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Last Updated: Tuesday, 29 March, 2005, 09:06 GMT 10:06 UK
Nepal, Pakistan in economy talks
By Sushil Sharma
BBC News, Kathmandu

Nepal's King Gyanendra
Pakistan called the king's takeover an 'internal matter'
Senior Nepali and Pakistani officials are holding two days of talks to improve economic co-operation.

The Kathmandu talks are being staged by a Joint Economic Commission (JEC). It is the first time in 10 years the JEC has met.

The Nepalese authorities have ruled out any discussion on a recent Pakistani offer of military supplies to the army to help fight Nepal's Maoist rebels.

The offer followed King Gyanendra's seizure of direct power in February.

It came after India and the United States threatened to suspend such assistance in protest at the king's move which they described as a setback to democracy.

Pakistan termed the royal takeover as an internal affair of Nepal.

'Wide range'

Nepalese Finance Minister Madhukar Shumsher Rana and Pakistani Minister for Economic Affairs Hina Rabbani Khar are leading their respective delegations in the JEC.

A spokesman for the Nepalese finance ministry, Atma Ram Pandey, said the talks would cover boosting cooperation on a wide range of areas such as trade, industry, agriculture, tourism, water resources, and air transport.

Mr Pandey told the BBC there would be a general discussion which could be followed in future by talks on specific issues.

The two countries are also expected to take up establishing a free trade area to boost mutual trade which at present is negligible.

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