Guinea-Bissau's junta and opposition parties pressed on Thursday with plans for a lengthy transition, defying international calls for a return to democracy and brushing off a sanctions threat.
The World Bank and the African Development Bank suspended development programs to the chronically unstable west African nation in the wake of the April 12 coup which ousted the government.
In a statement issued late Wednesday, the two lenders said they were "halting our development operations, with the exception of emergency assistance."
The calls for a return to constitutional order join an international chorus, and come a day after the junta and opposition parties dissolved government and agreed on a two-year transition period until fresh elections.
"The national assembly is dissolved, the president and government are relieved of their duties," said a source close to talks between the junta and opposition leaders, who spoke on condition of anonymity.
"The hierarchical structure of the army is maintained," the source added.
The deal also confirmed the creation of a National Transition Council, which will name an interim president and government in the coming days.
It will be based on a list of pre-selected candidates chosen by the parties and approved by the junta.
"It's a good agreement," said Cirilo Rodrigues, head of the Socialist Party.
"We have succeeded in taking power from the soldiers and that is the most important."
He said the agreement was in line with what the Economic Community of West African States (ECOWAS) had demanded, along with the African Union, UN and former colonial power Portugal, who wanted a return to constitutional order.
Junta spokesman Daba Na Walna said the signing of the agreement was a "symbolic moment".
But said a diplomat based in Bissau said: "To say that one has respected what ECOWAS has asked is a bad interpretation of what has been said.
"ECOWAS asked for a return to constitutional order, which means returning power to those who were elected."
Antonio Artur Sanha of the main opposition Party for Social Renewal was confident in the face of sanctions which have been threatened by the African Union.
"ECOWAS, the African Union, the United Nations and other international organisations should praise Guinea-Bissau for its experience concerning power transitions."
Junta spokesman Lieutenant Colonel Daba Na Walna told reporters that the former ruling African Party for the Independence of Guinea and Cape Verde (PAIGC) had been invited to take part in talks but had not come.
"It excluded itself," he said.
PAIGC secretary general Luis Olivares said the party had not taken part because the agreement was "unconstitutional and undemocratic".
Olivares called for all dissolved institutions be re-established and said a planned second round election on April 29 should go ahead.
He called for the reinstatement of the ruling party government.
He also called for the United Nations to send a "stabilisation force" to the country.
Guinea-Bissau's army and state have been in constant competition since independence from Portugal in 1974, leading to coups, counter-coups and assassinations.
The most recent coup came in the middle of an election billed as a test of the country's commitment to stability and seen as key to dealing with a booming cocaine trade to Europe in the impoverished dysfunctional nation.
Former prime minister Carlos Gomes of the PAIGC stepped down to take part in the polls after the death in January of president Malam Bacai Sanha.
He won the first round, but opposition candidates denounced it as fraudulent and declared a boycott.
However with a little more than two weeks until the elections, soldiers seized power over the presence of Angolan troops in the country, saying there had been a "secret deal" with Angola to undermine the army.
The former prime minister is being held by the junta along with interim president Raimundo Pereira and several former ministers.
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