It will also complete the transition of the former guerrilla outfit that waged a decade-long insurgency in the Himalayan nation to a mainstream democratic party.

The parties had initially agreed that the new cabinet will comprise 24 members, with Maoists getting nine ministries including Defense and Finance. The CPN-UML will have six ministries and MPRF four. Other four ministerial portfolios will be shared by four small parties, party sources said.

Negotiations to form a coalition government earlier faltered as the Maoists and Nepali Congress, which has 110 lawmakers, disagreed over who should become prime minister and take other Cabinet portfolios, including the Defense Ministry.

``All the documents, including one on a code of conduct for the ministers have been finalized,'' Khanal said. ``It remains to be seen when all parties will sign them.''

Nepali Congress will lead the opposition in parliament after its lawmakers voted against Prachanda, Nepalnews.com reported last week. Prachanda's government will have to deal with food shortages and high fuel prices in the country of 26.4 million people located between India and China.

Nepal is among the world's 50 least developed nations and has failed to share in recent economic growth in Asia, the United Nations said in its latest report on the country.

Living in Poverty

About a third of its people live below the poverty line and per capita gross domestic product is about $1,200, according to U.S. government data. As many as 2.5 million people need food aid because of drought and rising prices, the UN World Food Program said in June.

Prachanda, whose real name is Puspa Kamal Dahal, sketched out his party's platform at a meeting with business leaders in May, Nepalnews.com reported at the time. He said a Maoist-led coalition would provide the political stability needed to develop Nepal's economy.

He also vowed to bring an economic revolution by mobilizing young people across the country. The Maoists will lead Nepal toward an economic miracle within the next decade, he said.

Dahal, better known by his nom de guerre Prachanda, vanquished his sole rival former prime minister Sher Bahadur Deuba by garnering 464 votes, a more than two-thirds majority, while he needed only a simple majority to win.

Deuba, who was sacked twice by King Gyanendra in the past for failing to hold elections and was the arch enemy of the underground Maoists during their decade-old “People's War”, received only 113 votes.

While his wife Arjoo Deuba, also a lawmaker from his Nepali Congress (NC) party, voted for him, his mother-in-law Pratibha Rana, a lawmaker from the once royalist Rastriya Prajatantra Party, voted against him in an election fraught with tension and rivalry.

Prachanda, 53, had led a bloody insurgency against the monarchy for more than a decade in the jungles of the rugged Himalayan foothills and was on the nation's most-wanted list prior to dismissing his Marxist rhetoric and embracing democracy and private investment

Prachanda, chairman of the Communist Party of Nepal (Maoist), defeated Sher Bahadur Deuba of the Nepali Congress party. Although Deuba is a veteran politician who has been prime minister three times, his party did not have any support from the other parties. As a result, Prachanda's victory was almost guaranteed due to the support from the Communist Party of Nepal (United Marxist-Leninist), the Madheshi Janadhikar Forum (MJF) and several smaller parties.

Gyanendra was stripped of all his powers by Koirala's government and since leaving the royal palace, he has not been seen in public, according to the Associated Press (AP). The exit of Gyanendra set the stage for Prachanda to emerge from the jungles and switch from a revolutionary insurgent to a politician. According to Reuters, Prachanda wants Nepal to become the "Switzerland of Asia" and draw millions of tourists. He pledges to uphold democracy and human rights and says globalization is a fact of life and has vowed revolutionary land reforms. Following Prachanda's victory, India, the US, European Union and Japan extended their congratulations to him. They all said they looked forward to working with the new government to further develop bonds and deepen friendly relations between countries.

Nepal, one of the world's poorest nations, now faces an acute shortage of fuel as well as rising oil and food prices.

Popular expectations are high too.

Prachanda faces the tricky task of rehabilitating more than 19,000 former guerrillas housed in 28 U.N.-supervised camps and arrange for more than 200,000 people displaced by the conflict to return home.

The Maoist leader pledged a national unity government to bring about ``socio-economic change'' and establish lasting peace in the Himalayan nation. He'll have to deal with food shortages and high fuel prices, oversee integrating former rebels into the ranks of the army and the drafting of a new constitution.

``The economy had been stagnating for quite some years but now a stable government will be able to give direction,'' said D. H. Pai Panandiker, president of RPG Foundation, a policy group in New Delhi. ``Some sort of normalcy will come. Developmental issues which have long been sidelined will be taken up.''

Prachanda sketched out his party's platform at a meeting with business leaders in May, Nepalnews.com reported at the time. He said a Maoist-led coalition would provide the political stability needed to develop Nepal's economy.

He also vowed to bring an economic revolution by mobilizing young people across the country. The Maoists will lead Nepal toward an economic miracle within the next decade, he said.

Business Strike

Maoist official Baburam Bhattarai told business leaders they don't need to be concerned about investing. ``We are committed to protect your investments,'' he said, adding that industries that were closed due to labor-related problems will be opened.

Nepal's business leaders went on strike in March last year to demand the Maoists stop a campaign of intimidation and extortion, Nepalnews.com reported at the time. It came after rebels allegedly abducted and tortured a hotel owner for refusing to pay a ``donation'' to the group.

More than 13,000 people were killed in Nepal's civil war, which damaged the country's tourism-dependent economy.

Nepal is among the world's 50 least developed nations and has failed to share in recent economic growth in Asia, the United Nations said in its latest report on the country.

Roughly a third of its people live below the poverty line and per capita gross domestic product is about $1,200, according to U.S. government data.

As many as 2.5 million people need food aid because of drought and rising prices, the United Nations World Food Programme said in June.