IMF package to help Pakistan

Cash-strapped Pakistan will receive a rescue package worth at least US$7.6 billion from the International Monetary Fund, a senior government official says.

Cash-strapped Pakistan will receive a rescue package worth at least US$7.6 billion (Dh25.7bn) from the International Monetary Fund (IMF), a senior government official announced today. Shaukat Tarin, top finance adviser to Pakistan's premier, said the package would stave off the country's balance of payments crisis. "We have reached on an agreement with the IMF with the help of our friends and other officials," Mr Tarin told a news conference, adding that Pakistan would receive $4bn this year as part of the 23-month IMF deal.

"The interest rate on the IMF programme will be 3.1 to 3.5 per cent," he said, adding Pakistan will begin repaying the loan in 2011. Pakistan needs up to $4.5bn to deal with a balance of payments crisis that has raised the prospect of the violence-hit nation defaulting on its foreign debts. The government has previously said that 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. The Islamic republic has almost run out of foreign currency reserves to cover its import bill. *AP