October 24, 2001	Wednesday	Shaba'an 6, 1422

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ISLAMABAD, Oct 23: The government has finalized a 10-point multi-dimensional economic package and has forwarded it to the United States, seeking an immediate and extensive debt relief before a write-off which could take some time.

Official and diplomatic sources said here on Tuesday that US Under Secretary of State for Economic, Business and Agricultural Affairs Alan P. Larson had received a 10-point package and had largely agreed on it with a view to fully support Pakistan in acknowledgement of the support the country had extended to the US in its war on terrorism.

The Pakistan government, through the proposed package, thanked the US and its allies for committing $800 million immediate grant, and called for bigger financial allocations in shape of cash grants to provide certain immediate relief to its economy.

According to the sources, the package calls for re-profiling of $12 billion bilateral debt in order to bring it to a sustainable level so that it could be serviced easily. This re-profiling will provide temporary breathing space if not a permanent solution to the country’s debt problem.

The package also seeks a larger size of the Poverty Reduction Growth Facility (PRGF) than the one, which was being discussed before Sept 11 terror attacks in New York and Washington.

Pakistan was earlier given to understand to get about $1.5 billion under the PRGF by virtue of having maximum 90 per cent quota under $1.3 billion Special Drawing Rights (SDRs).

This quota could now be stretched to 130 or 140 per cent through a new amendment in IMF rules as the Americans are fully supporting the government of President Gen Pervez Musharraf. The PRGF was being sought on highly concessional terms and could be offered to Pakistan at only 0.5 to 0.7 per cent service charges.

The sources said Mr Larson had proposed enhancement of Pakistan’s maximum quota in the IMF from 90 per cent to 120 per cent. But he had not disagreed that it could be further increased, as the country was currently facing an unusual economic situation, they added.

The package wants new assistance from International Financial Institutions (IFIs) on new and better terms and not on existing Houston or Naples terms. Pakistan has so far been offered assistance under Houston terms and not under Naples terms, which were relatively more favourable. “But the future assistance is likely to be on new terms other than Houston and Naples terms because of Washington’s renewed support to Islamabad, a diplomatic source said.

The sources said Pakistan was not against a debt write-off, but did understand that it was not currently possible for bilateral donors as their respective constitutions did not allow them to have such a preposition. However, they said the US had assured that it would look for changing laws as had been changed for lifting political and military sanctions against Pakistan.