Pakistani finance advisor Shaukat Tareen says the country needs about four billion dollars by the end of the month to fend off the possibility of a default. He has been urging bilateral and trilateral donor sources for financial assistance but so far no country has made any commitment. After his visit to China, President Asif Ali Zardari has now been to Saudi Arabia. How serious is the crisis? And what kind of help has Pakistan been able to get from abroad?
Will he keep smiling? Pakistan's president Asif Zardari needs to stave off a daunting financial crisis
Pakistan's economic woes began with the surge in global oil prices. It almost doubled the country's import bill, causing a huge deficit in the balance of payments. Currently imports are double the amount of exports, while the country has to pay hundreds of millions dollars in principal and interest on its external debt in the next few weeks. At the current rate, Pakistan will be left with no foreign exchange at the end of this month.
After friendly countries like China refused to help, Pakistan went to the International Monetary Fund as a last resort for a bailout.
A "bottomless pit"
Analyst Dr.Gulfraz Ahmed explains why most of the friendly countries refused to give direct financial support to Pakistan:
"Bilateral help cannot lay down the terms, and it cannot force you to restructure the management of the economy. And these countries feel even if they give money, it is a bottomless pit. They will continuously be asked to give more. That is why each 'friend' wants to come through the multilateral approach, so that these institutions are able to lay down the terms that would actually force you to improve."
Analyst Mubashir Butt says a big challenge facing Pakistan is the issue of credibility and trust:
"The bitter truth is that Pakistan has lost credibility because of the misrepresentation of figures largely by the previous government, there is also the issue of the US aid which was given to Pakistan and was misused in the name of the war against terrorism, was used for purchasing weapons instead. Even now, the Pakistan government has thus far failed to come up with a concrete plan how it may be using the money it might get from the 'Friends of Pakistan' forum."
The informal 'Friends of Pakistan' forum is meeting in less than two weeks to discuss ways as to how to help Pakistan ride out the current crisis. Immediate help, however, is likely to come from the IMF. Technical talks about a bailout have been concluded, yet the extent of financial support from IMF or the world bank is still unclear.
Dr. Gulfraz Ahmed says the internationally community should stand by Pakistan in this hour of crisis:
"Pakistan was fighting this war and as a consequence Pakistan's economy has suffered a serious blow. The world should realize that in order to keep Pakistan going in the war on terror on behalf of the whole world, they must not allow this country to go down this precipice."
Late Thursday, official sources claimed that Saudi Arabia had agreed to provide a huge quantity of crude oil with deferred payments. An official announcement on the Saudi aid package was expected shortly, officials said.