President Asif Ali Zardari says that while cash-strapped Pakistan is still averse to resorting to IMF aid, the country must consider the IMF option as a cure for its ailing economy. Zardari is to visit Saudi Arabia on Tuesday for talks with King Abdullah Bin Abdul Aziz, Custodian of the Two Holy Mosques, to solicit support for the Friends of Pakistan initiative and the oil-facility requested by Pakistan. Speaking to Saudi Gazette in an exclusive interview ahead of the visit, Zardari said “Saudi Arabia has always provided assistance to Pakistan in difficult times.” And these are very difficult times for Pakistan, which needs up to $4.5 billion to deal with a balance of payments crisis, raising the prospect that the violence-hit country will default on its foreign debts. “I would solicit Saudi support for the Friends of Pakistan initiative,” the President said. “I sincerely hope that with the steadfast support of the Saudi government, it will achieve the desired objectives.” The Friends of Pakistan will meet in Abu Dhabi on Nov. 17 to decide on economic aid for the country, an ally in the global “war on terror.” Pakistan's friends include Britain, France, Germany, the United States, China, the United Arab Emirates, Canada, Turkey, Australia and Italy plus the United Nations and the European Union. Additionally, “Pakistan is supported through a series of negotiations by various world economic bodies – World Bank, Islamic Development Bank, Asian Development Bank and the UK's Department for International Development,” Zardari said, suggesting that options remain open for his country to avoid a loan from the International Monetary Fund (IMF). “Getting aid from the IMF is our last option,” Zardari said. However, he added after a pause: “Actually, we must consider the IMF option as a medicine that will ultimately cure our ailing economy.” An IMF loan is often tied to stringent conditions, chief of which is elimination of subsidies. In September, the IMF recommended that Pakistan's fiscal deficit be reduced to 4.7 percent of the GDP and electricity subsidies be eliminated. And that's Zardari's concern. “In just five years, our oil bill has increased from $3 billion to over $12 billion, thus creating pressures on our balance of payments, he said. “Such an increase is also creating difficulties for our budget as we have tried to protect our people from the rising cost of energy by subsidizing fuel and electricity in the given limits of the budget.” If Pakistan cuts its electricity subsidies as sought by the IMF, its energy bill – for mainly oil – will get passed on to the people, leading to price rises. “Global food inflation is hovering between 35 and 40 percent and Pakistan is no exception,” Zardari pointed out while explaining his government's struggle to control food prices in the midst of various initiatives to return Pakistan on a high growth trajectory. “Unfortunately, for decades Pakistan was being managed by people who had no perspective or imagination,” Zardari said. “Otherwise, Pakistan is rich in all sorts of resources.” – Okaz/ SG __
