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Wednesday, 26 September, 2001, 22:16 GMT 23:16 UK
Pakistan wins IMF cash
A villager walks through a drought-stricken part of Pakistan
Pakistan's economy was hit by drought
The International Monetary Fund has approved a $135m cash injection into Pakistan, in a further sign of the country's strengthened relations with Western states.

IMF chiefs, announcing they had cleared he final tranche of a $596m loan, praised the country's adherence to a fund-agreed economic programme.

"Pakistan's achievements under the programme... have been commendable," said Eduardo Aninat, the fund's deputy managing director.

"Despite adverse weather conditions, real per capita [economic output] rose, inflation has been lower than expected, and external balances and official reserves have improved in line with programme targets."

The move comes four days after the US lifted sanctions against Pakistan, which has become central to Washington's counter-terrorism efforts following the attacks two weeks ago on the Pentagon and World Trade Center.

The sanctions committed the US - the largest shareholders in the IMF - to blocking loans to Pakistan, or abstaining from the voting.

Nonetheless, the IMF stressed Pakistan's economic progress, assessed during a visit last month, and board members approved the loan "without any problems", a fund source said.

And Mr Aninat urged Pakistan to stick to 2001-02 Budget targets, stressing the importance of spending cuts and a rise in fuel tax in helping the country to balance its books.

The fund's finding will be welcomed in Islamabad, ahead of a visit by a team including Pakistan's Finance Minister Shaukat Aziz and Central Bank governor Ishrat Husain to Washington next month to discuss further IMF loans.

See also:

24 Sep 01 | Business
Pakistan's airline under pressure
24 Sep 01 | Business
Pakistan's exchanges re-open
23 Sep 01 | Business
Sanctions boost for Pakistan economy
22 Aug 01 | Business
Pakistan seeks new IMF money
14 Aug 01 | Business
Boost for Pakistan economy?
25 Jul 01 | South Asia
World Bank praises Pakistan's reforms
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