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Friday, 7 December, 2001, 02:26 GMT
IMF approves $1.3bn loan to Pakistan
Housing in Pakistan
The IMF is impressed by economic progress in Pakistan
The International Monetary Fund has approved a $1.3bn loan for Pakistan, to help it battle poverty and offset the economic impact of the war in Afghanistan.

The loan, under the IMF's anti-poverty programme, runs for three years and allows the Pakistan to draw $109m immediately.

Pakistan's case for borrowing the money was strengthened by its recent, first-ever completion of an IMF loan programme.

Its also won backing following its co-operation in the war on terror and the lifting of US-imposed sanctions.

'Commendable'

Pakistan's last IMF programme, worth $600m, expired in September, when the fund released a final $135m.


Pakistan's relations with Afghanistan could deteriorate because of its past support for the Taliban

Standard and Poor
At the time Eduardo Aninat, the fund's deputy managing director, said: "Pakistan's achievements under the programme... have been commendable."

The organisation urged Islamabad to introduce economic reforms, fearing it would face even greater uncertainty following the 11 September attacks.

In September the US decided to lift sanctions imposed on India and Pakistan for conducting nuclear weapons tests in 1998.

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

Regional tension

Even with US and IMF backing Pakistan faces massive debts and high interest payments.

Credit rating agency Standard and Poor highlighted further problems: "With the anti-Taleban Northern Alliance likely to assume a significant role in the new Afghanistan administration, Pakistan's relations with Afghanistan could deteriorate because of its past support for the Taliban.

"Coupled with its historical animosity with India, regional tension might rise."

See also:

26 Sep 01 | Business
Pakistan wins IMF cash
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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