Int'l community to provide $4 bn to save Pak from bankruptcy

ISLAMABAD: The international community has agreed to provide $four billion needed by Pakistan to avoid bankruptcy in return for Islamabad undertaking a series of tough economic reforms, a media report said on Friday.

US and diplomatic sources in Washington said Pakistan had started negotiating various arrangements with international financial institutions and friendly nations soon after it realised it might default on payments if it did not get help.

The US played a key supporting role in these negotiations, remaining engaged with the Pakistani embassy in Washington, the influential Dawn newspaper reported on Friday.

"There was a real panic in the Pakistani camp... Last month, Pakistani diplomats made 10 visits to the (US) Treasury," said a US official familiar with the talks.

The negotiations were finalised during a visit to Washington by Shaukat Tareen, Adviser to the Prime Minister on Financial Affairs, to attend annual meetings of the World Bank Group.

During these talks, the World Bank, Asian Development Bank, Islamic Development Bank and other international financial institutions discussed various plans for providing short to medium-term support to Pakistan.

The Pakistani rupee has gone into a free fall over the past few days, and is currently trading at an all-time low of over Rs 82 to the dollar. The country's foreign exchange reserves too have fallen to less than USD 2.5 billion in real terms, or barely enough for imports for one-and-half months.

During the current fiscal year, the World Bank will provide USD 1.4 billion to Pakistan. If Pakistan's programmes are approved, its international development assistance share will be front-loaded.