Pak to slash defence budget substantially for IMF help

Cash-strapped Pakistan will have to slash its defence budget by a substantial 30% over next four years if it agrees to the IMF’s conditions for a bailout package now being discussed.

 

Facing severe debt-repayment problems and massive imbalance in its foreign exchange reserves, Islamabad hopes to get $9.6 bn from the IMF over the next three years at a mark-up rate of 16.7% a year, a media report here said.

But it pictured "extremely tough conditions", Pakistan would have to meet to get this financial bailout, The News daily reported quoting a document containing IMF's conditions.

The document states that if Pakistan accepts the IMF funding, it will have to gradually slash the defence budget by 30% between 2009 and 2013 and reduce the number of jobs entailing pension in government and semi-government departments, from 3,50,000 to 1,20,000.

The document further states that six IMF and two World Bank directors will monitor the preparation of the federal budget by the finance ministry and could change proposals which Pakistan government will be obliged to comply with.

Shaukat Tarin, adviser to the Prime Minister on finance, has said that Pakistan will approach the IMF for aid to overcome its financial crisis by mid-November, if it is unable to secure assistance from multilateral donors like the World Bank and friendly countries.

Pakistan will also have to furnish to the IMF details of all loans it has availed of under bilateral and multilateral arrangements 48 hrs before signing the agreement for the funding, which will not be rescheduled, the document said.