ISLAMABAD, Feb 24: Pakistan has received $289 million from the United States on account of war on terror reimbursements for the October-December 2007 period, but the normal US economic assistance would no more be available to Islamabad for direct budgetary support, it is learnt.
Sources in the Finance Ministry told Dawn on Sunday that last week’s inflow of $289 million was purely on account of services provided by Pakistan to the
US in war on terror and was based on bills submitted by Islamabad after item-to-item verification by the authorities in Washington.
Pakistan has so far been paid about $5 billion in reimbursements for services, mostly military services and logistic support, at the rate of $80-100 million per month depending on actual expenditures incurred by Islamabad.
However, the sources said that the procedure for economic aid to Pakistan had been changed since November last year owing to increasing accountability issues raised by some US lawmakers in recent months.
They said Pakistan used to get about $300 million as direct disbursement for annual budgetary support under the $3 billion assistance package the two countries had finalised for Islamabad joining the war on terror about five years ago. These funds would now go directly to the specific development projects mostly in health and education sectors through the US Agency for International Development (USAID) that would also oversee award of contracts and payments thereof, except for less than $100 million that may still be available for direct budget support, the sources added.
The sources did not agree to a notion that the US administration was withdrawing direct budgetary financing to Pakistan’s new government – a facility that has been available to military-led government all these years. They said it had more to do with the pressure the Bush administration faced due to accountability concerns expressed by the Democrats.
The sources hinted that the US administration was in close contact with Islamabad to help arrange alternate avenues that might include some financing through development institutions.
Pakistan’s foreign exchange reserves declined from $16.4 billion in October 2007 to about $14.08 billion on February 15, owing to increased pressure arising out of higher oil imports, increasing balance of payment deficit and lower than expected inflows, particularly on account of privatisation proceeds and international bonds etc.
Overall, Pakistan has so far received about $10 billion since 2001 from the United States. More than half of this amount pertained to expenditure incurred by Pakistan on services provided to the US. Washington has been providing about $300 million to Islamabad since 2004, as part of the $3 billion package half of which was meant for supply of intelligence and military hardware.
Under the package, Pakistan used to get about $600 million, $300 million military assistance and $300 million in economic assistance.