Islamabad: Cash strapped Pakistan opens on Tuesday an informal dialogue with the IMF and other bodies to clinch a support package estimated to run up to $15 billion to avert a balance of payment crisis.
Islamabad expects that over half of the total amount could come about in the form of an IMF loan and the balance would be provided by the World Bank, Asian Development Bank and bilateral donors, potentially including Saudi Arabia.
Pakistan is also seeking funds from China, the sources said. However, President Asif Ali Zardari was unable to secure any commitments for cash support during his recent maiden visit to Beijing.
Soaring inflation and a plunging currency and foreign exchange reserves have played havoc with the country’s economy leading to almost Pakistan having problems to repay sovereign debt due for re-payment next year.
In the run up for preparations to arrange bridging loans, the country’s new financial adviser Shaukat Tarin had a meeting with the Prime Minister Yousuf Raza Gilani during which an alternative economic agenda was also discussed to spur up economic growth in the shape of foreign investments.
But, Gilani is faced with a prospect of an opposition from parties like PML-N as turning to IMF is considered an unpopular option. Opposition PML-N chief Nawaz Sharif yesterday urged the government not to avail of an IMF package.
The scale of support under consideration reflects global anxiety that Pakistan, regarded as a vital country in the war on terror, is at risk of being destabilised by the international financial crisis.
A senior Pakistani government official told media the country was considering an IMF loan that would disburse funds over the next two years to bolster investor confidence that has been shaken in part by falling foreign currency reserves.