KATHMANDU, May 25 (Reuters) - Nepal's new prime minister Madhav Kumar Nepal was sworn in on Monday but only two positions in his cabinet were filled because of wrangling over ministerial positions within the coalition, officials and analysts said.

Backed by a loose alliance of 22 political parties, Nepal replaced Maoist leader Prachanda who resigned this month after the president Ram Baran Yadav reversed his decision to sack the country's army chief.

Yadav administered the oath of office to Nepal, leader of the moderate Communist UML party, who served as a deputy prime minister in the country's first elected communist minority government in 1994-95.

Nepal named Vidya Bhandari as defence minister and Surendra Pandey to the finance portfolio. Rest of the cabinet would be named after talks with allies, UML officials said.

"There lie his difficulties," said Lok Raj Baral, chief of the Nepal Centre for Strategic Studies, a private think-tank. "All 22 parties are haggling for cabinet positions and satisfying each of them is proving hard."

The Maoists, who signed a peace deal with the government in 2006 to end a decade-long armed struggle, have burned Nepal's effigies and say his government would not last long.

Nepal said his government aimed to prepare a constitution by May next year as envisaged in the peace deal with the Maoists.

"Drafting the constitution on time and taking the peace process to a logical conclusion are two major priorities," he told top bureaucrats after assuming office.

The new leader also faces a difficult year with crippling power cuts, poor public security, high inflation, unemployment, food shortage and rising popular expectations.

(Reporting by Gopal Sharma; Editing by Sanjeev Miglani) (For the latest Reuters news on Nepal see: http://in.reuters.com, for blogs see http://blogs.reuters.com/in/)

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