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Pakistan to get at least 7.6 billion dollars from IMF: govt
AFP - 1 hour 38 minutes ago
KARACHI (AFP) - - Pakistan announced Saturday it will receive a loan of at least 7.6 billion dollars from the International Monetary Fund, the first rescue in Asia by the Fund since the financial crisis hit the globe.
Shaukat Tarin, top finance adviser to Pakistan's premier, said the rescue package for the cash-strapped country would stave off its balance of payments crisis.
"We have reached on an agreement with the IMF with the help of our friends and other officials," Tarin told a news conference, adding that Pakistan would receive four billion dollars this year as part of the 23-month IMF deal.
"The interest rate on the IMF programme will be 3.51 to 4.51 percent," he said, adding Pakistan would repay the loan over five years starting from 2011.
Pakistan needs up to 4.5 billion dollars (3.5 billion euros) to deal with a balance of payments crisis that has raised the prospect of the violence-hit nation defaulting on its foreign debts.
"The impact of the financial crisis in the world and the difficulties we faced at home impacted gravely, particularly to our foreign exchange reserves which were 16.4 billion dollars in October 2007 and now are less than 7 billion dollars," Tarin said.
Pakistan's finances have "deteriorated significantly", according to an IMF report released last month due to recent political instability, Islamic militant violence, and high oil and food prices.
While the Islamic republic has almost run out of foreign currency reserves to cover its import bill, the rupee has lost 25 percent of its value this year and the stock market has dropped 35 percent.
The government has previously said any application to the IMF would be a last resort because the Fund would only give credit under strict conditions, such as elimination of subsidies.
Pakistan's new civilian administration initiated discussions with the Fund because it only had a few weeks to arrange the money.
"We had gone to our friends to get financial help but they advised us to get endorsement from the IMF," Tarin said.
Pakistan's precarious financial situation has caused worldwide alarm due to its role as a key ally in the US-led "war on terror" and its position as the Islamic world's only nuclear power.
A group of bilateral donors known as the "Friends of Pakistan" -- including China, the United States, Britain and the UAE -- are also scheduled to meet in Abu Dhabi on November 17 to decide on economic aid to help stabilize the restive South Asian power.
The move to shore up the Pakistani economy is the first in Asia by the IMF since financial woes spread across the globe triggered by the US sub-prime mortgage crisis.
The fund is nearing agreements to make emergency loans to Iceland and Ukraine and discussing an aid package with Hungary in moves that would increase its direct involvement in helping to contain the global crisis.
During the 1997-98 financial crisis in Asia, the IMF loaned billions of dollars to Indonesia, Thailand and South Korea to cover their foreign exchange denominated debt.
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A Pakistani protester carries a placard at an anti-IMF and World Bank demonstration in Islamabad earlier this week. Pakistan announced Saturday it will receive a loan of at least 7.6 billion dollars from the International Monetary Fund, the first rescue in Asia by the Fund since the financial crisis hit the globe.
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