By Sushil Sharma in Kathmandu

Representatives from the World Bank have pulled out of a meeting of international donors in Nepal, saying they are reviewing the Bank's aid package for the country.

The move comes less than two weeks after World Bank officials expressed their concern at the resignation of the Finance Minister, Mahesh Acharya.

Mr Acharya, who led moves to reform Nepal's economy, stepped down saying he had serious policy differences with Prime Minister Krishna Prasad Bhattarai.

The donors were meeting over a $400m drinking water project planned in Melamchi.

Representatives from a number of leading donors took part in the meeting in Kathmandu, but officials from the World Bank, who had previously participated, declined to attend this time.

Resignation

The Bank had not yet made any commitment to help finance the water drinking project, but is considering a separate loan to improve the country's water distribution system, which will be crucial for the water supply from the Melamchi project.

World Bank officials have now said the future of the Bank's aid package for Nepal will depend on the speed of economic reforms.

Analysts say the World Bank is concerned that what it sees as crucial economic reforms may slow down after the depature of Mr Acharya, who stepped down because of differences with prime minister over the appointment of the central bank's governor.

In a public statement issued at the time, the World Bank said Mr Acharya's resignation would send the wrong signal to donors.

But critics of the World Bank have described the statement as interference in Nepal¿s internal matters.