed for everything that happens in Nepal".

India's The Hindu daily Monday carried a report in which the Maoist supremo said he had sought the presence of a senior envoy in Kathmandu to help "forge an eleventh hour political consensus" after his party was at loggerheads with its own allies over its wish to fire the chief of the Nepal Army, Gen Rookmangud Katawal.

Prachanda told the daily he had asked for the presence of Indian Foreign Secretary Shivshankar Menon in Nepal for consultations but it was not heeded as India remained preoccupied with general elections.

According to these sources, Prachanda had had direct talks with the "highest authorities" in the Indian government and was asked not to precipitate a crisis. However, he chose to ignore the advice, though it was reinforced by other foreign governments, including Nepal's northern neighbor China, and all other major Nepali parties, including his own allies.

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Also, the request to India for an envoy came after his party had fired the army chief and whipped up the row, a fact that he has glossed over.

New Delhi is disturbed by the appearance of a video tape in which Prachanda contradicts his public commitment to peace, says he grossly exaggerated the number of people in his army to the UN and would continue to buy arms even after signing a peace pact.

Though Prachanda tried to downplay the incident by saying the tape was made before the election in April 2008, India has taken note of the fact that his assertions came after his troops were verified by the UN, more than a year after he signed the peace pact.

Also, during his trip to New York to attend the UN General Assembly last year and in his meetings with UN officials as well as foreign envoys, Prachanda had admitted that it would be impossible to induct the nearly 19,000-strong Maoist army into the Nepal Army.

He had said that while about 4,000 guerrilla fighters could make it to the state army, the rest would have to be rehabilitated.

However, he made totally different promises to the combatants, promising all of them would get into the army.

New Delhi feels it indicates that either he is not in control or is fooling people intentionally.

Prachanda's doublespeak on India has also irked New Delhi. While saying he wants good relations with both India and China, Prachanda has allowed his party to step up anti-India propaganda, making New Delhi disbelieve his sincerity.

India is also not happy about the Maoists' threat to disrupt parliament and feels it would not get them any sympathy.

Nepal Maoists vow to prevent formation of new government The Communist Party of Nepal (Maoist) Monday vowed to prevent the formation of a new government, a move that is expected to prolong the political crisis in the Himalayan nation.

The Maoist statement came a day after President Ram Baran Yadav asked the constituent assembly, which also acts as an interim legislature, to form a new government on a majority vote.

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Nepal has been without an effective government since the Maoist-led government collapsed on 4 May over power struggle with the president, following the sacking of army Chief Rookmangud Katuwal by the government.

On Monday morning, Maoist second-in-command Babu Ram Bhattarai said his party would not allow the formation of a new government until the president corrected his 'mistake.'

The Maoists have described reinstatement of Katuwal by the president as a 'constitutional coup.'

'The question is about restoration of civilian supremacy and the president overstepping his constitutional boundaries,' Bhattarai said. 'The new government can only be formed if the president addresses those issues and civilian supremacy is restored by sacking the army chief first.'

On Sunday, Maoist lawmakers disrupted the session of the house which was to have initiated steps to vote in a new government.

Nepali Congress accused Prime Minister Pushpa Kamal Dahal of trying to stay in power despite resigning.

'It is a case where the prime minister who has resigned, is openly asking his party lawmakers to disrupt the house and prevent it from choosing a new government,' Nepali Congress Vice President Ram Chandra Paudel said.

The political crisis erupted after the Maoist-led government sacked army chief Rukmangat Katuwal for insubordination, accusing him of disobeying government orders.

The move, opposed by a majority of the political parties in parliament, led to the president reinstating the army chief, prompting the prime minister to resign.

The crisis is also threatening to derail the two and half year old peace process which ended the decade-long communist insurgency and brought the Maoists into the political mainstream

SOURCE: http://www.monstersandcritics.com

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International Financial and Economic Newsbrief:

Top Stories

§ Bankruptcy filing for GM almost certain, experts say The tasks General Motors would have to accomplish to stay out of bankruptcy are so numerous and overwhelming that it is almost inevitable that the company will file for Chapter 11 bankruptcy, experts said. In addition to shutting down hundreds of dealerships and closing factories, the company would have to persuade the owners of $27 billion in debt to trade it for 10% ownership of a restructured GM. The Associated Press (11 May.)

§ Fed said to have scaled back banks' capital shortfalls After two weeks of negotiations, the Federal Reserve reduced the amount of capital shortfalls facing some of the banks involved in the stress tests. Also, bank executives and U.S. government officials said the Fed's measurement of capital levels is different from and more generous than what was expected. Officials are defending the way they handled the reviews, which were warmly received by markets. The Wall Street Journal (09 May.)

§ U.S. stress tests raise questions about Europe's banks The stress tests of the 19 biggest banks in the U.S. highlighted the fact that there is no comprehensive plan to recapitalize banks in Europe, analysts said. Giorgio Questa of Cass Business School said he wants similar tests done on Europe's banks, both to eliminate uncertainty and "to establish the principle that rules are there to be checked." CNBC (09 May.)

§ Regulatory safety net fueled risk taking, Fed official says The U.S. government's policies protecting the financial industry should be abandoned because they encouraged executives to take on excessive risk, in effect causing the financial crisis, said Jeffrey Lacker, president of the Federal Reserve Bank of Richmond in Virginia. "While deployment of the financial safety net is often viewed as an essential response to the financial crisis, I believe we need to give serious thought to the extent to which the safety net was actually a significant cause of the crisis," he said. Reuters (11 May.)

§ Health industry groups promise $2 trillion in savings Some of the most influential organizations in the U.S. health care industry sent a letter to President Barack Obama promising to slow the rate at which health care costs are increasing and implement reforms that will save $2 trillion during the next 10 years. Obama plans to talk about the letter at a White House event Monday. Los Angeles Times (11 May.)

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§ AIG's Project Destiny shows recovery as long-term plan U.S. government officials, American International Group executives and market participants had hoped that the insurer's turnaround would be quick. An AIG memo, however, shows that its executives and government owners are expecting the restructuring to take some time. Called Project Destiny, the initiative includes a 45-day review of the company's businesses. From there, AIG executives plan to outline a multiyear plan for getting the company back on its feet. The Wall Street Journal (11 May.)

§ Sallie Mae changes tune with proposal closer to Obama's Student-loan giant Sallie Mae reversed its longtime opposition to eliminating subsidies for student loans and offered a proposal that comes fairly close to revisions proposed by U.S. President Barack Obama. The firm wants the government to own the loans but pay private companies to service and originate them. The Washington Post (11 May.)

Market Activity

§ Asian markets mixed as Toyota leads sell-off in auto shares Although shares of Toyota plunged Monday on news of its first annual loss, Tokyo's Nikkei 225 managed to rise 0.2%. Meanwhile, the broader Topix climbed 0.6%, Hong Kong's Hang Seng Index fell 1.7% and China's Shanghai Composite dropped 1.8%. MarketWatch (11 May.)

§ Asian bond markets appear to be recovering The Asian bond market is growing increasingly strong on healthy regional economic figures as well as positive data from the U.S. Australia's central bank held its cash interest rate at 3% at its most recent meeting. Kookmin Bank priced Asia's first covered bond last week, raising $1 billion. While it was the only primary issue, an active secondary market excited traders. IFR Asia (09 May.)

§ Convertible-bond market becomes more attractive to U.K. firms Oversubscribed convertible-bond issues, along with tight credit markets, have made convertible bonds increasingly attractive to British companies. In the first four months of this year, U.K. companies issued five times as much in convertible bonds in terms of value than they did during the same period last year. European issues more than doubled over the same period. "The market is definitely open for U.K. corporates of better quality," said Jamie Graham, head of international convertibles at Jefferies. "We are back to very good times. We are getting attractive prices." Financial Times (10 May.)

