By IRNA,
Islamabad : Despite promises and commitments of international financial agencies, economy of Pakistan is facing serious threats.
Pakistan is reportedly discussing a $10 billion to $15 billion support package with the IMF and other bodies at Dubai.
The IMF, it is said, would provide the package if satisfied with the steps taken by the government of Pakistan to stabilize its economy.
Over half of the $10-$15 billion package would be provided to Pakistan in form of an IMF loan and the rest of the amount would be provided by the World Bank, the Asian Development Bank and bilateral donors, including Saudi Arabia.
The money will be available at 5 to 6 percent interest while Pakistan also has agreed to readjust its monetary policies to qualify for the loan.
The country has already withdrawn subsidies on oil and oil products, a major IMF demand that may hurt millions of ordinary consumers across Pakistan.
The country’s inflation is running at around 25 percent, and its foreign currency reserves are rapidly depleting, forcing the government to seek emergency cash advance from friendly countries and international financial institutions.
Pakistan has been receiving economic aid from several sources as loans and grants.
The International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB), provides long-term loans to Pakistan. It also receives bilateral aid from developed and oil-rich countries.
The US has repeated its offer to help rescue Pakistan from the current financial crisis as it had said that International Monetary Fund has agreed to provide $6 billion to Pakistan.
Some of Pakistan’s key allies, such as China, also have urged Pakistan to go to the international community with concrete economic plans for seeking assistance.
The government of Pakistan has already said it would seek the IMF money only as a last resort if it cannot secure some US$5 billion it needs from governments or multilateral agencies like the World Bank.
Aid from the agency often comes with conditions such as cutting public spending that can affect programs for the poor, making it a politically tough choice for the government.
An IMF-backed plan would require Pakistan’s government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.
Economic hardship has been mounting across Pakistan for several months. Electricity shortages have become so dire that even middle-class families in big cities have to ration supply, with power cuts for 12 of every 24 hours, with one hour on, and one hour off.
Food prices have soared, making some basics, even flour, too expensive for the poorest to afford.
No large-scale riots have occurred, but concern is mounting that such protests are not far off.