Twirp : Terrorist Wahabi Islamic Republic Pakistan 2

[Naresh]

[center]<b><span style='font-size:21pt;line-height:100%'>Pakistan looking forward to $10b bailout by Saudia, China</span></b>[/center]

<b><i>Ongoing negotiations with IMF being dragged</i>

Negotiations with IMF which commenced last week for a US$10 billion bailout package for Islamabad are expected to remain inconclusive as Pakistan is set to seek direct help from Saudi Arabia and China.

The negotiations are being held by a couple of IMF officials who met Pakistani economic managers in a process of charting out an expression of interest for the bailout package.</b>

“We are making all out efforts to prevent a drift toward an IMF-assisted bailout that would obviously cause more difficulties as it would be governed by strings that are hard to fulfil,” said a senior Pakistani official involved in the talks.

The crisis deepened last month as the foreign exchange reserves dwindled while rising import bill has become the most daunting for the public finance heads in Islamabad.

<b>In 2008 Pakistan happens to be the only country facing the threat of being downgraded by the international rating companies from the present B-1 status in its import-export balancing effort and making on-time payments due in foreign exchange to the international exporting companies.</b>

A committee of experts currently working out a bailout package and keeping a tight lid on the actual situation is busy framing a strategy on war footing. It is reportedly framing up a ‘suggestion’ to the federal policymakers to approach Saudi Arabia and China for a $10 billion package split by 6-4 respectively.

Pleading anonymity, The News sources revealed that next Monday would be the critical date fixed for meetings at the Federal Cabinet’s Committee overseeing the strategy formation in this respect. “That is going to be the day when this country would have to decide as to how the two countries would be submitted with an agenda for the loan, and on what terms,” said a senior official.

“There is a consensus evolved in these meetings on averting a drift back to the IMF mechanizations. A week ago, some of the IMF officials did visit Islamabad to offer a package, and it was a soft-mark up deal. Its tranche-payment mechanism was attractive too, as the Fund seemed ready to release $500 million every month, which is close to what the actual requirement over the current financial year’s 12-month period would be. But the strings attached would be too harsh to meet,” said the official.

When asked to provide details on these strings and the bailout package split between Saudi Arabia and China, he said: “I am not supposed to handout half-cooked measures. But the main idea is that Saudi Arabia should be offering a deferred-payment scheme for the current fiscal year on provision of petroleum products imported from that country. It should be a 12-month scheme covered by assurances that the products would be used to keep the prices stable and no further loans would be acquired from other internal or external sources against the facility thus extended, which is not a harsh string.”

<b>From China, he said, a $4 billion offer is expected, and negotiations in this respect would be brisk, as <span style='font-size:14pt;line-height:100%'>“the crunch has begun telling too adversely to sustain any further.”</span> This money would be available in tranches of $500 million each, once agreed upon.</b>

Explaining the IMF strings, he said the Fund would like Islamabad to immediately stop subsidizing the oil, electricity, gas and food items. “That would mean an immediate jump in the inflationary trend, which would directly be impacting the export-production lines, which is not acceptable to Pakistan.”

Apart from this, IMF would also like to bind the tranche release to reappraisal of the reforms conducted in the economic-management structure of Pakistan over the past few years.

On their part, the committee’s members have been suffering from acute lack of orientation as far as identifying the actual nature and handling of the crisis is concerned. At one point the committee was about to churn out the formula for stopping imports of non-critical items, which are other wise a good source of revenues, prevent smuggling and, if banned, would help save only about $48 million in payments a month. This formula is expected to be rejected as wiser heads meet next Monday, the source added.

Cheers <!--emo&:beer--><img src='style_emoticons/<#EMO_DIR#>/cheers.gif' border='0' style='vertical-align:middle' alt='cheers.gif' /><!--endemo-->