Help Arrives, but Pakistan Is Still in Financial Mess
ISLAMABAD, PAKISTAN — Pakistan's financial crisis may be eased by a wealthy friend. A large loan from the oil-rich United Arab Emirates promises to help Pakistan restore its severely depleted foreign-exchange reserves.
Since ousting Prime Minister Benazir Bhutto Nov. 5 - for alleged corruption as well as financial mismanagement of the government - Pakistan has been trying to head off a balance-of-payments fiasco with the outside world.
The loan, reported by the Financial Times to be about $500 million, is welcome news for Javed Burki, who was brought home from a job at the World Bank in Washington to be the Muslim nation's new finance chief. Foreign-exchange reserves had fallen to around $650 million, or enough to finance three weeks of imports, down from $1.7 billion in June. The reserves are at a particularly alarming level because Pakistan is also required to pay $600 million by the third week of December in its foreign debt repayments. Ms. Bhutto also left a widening government deficit.
Making matters worse, the International Monetary Fund suspended a $600 million loan in June as a sign of its disapproval of the Bhutto government's economic policies.
In addition to its huge financial task, the caretaker government must prepare for national elections Feb. 3.