<<IMF "highly satisfied" with Pakistan talks
WASHINGTON, Oct 23 (Reuters) - The International Monetary Fund said Tuesday it will continue talks with Pakistan over a poverty reduction loan this week in Paris with the hopes of concluding negotiations quickly.
The IMF said in a statement it was ``highly satisfied'' with the progress made on reaching agreement on the economic policies and reforms Pakistan would make as the basis for a potential three-year poverty reduction loan. [...]
The latest IMF comments came as the World Bank approved a $300 million loan for Pakistan to help privatize and restructure the banking sector.
A Pakistani delegation has been in Washington to discuss a potential poverty reduction loan with the IMF after Islamabad completed a one-year program with the fund in September.
That marked the first time ever Pakistan had completed an IMF program and raised hopes that its relationship with the lender could move to the next logical step -- a loan aimed at boosting economic growth and reducing poverty.
That need has risen in recent weeks as the United States' war on terrorism led to bombing in neighboring Afghanistan and dampened economic prospects for the entire region.
Both IMF and Pakistan officials have said it is too soon to put a number on the cash that will back the new loan. There has been speculation a package from several lenders will total $2.5 billion with around $500 million of that coming from the IMF.
Earlier this week, Aziz said the cost to his country of the crisis in neighboring Afghanistan could be as much as $2.5 billion, depending on how long the conflict lasts.
Since joining the United States' coalition to fight terrorism last month, Pakistan has enjoyed a remarkable improvement in its fortunes. The United States has lifted sanctions put in place in 1998 after nuclear tests, given $100 million in aid and rescheduled $379 million of bilateral debt.
Earlier this month, Britain's International Development Secretary Clare Short called for debt relief for Pakistan, even though the nation is not eligible for debt relief under current terms, which dictate debts should only be written off for countries too poor to borrow commercially.
The change in fortune comes as Pakistan helps the U.S.-led effort targeting Osama bin Laden, the key suspect in the Sept. 11 attacks in New York and Washington. As a state neighboring Afghanistan and formerly the chief backer of the Taliban who are shielding bin Laden, Pakistan's help is vital if Washington is to get its hands on bin Laden.
Reversing years of pro-Taliban Pakistani policy during which U.S. requests for help against bin Laden produced little, Islamabad immediately offered full cooperation in the war on terrorism.
The move has already paid economic dividends with Japan rescheduled the repayment of $550 million in debts and Canada converting $286 million in bilateral debt into funds to be spent on development projects in Pakistan.
Most countries have followed the United States lead in lifting a host of sanctions imposed over the years for Pakistan's development of nuclear weapons and then General Pervez Musharraf's ousting of the elected government.
Reaching agreement with the IMF is critical for Pakistan because it will pave the way for negotiating a debt restructuring the Paris Club of creditor nations.
While the IMF has insisted its fast work on negotiating a new loan for Pakistan is not political, but rather a reflection of progress made there on reforms. Nevertheless, few people expect any hitches given the current political climate. >>
I thought we fought the Gulf War to restore "democracy", yada, yada - we had better hope the good General does not meet the same fate as his former neighbor, Mohammed Reza Shah Pahlavi. |
