Pakistan, IMF to begin crisis talks

October 22, 2008

Pakistan will begin talks with the International Monetary Fund over the next few days to secure funding to avert a balance of payments crisis, the IMF said in a statement from Washington.

The statement came after days of speculation that seemed to have gathered pace after President Asif Ali Zardari’s trip to China where according to these media reports he failed to win a commitment for cash to shore up the country’s reserves, barely enough to cover six weeks of imports.

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“The amount of Fund financing under a stand-by arrangement has yet to be determined. Financing could be made within the framework of the Fund’s Emergency Financing Mechanism,” IMF Managing Director Dominique Strauss-Kahn said.

Pakistan needs $10 to $15 billion of support from foreign lenders, according to Shaukat Tarin, adviser to the prime minister on economic affairs.

Inflation in Pakistan is running close to 25 percent, the budget deficit is unsustainable, government borrowing from the central bank has squeezed liquidity in the banking system, and the international bond market has priced in a debt default.

Such reports of a fast-approaching economic meltdown and even talk that this could be Asia’s Iceland would rattle any country, given the instinctive resistance to approaching the IMF with all its dreaded conditionalities.

A protest against price rises in Karachi

But it made me think of India’s financial emergency in 1991 when a balance of payments crisis forced the country to pledge its gold abroad. The ignominy of the country’s gold being shipped to Britain to finance imports for a nation with a long colonial history and even longer memories was enough to silence most critics when the government shortly afterwards approached the IMF for loan. Here is a question from parliament then Finance Minister Manmohan Singh answered.

There was a silver lining though. India launched the most sweeping economic reforms that year dismantling decades of license raj, and didn’t ever look back although progress was fitful in the first few years.

Perhaps this may well turn out to be Pakistan’s moment as it steps back from the abyss?

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Bilawal, who will be a titular head while he finishes his studies at Oxford University, said: “My mother always said democracy is the best revenge.”

Ms Bhutto’s widower, Asif Ali Zardari, who will run the party day-to-day, said it would contest upcoming elections.

But it is unclear whether the vote will go ahead as planned early next month.

Mr Zardari appealed to the former prime minister Nawaz Sharif – a long-time Bhutto rival – to drop his threat to boycott the polls.

Posted by Burca Alice Larisa | Report as abusive
 

not at all surprised that this day has come for the pakis.

earlier they had the U.S to finance them.now with U.S out of the picture they are running with their begging bowl to china and saudi [ so called dearest allies] who also have refused aid.

now with no choice left – they are heading to the IMF.

all these years they spend on arms and ammun.to counter india – now my dear paki friends -where do you stand????

no country in the world wants to invest in your country – finally the eagle has come to roost.please keep on supporting terrorism to bleed india and wait for the day when taliban will be in control of your nukes.

atleast now i hope these guys realise their true situation and instead of harping about their nukes [ which any way will be in foreign hands fast or they will sell it ] try to stabilise their situation at home and stop mocking at india who is way ahead in every sense.

like some paki.said – i too cant wait for the day when india will be like the U.S and pakistan will be like MEXICO.

what an irony!!!!!!!!!!

 

India is way ahead in poverty, corruption and HIV. One India will surely be like United States of As*holes.

Posted by Umair | Report as abusive
 

Hi Umair,

First get out of the feeling that every one in India hate Pak. Many people including our father of our nation Mahatma Gandhi(who started fasting until death until Pak is paid 55 crores at the time of independence) love pak. Because we are all the people of the same land with the same historical traditions and culture and knowledge of the land that almighty has bestowed on this wonderful land.
Lets be reasonable. what do we gain if we hate eachother for difference in our religions? In this world the three major religions are Christianity(2 bn), Islam(1.5 bn) and Hinduism(1 bn). Dont you see the that all of them should co-exist peacefully for all of them to live peacefully? I agree that there is little representation for the islamic countries in the UN. But I strongly disagree with the word religion affliated to country. If you relate them it means that people with other faiths should not live there, which is not possible with the current dependencies of one country on another. Can pak or for that reason any country even Israel can live with the help of its religious countries in this world.

I only worry that we have been seperated from living with each other only because of the politics and since I cant change the past I can only give love to fellow pakistanis and wish for their well being.

You are wrong in saying India is way ahead in poverty. Percentage of population below poverty line in India and Pak are almost the sam according to UN(India 25% and Pak 24%)(http://www.photius.com/rankings/eco nomy/population_below_poverty_line_2008_ 0.html). India managing a population of 110 crores has the same percentage as pak managing 16 crores. Currently India has forex reserve of $300 bn compared to $3 bn of pak. But I should agree india is very much behind china which has $2 trillion of forex and singapore also has almost the same forex as India. India also 67 tonnes gold which it has sent to England during the 1991 crisis.

Inflation in India is 11% where as in Pak it is 25%. I am not saying this to defame people of pak in any fashion. I love them but I hate its leaders who has kept them under dictatorship for most of the time after Independence and they are the sole reason for pak to be in this situation. I hope they will be on the right path in the days to come and wish them all the very best in the challange they are facing economically and military.

Posted by Ramesh | Report as abusive
 

I wish one day every person and nation will understand and implement and Democracy and Secularism. Proud to be an Indian. Many might say that minorities are being attacked, muslims for terrorism but the recent police trail of malegoan blasts lead to a Hindu group. This shows that hindus or muslims are same in the eyes of a true indian and constitution, be it their well being or acting against terrorist activities. There will be vote bank politics by all the parties some luring hindus and some muslims to vote for them. But I strongly believe our generation of politicians will come out of this religious politics. Every one knows who wasthe reason why incidents like Godhra and babri masjid and Kandhamal have happened and they will surely be taught a lesson in the days to come.

Posted by Ramesh | Report as abusive
 

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