The virus known as “economic meltdown” continues its global spread, now infecting Pakistan. Germany’s foreign minister called on the world to save Pakistan, saying, “I hope the decision will be taken soon. It won’t help to have it in six months, or six weeks. Rather, we need it in the coming six days.” The International Monetary Fund is slapping together a loan for Pakistan to prevent it from defaulting on its debt.
Unlike some other nations–cough, Iceland,cough–besieged by the financial fallout, Pakistan is a strategic military country which owns nucelar weapns and borders Afghanistan. Before the financial crisis began, the nation wasn’t exactly stable. IMF officials won’t even set foot in Pakistan because of fears of suicide bombers. Letting Pakistan default on its debt and sink into an abyss would have ramafications beyond economic troubles.
FT: “It is a precarious situation which has to be tackled,” said Abid Hasan, former adviser on Pakistan to the World Bank, referring to the need for international financial assistance. “Time is running out”.
Foreign governments fear that a growing balance of payments crisis could further destabilise the country and imperil its fragile security situation.
Pakistan needs $4bn-$5bn for the financial year to June 2009 to meet debt payments and other liabilities, according to finance ministry officials in Islamabad.
An official at the central bank said the country’s foreign currency reserves stood at $4bn and were likely to run out by the end of November. “We have a very narrow space to put the country back on the rails,” he said.
An IMF programme is expected to last till June 2010 and could be worth a total of $12bn-$15bn, officials say.
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