IMF 'agrees' Pakistan rescue deal | News | Al Jazeera

IMF 'agrees' Pakistan rescue deal

Pakistan says IMF will provide multi-billion dollar loan amid debt default fears.

    Conditions on the IMF loan do not include reducing Pakistan's defence budget, says finance official [AFP]

    "The interest rate on the IMF programme will be 3.51 to 4.51 per cent," Tarin said. Pakistan is expected to begin repayments in 2011.

    Pakistan has applied for up to $9 billion in credit from the IMF and, based on its IMF quota, it is entitled to get at least $7.6 billion.

    'Last resort'

    The country needs up to $4.5 billion to deal with a balance of payments crisis that has raised the prospect of the key US ally in the so-called "war on terror" defaulting on its foreign debts.

    The international community is concerned that economic meltdown could benefit groups sympathetic to al-Qaeda and the Taliban operating along the Pakistan-Afghan border.

    The Pakistani government had previously said it would only apply to the IMF for emergency funds as a last resort.

    Not only will the move prove unpopular with much of the population, the fund only agrees credit under strict fiscal conditions - such as the elimination of subsidies.

    However, by November 8 this year, the state bank of Pakistan's foreign currency reserves were equivalent to just nine weeks worth of import payments.

    With foreign currency reserves so low, the government faced the prospect of defaulting on its international debt obligations in February unless if received a multi-billion dollar cash injection.

    Tarin said conditions attached to the loan would force the Pakistani government to reduce borrowing but would not impose cuts on the nation's defence spending. 

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Interactive: Coding like a girl

    Interactive: Coding like a girl

    What obstacles do young women in technology have to overcome to achieve their dreams? Play this retro game to find out.

    America's Guns: Secret Pipeline to Syria

    America's Guns: Secret Pipeline to Syria

    How has the international arms trade exacerbated conflict in the Middle East? People and Power investigates.

    I remember the day … I designed the Nigerian flag

    I remember the day … I designed the Nigerian flag

    In 1959, a year before Nigeria's independence, a 23-year-old student helped colour the country's identity.