Aug. 18 (Bloomberg) -- Nepal's coalition government may announce a Cabinet today after former rebel leader, Prachanda, is sworn in as the Himalayan nation's new prime minister.

The ruling parties are discussing the allocation of portfolios and will form a Cabinet ``today or tomorrow,'' Jhala Nath Khanal, general secretary of Communist Party of Nepal (Unified Marxist-Leninist) said in a phone interview from the capital, Kathmandu.

The Communist Party of Nepal (Maoist), which holds the most seats in parliament, the CPN (UML), the Madhesi Janadhikar Forum, Jan Morcha and Nepal Sadbhavana Party have joined the coalition government, Khanal said.

``A common minimum program has been drawn up which includes restructuring of the state, consolidation of the peace process and security situation in the country, policies to meet people's demands and the integration and rehabilitation of Maoists into the army,'' Khanal said.

Prachanda, an adopted name meaning ``Fierce One,'' was elected prime minister of Nepal three days ago in a vote that ended four months of haggling following general elections in April. His rebel army disarmed and the party joined the political mainstream under a November 2006 peace accord that ended its decade-long campaign to topple the monarchy.

Agreement Reached

The Maoists hold 220 seats in the 601-member parliament, which voted in May to scrap the nation's 240-year-old monarchy and turn Nepal into a republic.

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 Programme 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.

To contact the reporters on this story: Michael Heath in Sydney at mheath1@bloomberg.net; Jay Shankar in Bangalore at jashankar1@bloomberg.net.

Last Updated: August 18, 2008 00:12 EDT