Pakistan Says China is “All Talk;” Rebuffed, Pakistan May Be Forced to Seek I.M.F. Aid

By Jane Perlez
The New York Times
October 18, 2008

ISLAMABAD, Pakistan — President Asif Ali Zardari returned from China late Friday without a commitment for cash needed to shore up Pakistan’s crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments.

With the United States and other nations preoccupied by a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the I.M.F.

Pakistan President Asif Ali Zardari (L) meets with Chinese Premier ...
Above: Pakistan President Asif Ali Zardari (L) seems delighted as he meets with Chinese Premier Wen Jiabao in Beijing. China vowed Thursday to do what it could to help cash-strapped Pakistan avert financial disaster as Islamabad’s leader continued an official visit aimed at rustling up crucial Chinese investments.  But Zardari returned home to Pakistan only with smiles, a photo-op and promises from China: no cash.(AFP/POOL/Kyogoku Kotai)

Accepting a rescue package from the fund would be seen as humiliating for Mr. Zardari’s government, which took office this year.

An I.M.F.-backed plan would require Pakistan’s government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan’s economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy about exploiting the terrorist threat to try to win financial support, a senior official at the I.M.F. said.

But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.

“A selling point to us even has been, if the economy really collapses this is going to mean civil strife, and strikes, and put the war on terror in jeopardy,” said the official, who declined to be identified because he was not authorized to speak to the news media.

“They are saying, ‘We are a strategic country, the world needs to come to our aid,’ ” he said.

Pakistani officials said they had received promises from the Chinese to help build two nuclear power plants, and pledges for business investment in the coming year.

But Pakistan had also hoped China would deposit $1.5 billion to $3 billion in its central bank, according to senior officials at the I.M.F. and Western donor countries.

The infusion of cash would have helped with payments for oil and food as currency reserves dwindle, officials said.

Shaukat Tareen, the new Pakistani financial adviser who accompanied Mr. Zardari to China, began to prepare the public for an I.M.F. program on Saturday, saying for the first time at a news conference that if Pakistan could not stabilize its economy within 30 days, it “can go to the I.M.F. as a backup.”

“We may have to go to Plan B,” he said.

Read the rest:
http://www.nytimes.com/2008/10/19/world/asia/19zardari.html?_r=1&hp&oref=slogin

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: