Pakistan faces bankruptcy with $3bn forex reserves: report

October 7th, 2008 - 6:51 pm ICT by IANS  

London, Oct 7 (IANS) Pakistan’s foreign exchange reserves are on the brink at a mere $3 billion - enough to buy only a month’s supply of oil and food, a newspaper reported Tuesday.The Daily Telegraph said that on paper the country’s central bank holds $8.14 billion of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion.

It said Pakistan had $16 billion of foreign exchange nine months ago, but high oil prices “have combined with endemic corruption and mismanagement to inflict huge damage on the economy”.

The report comes after President Asif Ali Zardari told the Wall Street Journal newspaper his country needs a $100 billion bail out package.

“If I can’t pay my own oil bill, how am I going to increase my police? The oil companies are asking me to pay $135 [per barrel] of oil and at the same time they want me to keep the world peaceful and Pakistan peaceful,” Zardari said in an interview published Saturday.

The Daily Telegraph said Pakistan’s efforts to defer payment for 100,000 barrels of oil supplied every day by Saudi Arabia have not yet yielded results, and that the government has failed to raise loans on favourable terms from “friendly countries”.

It said Zardari is expected to ask the international community for a rescue package at a meeting in Abu Dhabi next month.

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