November 16, 2008	Sunday	Ziqa'ad 17, 1429

WASHINGTON, Nov 15: The International Monetary Fund announced on Saturday that it had reached an initial agreement with Pakistan on the key elements of an economic programme supported by a $7.6 billion loan to meet the country’s serious balance of payments difficulties.

The 23-month stand-by arrangement is subject to the approval by the IMF Executive Board, which is expected to meet next week to discuss the programme, under the Fund’s emergency financing mechanism.

The IMF said the proposed loan amounted to some 500 per cent of Pakistan’s quota in the Fund.

The conditions attached to the programme will give greater oversight rights to the IMF, which will designate a set of experts for this purpose. Pakistan will also be required to reduce its expenditure, although the IMF had promised that the required cuts will not affect development projects.

Although an IMF package is not seen as very attractive, it will restore confidence of other donors in Pakistan’s ailing economy and may open doors to bilateral assistance from friendly nations and other financial institutions.

In a press statement, the IMF said Pakistan’s programme had two main objectives:

• To restore the confidence of domestic and external investors by addressing macroeconomic imbalances through a tightening of fiscal and monetary policies; and

• To protect the poor and preserve social stability through a well-targeted and adequately funded social safety net.

IMF Managing Director Dominique Strauss-Kahn said both objectives were an integral part of the IMF support for Pakistan.

“This support is part of a broader package that includes financing from other multilateral institutions and regional development banks. I would like to call on the donor community to work together and act quickly to support Pakistan’s programme in order to mitigate the impact of the current economic difficulties on the poor and ensure an adequate level of spending on development programmes,” Strauss-Kahn added.