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Pakistan hopes for Saudi aid amid financial crisis

November 3, 2008
ISLAMABAD, Pakistan (AP) — Pakistan is turning to Saudi Arabia for financial aid to ease an economic crisis that already has forced the militancy wracked South Asian nation to start talks with the International Monetary Fund.

Pakistani President Asif Ali Zardari arrives Tuesday in the oil-rich Arab nation to request a deferral on oil payments and other possible support, the Foreign Ministry said. Another potential topic: negotiating with the Taliban.

Nuclear-armed Pakistan needs billions in outside assistance to avoid defaulting on its international loans. The impoverished nation of 170 million people is hampered by high inflation, chronic power outages and a sinking currency, as well as a violent Islamist insurgency — all of which threaten to undermine the fledgling pro-U.S. government.

Analysts said Zardari’s visit could yield some temporary relief, but that he was unlikely to return with a package that would render moot politically unpopular IMF aid.

Pakistani President Asif Ali Zardari will visit Saudi Arabia ... 
Pakistani President Asif Ali Zardari, here seen in front of a portrait of his late wife, is visiting Saudi Arabia to seek a deferred payment on oil imports and garner support for a financial aid package.(AFP/File/Aamir Qureshi)

An IMF assistance package would likely come with painful requirements to cut government spending that could affect programs for the poor, making it a tough choice for the politicians.

Economist Muzammil Aslam predicted Zardari would ask for $3 billion in deferred oil payments from the Saudis, but warned that Pakistan should prepare for IMF assistance.

“If you miss the IMF now, you will need it again some months later, and that time you will have to accept more tough conditions,” he said.

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