PRACHANDA SUB-COMMITTEE MEET UPDATE Kathmandu, 22 May: A dormant Prachanda sub-committee to resolve differences on themes for inclusion in a proposed constitution meets later Tuesday after ruling parties failed to settle differences. New differences and controversies surfaced instead Monday, The same major parties are represented in the sub-committee which meets ahead of scheduled sessions of parliament and constituent assembly (CA) where voting could begin on adoption of a basic law after failure to adopt a constitutuon through consensus. Nnnn REPORTS OF VIOLENCE ON THIRD DAY OF STRIKE UPDATE Kathmandu, 22 May: Reports of violence and arson are pouring in from the caoital and districts on the third and last day of a joint three-day nation-wide bandh of indigenous nationalities and a broad Madeshbadi front of Upendra Yadav. The protestors are demanding ethnic identity based provinces, nnnn CENTRAL FOOD, PETROLEUM SUPPLY COMMITTEE Kathmandu, 22 May: The government on Monday formed the Central Food and Petroleum Supply Committee to ensure smooth supply of daily essential commodities amid increasing incidents of bandas and political tension in the country, The Kathmandu Post reports. The committee led by Commerce Secretary Lal Mani Joshi will oversee supply constraints and ensure food and petroleum supply across the country. A meeting held under the chairmanship of Chief Secretary Madhav Prasad Ghimire took a decision to this effect. The committee comprises of joint-secretaries from Home, Finance and Agriculture ministries, the director general from the Department of Commerce and general managers of the state-owned food and petroleum supplying entities. “The committee will work on ensuring smooth supply of essential household commodities and petroleum products across the country,” said Deepak Subedi, spokesperson for the Ministry of Commerce and Supplies. “If needed, the Home Ministry will arrange police escorting for vehicles ferrying essential commodities like petroleum products, milk, vegetables, fruits, medicine, and oxygen cylinders, among others.” The committee will hold review meeting every day. The government has also directed concerned agencies like the Nepal Oil Corporation and Nepal Food Corporation to ensure smooth supply. NFC has been directed to maintain adequate stock of rice and start prompt supply in all remote areas and the Capital. At present, NFC has 201,000 quintals of rice in its buffer stock. With the rising incidents of strikes and bandas, the Kathmandu Valley is facing a short supply of vegetables and other essential commodities. The shortage has also resulted in a 10-20 percent rise in food prices. Retailers and wholesalers predict an acute shortage food and vegetables if the strike is extended. Vegetable supplies to the Kalimati market have dropped to almost half of the regular supply. nnnn DEVELOPMENT LOAN BEING SOUGHT FROM WB Kathmandu, 22 May: The government is all set request the World Bank (WB) to provide assistance under the Development Policy Loan (DPL) which the latter proposed recently, Prithvi Man Shrestha writes in The Kathmandu Post.. The global lender had urged the government to take DPL worth $100 million for bringing reforms in the financial sector. A Finance Ministry official said the ministry will soon send a formal request to the WB. WB provides DPL as quick-disbursing assistance to countries needing external financing to support structural reforms in the economic sector and the economy as a whole. Initially, the bank had proposed that Nepal accept assistance to inject liquidity in financial institutions facing liquidity crunch. However, after improvements in the liquidity situation, the WB made the new proposal. As the DPL proposal has been made by the WB itself, Nepal’s request to the lender will just be a ‘formality’, according to the official. The proposed loan of $100 million is the sum of the unspent aid amount that the bank had pledged to Nepal in the past. As per the WB proposal, the Finance Ministry will have to establish a separate bank restructuring unit to look after the banking sector. “They are yet to clarify the logic behind establishing such a unit,” said a senior ministry official. However, an official at the WB office in Nepal said the formation of the unit was suggested not a condition for the loan, but a suggestion to bring reforms in the Nepal Rastra Bank (NRB) based on past experiences. “NRB, being an implementing agency of its own re-engineering programme, faced many troubles in the decade-long financial sector reform programme. Hence, such a mechanism was sought,” said the WB official. Other components of DPL are second round of restructuring of the stated-owned Rastriya Banijya Bank and Nepal Bank Limited. Introduction of the new Bank and Financial Institution Act (BAFIA), whose bill is under consideration at the parliament and introduction of the Micro-Finance Act with a provision of a separate regulatory body are other components of the pledged support. These were also the part of the previous financial reform programme which ended in December 2011. “Regarding the restructuring of the two banks, we rejected some conditions for the loan which sought micro-management of the WB on certain measures,” said the ministry official. The WB has also incorporated the issue of conducting diagnostic reviews of banks and financial institutions under DPL, according to a senior NRB official. The central bank has already started the diagnostics review of some banks and financial institutions. nnnn