Pakistan seeking market access, not cash from US, EU: Tareen

* Financial adviser says formal request for IMF cash assistance not yet made
* Other international lenders, Friends of Pakistan forum are priority

By Sajid Chaudhry

ISLAMABAD: Pakistan has not asked the United States and the European Union for cash assistance, but sought help with enhanced market access, free trade agreements, securitisation of remittances and oil facilities, Financial Adviser Shaukat Tareen said on Thursday.

“Our demand from the United States and the European Union is not to provide cash but to give us market access for enhanced exports through inking free trade agreements,” he told reporters at a briefing. “We cannot force anybody to give us cash. The Friends of Pakistan [forum] has shown willingness to support Pakistan, however, they can help us in terms of oil, securitisation of remittances and export market access.”

He said Pakistan had not made a formal cash assistance request to the International Monetary Fund (IMF), saying it was ‘Plan C’, if financial help from other international financial institutions and Friends of Pakistan was not available by November 15. “Timing is the issue,” he said.

“We have not formally requested the board of IMF for a facility as of now. . . We will do that when our discussions are complete and once we believe that there is no other option.”

Tarin said that discussions with the IMF had been started so that if Pakistan needed funding, the Fund would have ample time to prepare. “We will need $3.5 billion to $4.5 billion in foreign exchange over the next 30 days,” Tareen said.

He said the central bank governor and top Finance Ministry officials were in Dubai to brief IMF officials about Pakistan’s plan to deal with the crisis.

“Discussion with IMF was going on about reducing the budget deficit to 4.3 percent, flexibility in exchange rate, control on fiscal deficit,” he said.

Tareen said Pakistan’s actual financial gap is estimated at $3.5 billion, but “we want to secure a $5 billion deal apart from normal lending from international financial institutions not only to bridge the gap but also to build foreign exchange reserves”.

To a question, Tareen said a possible IMF loan would come under a ‘standby arrangement’ and would carry interest rate of 3 to 4 percent, which are high when compared with the Poverty Reduction and Growth Facility’s 0.75 percent service charges.

Regarding the Saudi oil facility, he said it was “very much on – its quantum and modalities of its supply would be discussed during the Friends of Pakistan meeting scheduled next month in Abu Dhabi”.

He said the government had provided Rs 180 billion to tackle the liquidity crisis in the banking sector and another Rs 90 billion would be added in November, so that cotton procurement is ensured.

“If I had a magic wand I would have used it to avert the current financial crisis, reduce terrorist attacks and produce more electricity to restore the confidence of local and foreign investors,” he said.

Source: http://www.dailytimes.com.pk/default.asp?page=2008%5C10%5C24%5Cstory_24-10-2008_pg1_10