Islamabad, September 03: The International Monetary Fund will give Pakistan $450 million in emergency flood aid and disburse funds in September to help the country’s economy cope with the devastation, the head of the IMF said on Thursday.
Severe flooding in Pakistan has destroyed cropland and livestock and displaced millions of people, causing damage that the government has estimated at $43 billion, or almost one quarter of the South Asian nation’s 2009 GDP.
“The IMF will be the first agency likely to disperse very rapidly money which is absolutely needed,” IMF Managing Director Dominique Strauss-Kahn told reporters after a week of discussions with Pakistani officials. “The most important thing is to keep the Pakistani economyn track.”
Talks with a delegation led by Pakistan’s Finance Minister Abdul Hafeez Shaikh on the terms of an $11 billion IMF loan program left him satisfied with the country’s commitment to reforms, the IMF chief said.
Under the 2008 IMF loan program, Islamabad pledged to implement tax and energy sector reforms and give full autonomy to the State Bank of Pakistan.
“What is important is what was decided by the government to do to improve the economic situation, especially in the tax sector but in other fields also,” said Strauss-Kahn.
“What I heard from the authorities is that they really want to move on with the program,” he said.
Shaikh said Islamabad remained committed to loan terms, including fiscal authority and tax reforms.
Pakistan’s ambassador to the United States, Husain Haqqani, said IMF faith in its reform commitments could help boost international “solace and confidence” in the country’s economic prospects and fiscal discipline despite the flood calamity.
“We expect the markets to respond positively and we also expect other donors in a more aggressive manner now that they know Pakistan is going to continue with economic reforms,” he told.
Describing the flood damages as “manifold worse than the (2005) tsunami, the Haitian earthquake and the 2005 earthquake in Pakistan,” Haqqani appealed to Washington to take steps to allow Pakistan to export more textiles to the U.S. market under special low-tariff programs.
One program, the “Reconstruction Opportunity Zones” trade package that allows tariff goods for certain Pakistani garments, remains stalled in the U.S. Senate and faces opposition from some American textile groups.
“Because of the magnitude of the impact of the floods, as well as the fact that Pakistan is a front-line state in the global war against terrorism, there is a case to be made that Pakistan needs to be given that preferential access,” said the ambassador.
-Agencies