Tuesday, March 13, 2012

Pakistan meets with IMF amid meltdown fears

Pakistani finance officials, faced with a looming economic meltdown, brought their case Tuesday to the International Monetary Fund, though Islamabad has said it would only seek money from the agency as a last resort.

IMF spokesman Niels Buenemann declined to give any specifics from the talks, which were held in Dubai, but Pakistani officials have said they may have to ask the fund for cash to avoid defaulting on sovereign debt due for repayment next year.

Any default would further shatter local and international confidence in the country as it battles soaring violence by al-Qaida and Taliban militants close to the Afghan border.

The government has said it would seek IMF money only as a last resort if it can not secure the some US$5 million it needs from governments or multilateral agencies like the World Bank.

Aid from the agency often comes with conditions such as cutting public spending that can affect programs for the poor, making it a politically tough choice for the Pakistani government.

Many analysts believe Pakistan's front-line role in fighting terrorism will persuade other countries, including the U.S., to help prevent it from economically imploding.

But a global economic crisis, including severe problems in the U.S., could limit assistance.

The country of 160 million mostly poor people is facing soaring inflation, a plunging currency and chronic power outages.

Pakistan hopes a recently formed group of countries called "Friends of Pakistan" _ including the U.S., Britain, Canada, France and Germany _ can help financially.

While visiting Pakistan on Monday, U.S. Assistant Secretary of State Richard Boucher attended a preliminary meeting of the Friends group, which expects to hold a session in Abu Dhabi in a few weeks.

Boucher said the group wanted to help Pakistan but that its "goal was not to throw money on the table, it is to support long-term goals for Pakistan."

His remarks appeared to suggest that immediate assistance for Pakistan would likely come from groups like the World Bank or the IMF.

The economic crisis comes amid a surge in violence by Islamic militants in Pakistan as well as neighboring Afghanistan.

Eight suspected insurgents were killed in aerial bombardments and mortar attacks in the Bajur region close to the Afghan border late Monday and Tuesday, said Jamil Khan, the No. 2 government representative there.

In the nearby Swat valley, suspected insurgents set alight a warehouse containing cooking oil belonging to the World Food Program, said police officer Dilwar Bangash.

WFP spokesman Amjad Jamal said the oil was to be given out as an incentive to parents who sent female children to school _ something opposed by militants in the region.

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