IMF ' Has six days to save Pakistan'

The International Monetary Fund has less than a week to prevent a full-blown financial crisis in Pakistan, Germany’s foreign minister warned on Tuesday, as Islamabad said it was nearing agreement with the fund over a bail-out package.
Speaking in the Pakistani capital, Frank-Walter Steinmeier called on the IMF to save the nuclear-armed country from an escalating financial crisis by extending an “appropriate loan”.

“I hope the decision will be taken soon. It won’t help to have it in six months, or six weeks. Rather, we need it in the coming six days,” he said after meeting Pakistan’s President Asif Ali Zardari and Shah Mehmood Qureshi, foreign minister.
Germany, which has troops on the ground in neighbouring Afghanistan, shares the concerns of many western governments that a growing balance of payments crisis will destabilise security in Pakistan whose people are angry about the rising cost of food and energy.
Shortly after Mr Steinmeier’s remarks, a Pakistani official said negotiations with the IMF were “in the final stages” and that the government expected agreement on a letter of intent with the fund “within one or two days”.
An IMF programme is expected to last until June 2010 and could be worth up to $15bn, officials said.
An official said that a letter of intent would be followed by a formal request to the IMF’s board for funding, with an agreement likely by mid-November.
Moody’s, the ratings agency, downgraded Pakistani government bonds from “B-2” to “B-3” and signalled that it could cut its rating further, citing the failure of Pakistan to secure other lines of funding.
Mr Steinmeier pledged to support the country in its negotiations with the IMF and promised to increase German development assistance. He departed immediately for the Middle East where he is expected to urge Saudi Arabia and the United Arab Emirates to increase their support for Pakistan ahead of a donor conference in mid-November.
Pakistan needs $4bn-$5bn for the financial year to June 2009 to meet debt payments and other liabilities, according to finance ministry officials in Islamabad.
An official at the central bank said the country’s foreign currency reserves stood at $4bn and were likely to run out by the end of November. “We have a very narrow space to put the country back on the rails,” he said.