16 Nov 2008

Pakistan agrees to multi-billion loan with the IMF

6:38 am on 16 November 2008

Pakistan has agreed with the International Monetary Fund on a stand-by credit facility of at least $US7.6 billion to stave off a balance of payments crisis, the country's top economic adviser said.

The international community is concerned that an economic meltdown in the nuclear-armed state could play into the hands of al Qaeda and allied Islamist militant groups seeking to destabilise the Muslim nation of 170 million.

The eight-month-old civilian government is banking on goodwill towards Pakistan during its transition to democracy after more than eight years under former army chief Pervez Musharraf, who quit as president in August to avoid impeachment.

World leaders were meeting in Washington at the weekend to discuss the worst global economic turmoil since the 1930s and consider reforms to world financial institutions such as the IMF.

Shaukat Tarin, the recently-appointed adviser to the prime minister, said the IMF had already agreed to lend to Pakistan under a 23 month programme, and the formalities should be concluded next week.

The interest rate on the credit facility would vary between 3.51 and 4.51% with changes according to market conditions, and would be payable between fiscal 2011/12 and 2015/16, Mr Tarin said.

He said the IMF had offered access to a stand-by facility, for an amount as much as five times Pakistan's quota.