‘Friends’ unveil initiative to avert economic collapse in Pakistan

‘Friends’ unveil initiative to avert collapse: Over $15bn needed
By Anwar Iqbal and Masood Haider, Dawn, September 27, 2008
Source

NEW YORK, Sept 26: A permanent forum was launched in New York on Friday to help raise billions of dollars to avert a possible economic collapse in Pakistan.

The forum, which will be called the Friends of Pakistan, will hold its first meeting in Abu Dhabi next month.

The decision to form such a body was made at a meeting of some of the world’s richest nations that also have close ties to Pakistan and want to help.

“I don’t want them to give us the fish. I want to learn how to fish and do it myself,” said President Asif Ali Zardari while explaining what Pakistan expected from the new forum.

“We are engaged with Pakistan through international financial institutions,” said US Secretary of State Condoleezza Rice. “We will support the steps Pakistan must take” for economic reforms.

British Foreign Secretary David Miliband described the meeting as “a very strong signal of political and economic support to the democratically elected government in Pakistan”.

UAE Foreign Minister Shaikh Abdullah bin Zayed said his country fully backed the initiative to “show our commitment to Pakistan”.

The three officials were among half a dozen world leaders who attended Friday’s meeting formally inaugurated by President Zardari.

The United States, Britain, Italy, Germany, France, Japan, China, Australia, Turkey, Canada, Saudi Arabia and the UAE attended the inaugural meeting.

European Union and the United Nations sent their representatives. Other countries are also likely to join.

Recent reports in the western media indicate that Pakistan needs as much as $10 billion to avoid an economic meltdown.

The United States and Britain jointly launched the initiative to form a group to help Pakistan after realising the seriousness of the economic crisis confronting the country.

Diplomatic sources told Dawn that at a meeting with President Zardari on Wednesday US President George W. Bush had told him that “Pakistan needs help today, rather than tomorrow”.

Pakistan’s foreign currency reserves are falling fast and if forward liabilities are included, the real reserves may go down to $3 billion. This cannot meet the import bill of one whole month.

Out of total reserves of $8.467 billion, the reserves held by the commercial banks stood at $3.461 billion on September 23. From September 22, the reserves fell by around $180 million, as there were no receipts while the government made heavy payments for oil and other imports.

This week, Moody’s Investors Service lowered Pakistan’s credit outlook to negative due to the risk of “missed repayments” on the nation’s debt.

Pakistan’s gradual economic decline, which started last year, alarmed the United States and Britain as they feared that financial chaos could allow terrorists to deepen their roots in the country.

To avoid such an eventuality, they decided to launch a new group of donors.

After Friday’s meeting, President Zardari told journalists outside a UN conference room that the participants had decided to make the Friends of Pakistan group a permanent body.

“All of them want to help. They want to make democracy work,” said Mr Zardari.

He said countries in Pakistan’s region realise that they had to support its efforts to fight terrorism, which was a regional issue as well and therefore needed “a regional ownership”.

“There is a very strong support for Pakistan’s democratic government” and the world wanted to help it deal with the economic challenges the country faces, he said.

“They want to help bring stability to the young democracy” and to help it “take difficult decisions” for economic recovery, Mr Zardari added.

Ms Rice, who accompanied Mr Zardari and Mr Miliband to the media briefing, said that those joining the Friends of Pakistan group had stayed “very closely engaged” with international financial institutions that provided economic assistance to Pakistan.

“We look at the US and the world support to (our economy) as a blessing,” said Mr Zardari while responding to Ms Rice’s expression of support.

The British foreign secretary said that every single country that joined the Friends of Pakistan group “stands shoulder to shoulder with Pakistan”.