Nepal budget aims to conclude peace with Maoists

By Gopal Sharma

KATHMANDU, July 13 (Reuters) - Nepal's new budget has enough to finish a peace process with former Maoist rebels and rehabilitate people displaced in the war, the finance minister said on Monday while presenting the $3.65 billion outlay.

A specially elected assembly is preparing a new constitution, a key part of a 2006 peace deal with the Maoists which ended a decade-long civil war that killed more than 13,000 people and displaced thousands.

Finance Minister Surendra Pandey said in parliament the work of preparing a new constitution, a major demand of the Maoists in the peace deal, would not suffer from a lack of money in the 2009-2010 budget. It is due to be ready by May.

The objective of the budget was also "to facilitate the promulgation of the new constitution as per the people's expectations and bring the peace process to an end", Pandey said.

Pandey said displaced people would be rehabilitated and the government would spend $30 million over the next two years to rebuild infrastructure destroyed in the war.

He said the budget would focus on job creation, boosting law and order, creating a better investment climate and implementing power projects to end a crippling shortage of electricity that has stunted economic growth.

Nepal's peace process has been stalled since May when the Maoists resigned from a coalition government they were heading amid a row over their plans to sack the country's army chief.

A survey prepared by the finance ministry said the economy, still struggling to recover from the conflict, was expected to grow by 3.9 percent in the year ending this week compared with 5.3 percent a year ago.

This was attributed to poor rainfall which hit farm output in a country that does not have enough irrigation. Agriculture accounts for 40 percent of the GDP and employs 66 percent of the country's 27 million people. (Editing by Bappa Majumdar and Jerry Norton)