KARACHI (AFP) — Pakistani officials are to meet International Monetary Fund representatives in Dubai on Tuesday as the violence-hit country looks for billions of dollars to stave off an economic meltdown.
The government has insisted that seeking IMF help to avoid a balance of payments crisis is only a "back-up plan", but officials said privately that they would likely seek the four billion dollars the country needs.
Dwindling foreign currency reserves can cover the nuclear-armed Islamic republic's import bill for only six more weeks, and Pakistan's new civilian administration admits rapid action is required.
"It is not an extraordinary meeting but, yes, the circumstances have made it so," said Shaukat Tareen, financial adviser to the Pakistani premier, referring to the fact that regular talks with the IMF are mandatory for signatories.
"We'll discuss with the IMF about the present economic and financial situation we are facing," Tareen told AFP.
Pakistan's finances have "deteriorated significantly" according to an IMF report released on Monday, due to recent political instability, Islamic militant violence, and high oil and food prices.
Its foreign reserves have sunk from 14.3 billion in June 2007 to 4.7 billion in September 2008, while the rupee has lost 25 percent of its value this year and the stock market has dropped 35 percent, it said.
The Financial Times reported on Tuesday that Pakistan was in "informal discussions" with the IMF and other bodies over a 10 to 15 billion dollar international support package designed to stabilise its economy.
Just over half would come in the form of an IMF loan while the rest would come from the World Bank, the Asian Development Bank and donors including Saudi Arabia.
While Tareen said at the weekend that there was "no danger" of a looming debt default, Pakistani officials told AFP the country would seek at least four billion dollars from the IMF to avoid that possibility.
"The country has got promises from other quarters but is getting nothing immediately, which is the real problem," said a senior Pakistani government official on condition of anonymity.
"We are in dire need of dollars so the situation is that we have no choice."
Tareen later denied a local television report confirming the 10 to 15 billion dollar figure.
"Pakistan immediately requires four billion to five billion dollars for now. We are making all out efforts to improve the situation and we believe we'll succeed," he said.
The IMF's senior resident representative in Pakistan joined other officials in Dubai to meet the Pakistani delegation, the Fund's office in Islamabad told AFP.
Pakistan's precarious financial situation has caused worldwide alarm due to its role as a key ally in the US-led "war on terror" and its position as the Islamic world's only nuclear power.
A group of bilateral donors known as the "Friends of Pakistan" -- including China, the United States, Britain and the UAE -- pledged in September to help the country to stabilise.
But the top US diplomat for South Asia, Richard Boucher, warned on Monday that any aid from the group is "not a cash advance" and would only be carefully targeted.
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