Pakistan's cash for co-operation deal

Pakistan risks civil unrest by supporting the global alliance

By BBC North America business correspondent Stephen Evans

The International Monetary Fund is working on a multi-million dollar aid package for Pakistan as Britain and the United States try to cement an alliance against the Taleban regime in Afghanistan.

It is understood the loan will be unveiled at the G7 talks this weekend between the finance ministers of the world's biggest industrial countries.

The money for help package is being finalised behind the scenes at the meeting in Washington.

Pakistan has asked the IMF for a $2.5bn loan.

Britain is now brokering a deal whereby the country - one of the few to recognise the Taleban regime - will get IMF funds in return for help, perhaps by agreeing to allow war planes through its airspace.

Recession fears

UK Finance Minister Gordon Brown has been at the IMF headquarters in Washington, while UK Prime Minister Tony Blair has been in the Pakistani capital, Islamabad.

Apart from this, the G7 finance ministers will also discuss concerted action to avert global recession.

The Bush administration now accepts that the American economy is actually shrinking, with output down.

There is disagreement, though, about what to do. German ministers are sceptical about whether co-ordinated international action will help.