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Pakistan pins hopes on October talks as economic bailout proves elusive

Cash-strapped Pakistan will hold another round of talks with global donor agencies in October in Washington in a bid to get a bailout package for its battered economy jolted by international sanctions and a $ 32 billion external debt, a senior official has said in Islamabad.

''Our discussions will resume in Washington from October 2,'' Hafeez Pasha, finance adviser to Pakistan's prime minister told a news briefing on Friday.

Pakistan is hoping for the bailout package, particularly after Prime Minister Nawaz Sharief promised to sign a global nuclear test ban treaty while in New York this week.

A joint team of the International Monetary Fund and the World Bank has been holding talks in Pakistan for the past two weeks with Pakistan's financial managers which were aimed to decide a relief package for the country's ailing economy.

But the talks remained inconclusive and ended with hopes of a breakthrough in next round.

Pakistan is scrambling for funds it desperately needs to avoid a default on the payment of external debt because its already fragile economy, has been shaken further by international sanctions for its series of nuclear tests in May.

The IMF stalled an installment of a $ 1.56 billion loan to Pakistan after the nuclear tests. The country earlier said it may seek a moratorium on the payment of external debt if promised loans are not released.

Pakistan's scant foreign exchange reserves have slumped further to $ 697 million this week from $ 750 million early this month, the State Bank of Pakistan said.

These reserves are barely enough to meet the country's import bill of one month and the government is seeking emergency funds to bridge the Balance of Payments gap.

Pasha said Pakistan will hold further discussions in Washington for the resumption of its two stalled credit programmes of enhanced structural adjustment facility and enhanced fund facility, but with expanded BoP support.

Pasha said the quantum of financing will be around $ 5 billion, which does not include the $ 1.5 billion package agreed earlier this month with the Islamic Development Bank.

He said besides the revival of stalled IMF programmes, a possible debt restructuring and restoration of assistance from the World Bank was also among components of a relief package sought from the global donors.

The IMF said it welcomed the fact that despite a difficult economic environment and severe BoP constraints, Pakistan slashed its inflation and maintained a buoyant outlook for the agriculture sector growth.

UNI