Pakistan prepares plan to avert financial crisis

Media reports said Pakistani officials would discuss the aid possibility with the IMF on Tuesday in Dubai.

Pakistan, a U.S. ally in the war on terrorism facing a rising domestic militant threat, needs up to US$5 billion to avoid defaulting on sovereign debt due for repayment next year.

Soaring inflation, a plunging currency and chronic power outages also plague the country.

In a meeting with Pakistan's prime minister Monday, finance ministry head Shaukat Tareen said the planned economic agenda would "enhance economic stability and socio-economic uplift in the country," according to a press statement from the premier's office.

The prime minister, Yousuf Raza Gilani, asked the ministry's economics team to ensure that the plan would spur foreign investment in the unstable, nuclear-armed nation, according to the statement released late Monday.

Tareen has said turning to the IMF to get cash to avoid defaulting is a backup option. IMF aid often comes with conditions such as cutting public spending that can affect programs for the poor, making it a politically tough choice for the Pakistan government.

Pakistanis believe their front-line role in fighting terrorism should convince other countries, including the U.S., to help prevent it from economically imploding.

The South Asian nation also hopes a recently formed group of countries called "Friends of Pakistan" - including the U.S., Britain, Canada, France and Germany - can help financially. But a global economic crisis, including severe problems in the U.S., could limit assistance.

While visiting Pakistan on Monday, U.S. Assistant Secretary of State Richard Boucher attended a preliminary meeting of the Friends group, which expects to hold a session in Abu Dhabi in a few weeks.

Boucher said the group wanted to help Pakistan but that its "goal was not to throw money on the table, it is to support long-term goals for Pakistan."

His remarks appeared to suggest that immediate assistance for Pakistan would likely come from multilateral groups like the World Bank or the IMF.

U.S. State Department deputy spokesman Robert Wood said Monday that Washington was "concerned" about Pakistan's economic problems, but declined to detail any plans to help.

"We obviously will try to see what we can do to help Pakistan get through its financial - you know, financial crisis," Wood said in a briefing to reporters posted on the State Department Web site.

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