PARTIES CONTINUE TALKS OT FIND GOVT. CHIEF Kathmandu, 13 Feb.: Major political party leaders are continuing inter and intra-party talks Wednesday to appoint the head of an election government to be held end of May. Effort continues as opposition NC and UML rejected a Maoist proposal to appoint a government headed by an incumbent chiefjustice. President DR. Ram Baran Yadav asked parties Tuesday to agree on a government chief by Thursday. Prime Minister Baburam Bhattarai who said he’ll; resign to make way for a government headed by a chief said he’ll only quit after 18 months in office for a chief jusoitce to replace him. Meanwhile, an election commission official said May constituent assembly eletion can’t be held despite government assurances. nnnn MAOIST CHIEF INSISTS CJ CAN LEAD ELECTION GOVT. Kathmandu, 13 Feb.: Countering the arguments of opposition parties, UCPN(Maoist) Chairman Pushpa Kamal Dahal claimed on Tuesday that the Interim Constitution says a Supreme Court justice can lead an election government, Republica reports.. Addressing a mass gathering at the Khulamanch on the occasion of the 18th anniversary of the Maoists´ people´s war, he urged people to read the constitution. However, he did not say which article of the Insterim Constitution he was refering to. Dahal said his party proposed a sitting chief justice for PM as a last resort. Reassuring his party cadres, he claimed that he has not abandoned the agenda of the people´s war. Dahal tried repeatedly to persuade party cadres and others that his party´s political line is revolutionary and suitable to the situation. "Our political line is revolutionary and it can complete the revolution," added Dahal. He tried to satisfy party cadres and others as to why his party handed over the PLA and its weapons. To justify his party´s shifting to the parliamentary mode, he referred to how the communists were finished off in Malaya, Peru, Burma and Turkey while following the traditional path of revolution. "We will complete the revolution in a new way, making our way into the homes of the reactionary forces," added Dahal. Refering indirectly to Malaya and Peru, he said the Baidya-led Maoists are finished if they follow people´s war. He praised the Nepal Army and police, mentioning that they had good relations with the ex-PLA and security forces.. (Photo: Dipesh Shrestha) Also addressing the gathering, Vice-chairman and Prime minister Baburam Bhattarai claimed that he was ready to debate the articles of the constitution that say an apex court justice can lead an election government. "I am not a student of law. But I can debate each single article as I was on the constitution draft committee," said Bhattarai. He too claimed that the constitution says a justice can head an election goverment. Countering opposition party criticisms and their demands for the government´s resignation, he said the government was formed through election by the people. "We are not in government through anybody´s mercy or love," added Bhattarai. ----- CPN-Maoist Chairman Mohan Baidya on Tuesday warned Nepali Congress and CPN-UML leaders that his party would not allow them into the villages if they revived cases from the insurgency period. Addressing a tea party organized by the Newa state committee at Bhrikutimandap on the occasion of the 18th anniversary of the Maoists´ people´s war, he urged them to settle all issues through talks among the parties. He said his party would not accept a decision of just the four parties --UCPN (Maoist), Nepali Congress, CPN-UML and the Madhesi front. He said that the Nepali Congress and other parties have violated the comprehensive peace accord and other agreements. "In reviving cases from the insurgency period, the reactionary forces have been trying to finish off the Maoists," thundred Baidya. Lambasting the UCPN (Maoist), he said it wanted to suppress his party by forcing it to go for armed conflict. "The other [Dahal-led] Maoists also want to suppress us in cooperation with the reactionary forces. They have been asking us when we will take up arms," said Baidya. He mentioned that the arms are connected with the people´s livelihood and the issues of people like Dalits, women, janajatis and the poor. "Guns are linked to the problems of the people and they will be rised if these issues are not resolved," added Baidya. "We will carry the flag of revolution until the completion of that revolution. We sacrificed in the past. The new janabadi [people´s democratic] revolution would not end until we fulfill the dream of the martyrs, the disappeared, the injured, the people." He mentioned that the Maoist people´s war was launched to free the country from expansionist and imperialist forces and bring a new janabadi [people´s democratic] system. He said the agenda of the people´s war has not been fulfilled and his party would keep upholding its legacy. He termed as a ´farce´ the ruling Maoists and other parties reciting the rubric of elections, saying they have already failed, and will fail, to hold elections. Indicating the UCPN (Maoist), he repeated that they betrayed the people´s war, and their leadership was ´revisionist´. He also said that he was compelled to from a new party because of the anti-national activities of Dahal and Bhattarai. "Dahal and Bhattarai not only betrayed the people´s war but also abandoned the issue of federalism," added Baidya. Nnnn UP DEPOSIT RATES NRB TELLS COMMERCIAL BANKS Kathmandu, 13 Feb.: The liquidity strain felt by the banking sector has worsened as excess money held by banks and financial institutions fell to Rs 7.5 billion on Tuesday from around Rs 10 billion a week ago, Rupak D. Sharma writes in Republica.. As in the previous week, many blamed stockpile of over Rs 43 billion in state coffers, which has remained unused due to the government´s inability to ramp up capital spending, for the liquidity shortfall. Nepal Rastra Bank, the central monetary authority, too agreed with this argument. But not totally. It said commercial banks´ decision to slash deposit rates also played a key role in reducing the portion of excess liquidity. "Banks are witnessing flight of funds from accounts as one-year fixed and savings deposit rates of commercial banks are lower than inflation (of 10.4 percent as of December)," Dr Min Bahadur Shrestha, chief of the Research Department of Nepal Rastra Bank, told Republica. He called the tendency of people to remove deposits natural, as they are not getting any return, in real terms, by parking funds in bank accounts. "Against this backdrop, how will liquidity situation improve?" Dr Shrestha wondered, as he called on banks to raise deposit rates. Around a year ago, almost all commercial banks slashed one-year deposit rates by up to 4 percentage points to around 7.5 percent after the banking sector became flush with liquidity. Development banks and finance companies also followed suit. This caused fixed account deposits of banks and financial institutions to fall to Rs 338.81 billion by the end of first five months of the current fiscal year to mid-December 2012, as against Rs 341.03 billion recorded in mid-July 2012. In the same period, fixed account deposits held by commercial banks also dipped to Rs 288.97 billion from Rs 297.62 billion in mid-July. "Banks should learn a lesson from the latest development and should not hurry while cutting deposit rates upon getting faint indication of improvement in the liquidity situation," Dr Shrestha said. Around two years ago, when the banking sector was hit by severe liquidity crisis all banks and financial institutions had immediately raised interest rates. In those days, even commercial banks were providing up to 12 percent yield on one-year fixed deposits. "High rates worked as bait and facilitated flow of money from informal economy to the banking sector. That is not happening now because of low deposit interest," Dr Shrestha said. Nonetheless, the situation still hasn´t gone out of control, he informed. "The banking sector has excess liquidity of around Rs 7-8 billion. And if commercial banks raise deposit rates, they can still attract funds." But in case the situation worsens, he continued, Nepal Rastra Bank will use appropriate tools to inject liquidity in the economy. "Yet such a measure will provide short-term solution," Dr Shrestha said. "In the long run, banks and financial institutions will have to play their part well in maintaining sound liquidity levels." Nnnn ________________________________________