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Pakistan set to receive major economic relief package from US

Pakistan to suffer $10 billion loss

ISLAMABAD, October 20 (Internews): A high profile delegation from the
United States is expected in Islamabad shortly to formalise an economic
aid package for Pakistan, sources said here Saturday.
"The US is actively working with Islamabad to shape up the pros and cons
of the possible aid package, which can include direct economic
assistance, military sales, trade incentives and measures to reduce
Pakistan's debt burden," one official said.

He, however, refused to say what could be the expected size of the
package.
Pakistan expects the United States to waive its bilateral debt of $3.1
billion, enhanced access to export markets, and support for new
multilateral arrangements.
Economists here believe the US has taken its time before offering
economic relief to actually gauge the scope of Islamabad's cooperation.
For the last few days, however, it was being felt that delayed
announcement of relief package would put more pressure on the
government, which is facing resistance from the mainstream religious
parties for supporting the US military strikes against neighbouring
Afghanistan.
The economic benefits in response to Pakistan's overwhelming support
against terrorism had been limited to small budgetary support measures,
including $100 million from the US, $25.5 million from Japan and some
incentives from the UK.
Japan's response to an official Pakistani request for debt waiver was,
however, not very encouraging. Islamabad owes $5 billion to Tokyo.
Official sources say talks with the IMF, World Bank, Asian Development
Bank and major bilateral creditors are progressing satisfactorily.
Pakistan also expects a good deal with the official bilateral creditors
at the Paris Club level to reduce the external debt to a more
sustainable level.
An IMF official said this week that Pakistan's debt is a serious
consideration, as part of the new Poverty Reduction and Growth Facility
(PRGF) being negotiated.
"The plan for some time has been to move on toward a PRGF. That is the
plan, and there has been no change in that plan or, actually, even in
the timing of the plan," he told a press conference in Washington.
He said that PRGF would be necessary for another Paris Club operation.
"I certainly have seen some commentary about Paris Club because the debt
situation for Pakistan is a significant consideration."
Finance Minister Shaukat Aziz has said the government is working on
innovative measures to seek best possible debt relief package.
However, he said that there was no consideration to seek debt relief
under terms available for the Highly Indebted Poor Countries since
Pakistan does not qualify for it.
A high-level Pakistani team is currently in Washington to finalise
arrangements for the new bailout package. -Internews
________________________

Pakistan to suffer $10 billion loss

ISLAMABAD, October 20 (Internews): The damage to Pakistan's economy in the aftermath of events related to the September 11 terrorist bombings
in the United States has been estimated at $10 billion.
This is the figure being cited in Islamabad by the economic circles
although the government is yet to officially endorse it because the
Ministry of Finance is still busy calculating the exact losses in
different fields.
Independent sources say that Pakistan's $1 billion recurring cost on
hosting 2.7 million Afghan refugees (calculated on one dollar a day
international poverty base line basis) is shooting up with a fresh
influx of refugees.
They say Islamabad will have to foot an additional bill of around $400
million annually if the estimated one million new Afghan refugees cross
over into Pakistan, fleeing American military strikes.
With slower economic growth and a considerable decline in exports - $1.5
billion below target this year - there is expected to be a huge revenue
shortfall that may be touching $1 billion.
Pakistan's track record in meeting its revenue target has perennially
been dismal, and with the economy having plunged in crisis due to the
prevalent situation, the picture has become further drearier.
American war of neighbouring Pakistan is also scaring away foreign
investment and stoppage of further investment is expected to hugely add
to Pakistan's economic woes. $500 million has already been lost this
year. -Internews

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