October 30, 2008	Thursday	Shawwal 30, 1429

WASHINGTON, Oct 29: Talks between Pakistan and the International Monetary Fund were on a “very positive track” but no deal has been finalised yet, Ambassador Husain Haqqani told Dawn on Wednesday.

A section of the media in Pakistan reported on Wednesday that the IMF had already approved a loan package to save the country from a possible default on its foreign debt.

“Discussions continue. We are on a very positive track but no decision yet,” said the ambassador who is playing a key role in negotiations between Islamabad and the donors, including the IMF.

A source at the IMF told Dawn that even after the two sides agreed on a loan package, they would still need the approval of the Fund’s executive committee.

“Even the agreement is not firm yet, although talks are on the positive track,” the source said. “Once the two sides reach an agreement, it will be sent to the executive board.”

The board, he said, could approve the package before Nov 15 if an agreement was reached now.

The chances of Pakistan getting an IMF loan improved earlier this week when the Fund concluded similar agreements with other nations.

On Sunday, the IMF reached a tentative agreement with Ukraine to lend the eastern European country $16.5 billion. On Oct 24, the IMF concluded an outline agreement to provide $2.1 billion to Iceland. The Fund also reached a broad agreement with Hungary.

All such moves are aimed at helping these nations recover from the impact of the international financial turmoil and to help stabilise their economies.

Last week, IMF Managing Director Dominique Strauss-Kahn issued a statement saying that an IMF mission was discussing with Pakistani authorities a programme to meet the country’s balance of payments needs created by recent high food and fuel prices and the global financial crisis.

The Fund, he said, was already providing confidential policy advice to countries like Pakistan on how to adapt to the current turmoil.

Pakistan has been hit hard by the current financial turmoil. The country’s foreign currency reserves have been falling at a rate of nearly $1 billion a month, and the central bank has barely enough to cover six weeks of imports. Total reserves, including those held by commercial banks, stood at $7.75 billion on Oct 11, of which the central bank accounted for $4.34 billion.

Recently, the rating agency Standard and Poor’s downgraded Pakistan’s sovereign debt to level of ‘CCC-plus’, close to defaulting on its commitments of external loan repayment.