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IMF holds talks with Pakistan over aid package

Text by News Wires

Latest update : 2010-08-24

IMF and Pakistani officials began talks on Monday to discuss the terms of Pakistan's 11-billion-dollar loan. IMF chief Dominique Strauss-Kahn (pictured) has said the organisation would do its part to help the flood-wrecked country.

AFP - Officials from the IMF and Pakistan held talks Monday amid reports that the flood-battered country was asking the fund to ease terms of a nearly 11-billion-dollar loan.
  
"I can confirm the meeting," one official said but declined to elaborate on the specifics of the discussions at the Washington-based International Monetary Fund headquarters.
  
But Masood Ahmed, director of the IMF's Middle East and Central Asia department, said Pakistan's budget and macroeconomic prospects, being supported by an IMF financed program, would have to be reviewed due to the deadly floods.
  
The nearly month-long floods have killed 1,500 people and affected up to 20 million nationwide in the country's worst natural disaster, with the threat of disease ever-present in the miserable camps sheltering penniless survivors.
  
There are fears that losses could snowball to 43 billion dollars.



The IMF meeting with the Pakistan officials would "evaluate the macroeconomic impact of the floods, assess the measures they are taking to address this impact, and discuss ways in which the IMF can assist Pakistan at this difficult juncture," Ahmed said at the weekend.
  
Pakistan's finance minister Abdul Hafeez Shaikh will ask the IMF to restructure the current loan or consider new financing, Pakistan officials said last week.
  
"Either the fund steps forward and allows plenty of relaxations on the current program or we make a fresh start and discuss a new program with performance criteria that are tailored to our new economic realities," one official told the Financial Times.
  
"The present program is not looking sustainable."
  
Even before the floods there had been speculation that Pakistan might seek a new loan agreement with the IMF.
  
But in light of the natural disaster, Islamabad now fears it will not be able to meet key IMF-set targets on inflation and budget deficit levels.
  
IMF Managing Director Dominique Strauss-Kahn wrote to Pakistani President Asif Ali Zardari at the outset of the disaster that "the IMF stood with Pakistan at this difficult time and will do its part to help the country."
  
The IMF in 2008 approved a 7.61-billion-dollar rescue package for Pakistan as the country struggled to cope with bloody attacks by Islamic radicals, 30-year-high inflation and fast-depleting reserves.
  
It was augmented to 10.66 billion dollars last year under the program that was extended to end in 2010.
  
So far, Pakistan has received about 7.27 billion dollars from the IMF loan.

Date created : 2010-08-23

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