Pakistan accepts IMF conditions for financial aid: report

November 2nd, 2008 - 5:57 pm ICT by IANS  

Islamabad, Nov 2 (Xinhua) Pakistan has accepted most of the conditions of the International Monetary Fund (IMF) for aid to overcome its balance of payment crisis. The IMF had proposed 16 conditions for financial assistance to Pakistan during the talks in Dubai last month, and “11 of them have been accepted with slight changes,” The News daily Sunday quoted a finance official as saying.

According to the conditions, the Pakistan government has agreed to gradually impose the central excise duty (CED) on services and agriculture sectors at the rate of eight to 18 percent in place of the general sales tax (GST), the finance official told the newspaper.

The Pakistani currency will also be devalued after slight changes in the discount rate and exchange rate will be decreased officially by six to seven percent, the official said.

Pakistan, which said an IMF loan would be its last option, has been lobbying for financial help from friendly countries and financial institutions as it is faced with plunging foreign exchange reserves and high inflation.

However, it has failed to get positive response from those countries.

Analysts said the country’s foreign exchange reserves could only afford two months’ imports.

The rating agency Standard & Poor’s has downgraded the country’s sovereign debt to the level of CCC-plus, close to defaulting on its commitments of external loan repayment.

Shaukat Tareen, advisor to prime minister on finance, said Oct 23 that Pakistan needed upto $5 billion in 30 days for stabilizing the country’s economy.

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