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Pakistan's creditors to bridge $3.2 billion financing gap

  ISLAMABAD, November 15 (Internews): Pakistan's $3.2 billion financing
 gap for the current fiscal year will be jointly bridged by the IMF-led
 bilateral and multilateral creditors and a decision in this respect is
 expected to be taken by the Fund's executive board in the first week of
 December.
 Pakistan has been assured by the United States that bilateral and
 multilateral donors will meet its $8 billion financing gap during the
 next three-year period, official sources here say.
 Pakistan has been told that since it offered necessary support to US-led
 coalition to fight against terrorism, Islamabad's short- and long-term
 financial requirements will be adequately met.
 In the first place, Pakistan's current year $3.2 billion financing gap
 will be filled to ease pressure on its balance of payment position.
 IMF's new Senior Representative in Pakistan Henri Ghesquiere, when
 contacted, confirmed that the Fund's executive board was meeting in
 Washington on Dec 5 or 6 to discuss and approve Pakistan's estimated
 $3.2 billion financing gap for the current financial year.
 "Pakistan's economic and financial needs are required to be met and its
 case for approval of $3.2 billion financing gap for the current fiscal
 is bright," he said.
 He pointed out that IMF and other bilateral and multilateral donors were
 greatly encouraged by the successful completion of the 10-month Standby
 Arrangement (SBA).
 "The executive board of the IMF has been encouraged to see good economic performance shown by Pakistan under SBA programme," he added.
 "Pakistan has a good argument for trying to persuade the creditors for a
 certain extent of debt forgiveness."
 Ghesquiere said that Poverty Reduction Growth Facility (PRGF) will also
 come up for discussion by the board. However, he made it clear that
 nothing could be said about the size of the new lending programme.
 But he said that new lending programme will be concessional one to help
 improve the economy of the country. Pakistan, he said, was so indebted
 that it needed to be offered new loans on maximum 0.5 per cent interest
 rate.
 Official sources said that $3.2 billion financing gap was likely to
 include $700 million loans to be restructured by the Paris Club for the
 current financial year. The Club was expected to meet immediately after
 IMF executive board's meeting.
 Sources said that while the IMF, Paris Club and other bilateral and
 multilateral donors were working out details to offer substantial
 assistance to Pakistan, they wanted improvements in various sectors.
 For example, they were of the view that issues like corruption, good
 governance, transparency and provisions for more funding for health and
 education sectors were needed to be taken seriously by the government.
 The United States has just promised $1 billion assistance of which $600
 million will be in the shape of budgetary support.
 Also, Pakistan was promised market access in the United States and a
 better financial package by the IMF, World Bank, Asian Development Bank
 and other bilateral creditors.
 Washington had also approved $600 million cash grant for Pakistan but so
 far nothing has flowed into the kitty.
 Earlier, the UK had written off Pakistan's $40 million loans while
 Canada converted its $300 million debt into social sector funding
 through a swap.
 European Union (EU) had also offered additional market access which
 according to the officials concerned was likely to provide $400 million
 additional relief during the current financial year. -Internews

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