November 11, 2008	Tuesday	Ziqa'ad 12, 1429

WASHINGTON, Nov 10: Pakistan has not yet sent the letter of intent needed to finalise a rescue package it is negotiating with the International Monetary Fund to stave off a possible economic collapse.

Sources in the IMF and Washington’s diplomatic circles described the current week as crucial for finalising the package because any further delay could do an irreparable damage to the Pakistani economy.

This correspondent has learned that Pakistan intends to send the letter of intent by the end of this week and the country’s economic planners hope the IMF will approve their request as soon as possible.

IMF’s board of director meets twice a week and the Fund has promised to expedite the approval process.

Under IMF rules, a country is allowed to receive 300 per cent of its quota, which in Pakistan’s case amounts to about $4.5 billion. But Pakistan has asked for four to six times of the quota — between $6 billion to $9 billion — to meet its immediate needs.

Pakistan and the IMF reached a broad agreement on a rescue package in Dubai late last month but Islamabad is seeking further clarifications from the world body.

Diplomatic sources, however, say that there are no major disagreements between the two parties but Islamabad is making last-minute efforts to seek direct financial assistance from friendly countries.

The new Pakistani government has indicated that it would prefer bilateral deals with friendly governments to an IMF package because the Fund attaches strict conditions to the loans it gives.

But, so far Islamabad has not received any positive response from the countries it has contacted and it continues to delay its deal with the IMF to further explore the possibility for bilateral agreements.

“There is quite a lot of confusion right now about a Saudi oil facility or whether Pakistan is entering into an IMF programme,” said a financial analyst.

But he said that even if Saudi Arabia agreed to defer Pakistani oil payments, the country would still have to go to the IMF to fill its financing gap and secure other bilateral funding.

“Pakistan should move fast and finalise the rescue package, instead of moving slowly and grudgingly,” he said.He noted that one of the reasons for the delay in Pakistan’s response was that all major decisions were made by the president alone and his economic team only had an advisory role.

The Pakistani government, he said, was also reluctant because the fund was demanding a reduction in the government’s expenditure while the government was doing otherwise.