U.S. agrees on $600m in aid for Pakistan
U.S. agrees on $600m in aid for Pakistan
Reuters, Islamabad
The United States formally agreed to give Pakistan US$600
million in aid, yet another reward for a decision by President
Pervez Musharraf to back U.S. President George W. Bush's declared
war on terrorism.
The memorandum of understanding signed on Thursday was for a
total of $600 million, in addition to a deal to reschedule $379
million debt which was signed in September.
"This is a grant aid to assist the government of Pakistan in
its forex exchange needs," Wendy Chamberlin, U.S. ambassador to
Pakistan, told a news conference after the signing ceremony.
In addition to the $600 million, Washington will provide more
bilateral funds to Pakistan that will include $73 million for
border security funds, a $300 million line of credit for
investment promotion from the Overseas Private Investment
Corporation, $15 million in refugee assistance, $34 million to
combat drugs, and $6.5 million in anti-terrorism funds.
"In order to support the government reform agenda and to
mitigate the impact of the economic downturn on Pakistan's
economy, we are providing today $600 million in direct budget and
balance of payments support to the government of Pakistan," a
U.S. embassy statement said.
Chamberlin said the U.S. financial support to Pakistan was an
acknowledgement of Islamabad's help to the international
coalition to fight terrorism and for the strong economic reform
programme of Musharraf.
"The United States is impressed by the strong support Pakistan
has provided to the international coalition against terror,"
Chamberlin added.
The United States has already rewarded Pakistan for its help
in the war against terrorism, doling out $100 million in economic
assistance and rescheduling $396 million in debt.
Islamabad is seeking far more, including new loans from the
International Monetary Fund and greater access to the U.S.
market.
Finance Minister Shaukat Aziz said Pakistan was seeking a long
term Poverty Reduction Growth Facility (PRGF) from the
International Monetary Fund, for which discussions were due to be
held in Washington in December.
Washington has already promised its support to Islamabad in
seekin the PRGF which will make IMF funds available to Pakistan
on soft terms.
"Pakistan is looking at not deferring its debt problem but
solving it," Aziz said. Pakistan's external debt stood at about
$38 billion in June, with servicing eating away a major chunk of
its revenues, leaving very little for development spending.