WASHINGTON - The World Bank on Thursday agreed on a new two-year lending strategy for Nepal potentially worth US$782 million.

Under the interim strategy, the World Bank's private sector lender could potentially commit an additional US$15 million to US$20 million annually during the two-year period.

"The Bank's strategy document supports the promotion of consensus and unity to address key elements of the peaceprocess, including the foundations for state building, growth, and improved basic service delivery for Nepal's poor," the World Bank said in a statement.

The bank said it had prepared an interim strategy because Nepal is in a transitional period with a new constitution being drafted and elections expected in 2011.

Nepal swore in moderate Communist Prime Minister Madhav Kumar Nepal, last month after his Maoist predecessor quit, plunging the nascent republic into a crisis.

Various ethnic groups are now demanding a greater role in running the government, and some are pressing for separate autonomous states as the Himalayan nation prepares a new constitution after its 239-year-old monarchy was abolished.

Prime Minister Nepal was sworn in on May 25, but is yet to name his full cabinet due to wrangling among coalition partners over positions, leaving the country in limbo.

He is expected to face a difficult year with the Himalayan nation beset by crippling power cuts, poor public security, high inflation, unemployment as well as food shortages.