Pakistan to ask IMF for additional loan of 4.7 billion dollars

Business Materials 13 February 2009 19:56 (UTC +04:00)

Pakistan is to ask the International Monetary Fund (IMF) to raise its approved loan of 7.6 billion dollars to 12.1 billion dollars during talks with the organization opening in Dubai on Saturday, a Pakistani official said on Friday, dpa reported.

"Keeping in view our good performance where we have achieved all targets set by the IMF, Pakistan deserves an increase," the prime minister's finance advisor Shaukat Tarin told reporters in Islamabad. "But it's up to the IMF whether they accept our request or not."

Pakistani officials and the IMF authorities will review financial targets set for the country to qualify for the second tranche of 775 million dollars of the 7.6-billon-dollar programme that was approved in November 2008 to save the country from a default on external payments.

The 23-month standby loan gave Islamabad 3.1 billion dollars immediately, with the rest to be phased in over the course of the period if Islamabad manages to fulfill the IMF's envisioned targets of reducing the deficit and State Bank of Pakistan's financing of the government, among other tight fiscal and monetary measures.

Tarin said that the fiscal deficit was curtailed at 1.9 per cent of the gross domestic product (GDP) against the set target of two per cent for the first half (July-December) period of the fiscal year 2008-09.

The current account deficit, which stands at 2 billion dollars per month, is now reduced to 500 million dollars as a result of various measures.

The borrowing from the central bank, has been reduced from 258 billion rupees (3.26 billion dollars) to 204 billion rupees (2.59 billion dollars) until the end of December 2008.

"The stabilization of the economy has slowed down the economic activities and turnaround cannot be achieved overnight. But were doing well and that is why we expect an increase from IMF," Tarin said.

Pakistan, a key ally of the West in the war against terrorism, is witnessing deteriorated law and order with growing militancy in its volatile tribal areas, affecting foreign investment.

The country approached the IMF last year for a rescue package as it grappled with a 30-year high inflation rate and fast-depleting reserves that held barely enough to cover nine weeks of import bills.