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.