Pakistan Looks for Financial Aid Amid Budget Woes

Pakistan looks for financial aid amid budget woes

Devastated by floods, Pakistan is facing tough choices in deciding how to allocate increasingly dwindling financial resources, said an International Monetary Fund official on Monday after the first day of economic talks with government officials.

It was clear that the floods will have a “major and lasting impact” on the economy of Pakistan, said Masood Ahmed, director of the Middle East and Central Asia Department of the IMF.

The talks held in Washington will be joined by Pakistani Finance Minister Abdul Hafeez Shaikh on Wednesday, but earlier he has urged the IMF to lift constraints on its $11 billion loan to Pakistan in 2008.

The minister said another option is to ask for emergency funding from the IMF that the agency gives to countries devastated by natural disasters.

Huge floods who have claimed thousands of lives will complicate the already dire financial situation of Pakistan, with the government busy addressing a growing humanitarian crisis, widespread losses to crops and infrastructure, and decreased tax payments.

The talks will be about the impact of the disaster to Pakistan's growth, budget, and inflation.

“They will have to make hard choices in reallocating government investments toward higher priorities and find ways to mobilize the resources,” Ahmed said.

He identified foreign humanitarian aid as crucial in helping the government to deal with its losses.

“Despite all that, what this makes even more imperative is that the international community, which has been active in helping Pakistan, will need to redouble its efforts to help the country overcome some of its difficulties imposed by this catastrophe,” Ahmed added.

Posted by James Fried on Tuesday August 24 2010, 6:04 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0