Pakistan seeks financial aid from IMF
Country feels it should be rewarded for role in War on Terror, allies reject requests
Saeed Shah
Issue date: 10/23/08 Section: World News
ISLAMABAD, Pakistan (MCT) - Pakistan has sought an emergency bailout from the International Monetary Fund, a humiliating step forced on Islamabad after allies refused to come up with the cash needed to prevent the country going bust.
The U.S., China and Saudi Arabia have all rebuffed Pakistan's urgent money-raising requests, despite Islamabad telling its allies that it should be rewarded for its key role in the "war on terror."
Relations with Washington may have been damaged as a result, analysts said. A separate political development in Pakistan on Wednesday may test the U.S. alliance further.
Against expectations, a special debate in parliament on counter-terrorism policy, which had lasted nearly two weeks, resulted in an agreement between all the parties that demanded "an urgent review of our national security strategy." It said that negotiation, not military action, would be the policy used to tackle extremism.
The IMF funding would stave off bankruptcy for Pakistan, which would've nudged it closer to instability as the nuclear-armed country fights an Islamist insurrection at home and reinforces the U.S.-led coalition in neighboring Afghanistan. However, Pakistan's leaders had been desperately trying to find other sources of funding. Finance minister, Shaukat Tareen, recently described going to the IMF as his "Plan C".
In Pakistan, the IMF programs of the past had been deeply unpopular, requiring the country to agree to strict austerity measures. The previous regime, led by former President Pervez Musharraf, had trumpeted its break from this source of finance.
"Musharraf, everyone, celebrated that Pakistan had graduated out of IMF programs. He said he had 'broken the begging bowl,'" said Faisal Bari, a professor of economics at the Lahore University of Management Sciences. "Going back to the IMF means that the country is carrying the begging bowl again, that it is not on a path of sustainable growth."
The IMF on Wednesday confirmed that Pakistan asked for funds, "to meet the balance of payments difficulties the country is experiencing." A deal is expected to provide $5 billion or more for the coming year, with billions more for subsequent years.
The U.S., China and Saudi Arabia have all rebuffed Pakistan's urgent money-raising requests, despite Islamabad telling its allies that it should be rewarded for its key role in the "war on terror."
Relations with Washington may have been damaged as a result, analysts said. A separate political development in Pakistan on Wednesday may test the U.S. alliance further.
Against expectations, a special debate in parliament on counter-terrorism policy, which had lasted nearly two weeks, resulted in an agreement between all the parties that demanded "an urgent review of our national security strategy." It said that negotiation, not military action, would be the policy used to tackle extremism.
The IMF funding would stave off bankruptcy for Pakistan, which would've nudged it closer to instability as the nuclear-armed country fights an Islamist insurrection at home and reinforces the U.S.-led coalition in neighboring Afghanistan. However, Pakistan's leaders had been desperately trying to find other sources of funding. Finance minister, Shaukat Tareen, recently described going to the IMF as his "Plan C".
In Pakistan, the IMF programs of the past had been deeply unpopular, requiring the country to agree to strict austerity measures. The previous regime, led by former President Pervez Musharraf, had trumpeted its break from this source of finance.
"Musharraf, everyone, celebrated that Pakistan had graduated out of IMF programs. He said he had 'broken the begging bowl,'" said Faisal Bari, a professor of economics at the Lahore University of Management Sciences. "Going back to the IMF means that the country is carrying the begging bowl again, that it is not on a path of sustainable growth."
The IMF on Wednesday confirmed that Pakistan asked for funds, "to meet the balance of payments difficulties the country is experiencing." A deal is expected to provide $5 billion or more for the coming year, with billions more for subsequent years.
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