§ Berkshire Hathaway posts first quarterly loss since 2001 Insurance conglomerate Berkshire Hathaway reported a $1.5 billion loss in the first quarter, down from a $940 million profit in the same quarter last year.

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Berkshire has not suffered a loss of this magnitude since it was hit with mammoth claims after the Sept. 11, 2001, terrorist attacks on the U.S. The Wall Street Journal (09 May.)

Economics

§ Survey: Growth to return to U.S. economy in second half Leading forecasters said in a survey that they expect the U.S. economy to start growing in the third quarter of this year. They also predicted that the unemployment rate will peak in the first three months of next year. "The past month provided fresh evidence the decline in business activity is starting to moderate, buttressing consensus expectations that the economy will emerge from recession in the second half of this year," according to the Blue Chip Economic Indicators newsletter in which the survey was published. Reuters (10 May.)

§ Consumer inflation in China posts third monthly decline China's consumer-price index, which is greatly influenced by the cost of food, declined 1.5% in April, the National Statistics Bureau said, after a 1.2% drop in March. A major factor in the drop was a shortage of pigs because of a disease outbreak that killed hundreds of thousands of pigs, analysts said. Forbes/The Associated Press (10 May.)

§ Growth in Middle East to fall this year, IMF says Economic growth in the 22-nation region of the Middle East and North Africa is forecast to decline to 2.6% this year, down significantly from last year's 5.8%, the International Monetary Fund said. The region will get through the financial crisis in better condition than most other areas because of "prudent financial and economic management," said Masood Ahmed, Mideast and Central Asia department director at the IMF. The New York Times/The Associated Press (10 May.)

§ U.K. economy to face more setbacks, research suggests Research from two groups challenges the thought that the British economy has put the worst of the recession behind it. The Chartered Institute of Personnel and Development said unemployment is likely to increase more in the coming months than previously expected. The British Retail Consortium warned that consumer confidence is still in a downturn. The Independent (London) (11 May.)

Geopolitical/Regulatory

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§ Obama administration to get tough with antitrust rules Reversing the Bush administration's approach that favored big corporations, the Obama administration is preparing to aggressively enforce antitrust laws. Christine Varney, head of the U.S. Justice Department's antitrust division, is scheduled to announce policy changes in a speech Monday. The New York Times (11 May.)

§ BoE's King to say quantitative easing starting to work Bank of England Governor Mervyn King is expected to explain this week how the bank's quantitative-easing efforts are working as more money is flowing through the economy. However, he will also warn that more stimulus is needed to prevent the economy from falling back into crisis. The comments are expected to defend the bank's recent decision to commit an additional £50 billion to purchasing corporate and government bonds. Telegraph (London) (11 May.)

§ Industry split over EU's rules for securitization The European Parliament recently adopted regulations that include requiring banks to retain 5% of securitized products they originate and sell. Securitization professionals in Europe are split over how the changes will affect the industry. EuroWeek (08 May.)

§ India fights back with inquiry into U.S. trade hurdles Angry about a U.S. investigation into barriers to agricultural exports to India, the Indian Commerce Ministry initiated its own investigation into U.S. "nontariff barriers to Indian exports." Gopal Pillai, the country's commerce secretary, said the U.S. uses "subtle, sophisticated" techniques to block competition from Indian agricultural producers. The Washington Post (08 May.)

§ Japanese minister says stimulus promotes "domestic demand" Critics of Japan's government are increasingly suspicious that its $150 billion economic stimulus has more to do with gaining support in elections later this year than boosting the economy. However, Finance Minister Kaoru Yosano said the measures are essential to steering the nation's economy away from heavy dependence on exports. The Charlotte Observer (N.C.)/The Associated Press (10 May.)