A sugar crisis in Pakistan has wrong-footed the political leadership as mills owned by lawmakers are blamed for compounding the miseries of Pakistanis and housewives struggling to sweeten the Eid festival.

Growing Islamist violence has crippled the economy in northwest Pakistan, made tens of thousands of people unemployed and exacerbated the poverty that breeds fundamentalism, business leaders say.

The International Monetary Fund Thursday praised Pakistan and noted initial success in stabilizing its crisis-hit economy, in the first review of a US$7.6 billion line of credit.

Chronic power cuts in Pakistan threaten millions of jobs and have sparked violent protests, but the government says it will make up the shortfall in electricity with new power plants by the end of the year.

Pakistan has won final approval for a $7.6 billion loan from the International Monetary Fund to help the front line state in the campaign against Islamist terrorism stave off possible economic meltdown.

Pakistan’s central bank increased its benchmark interest rate by 2 percentage points, the most in more than a decade, as the government seeks a loan from the International Monetary Fund to avoid defaulting on its debt.

Pakistan’s government Tuesday approved the construction of a multi-billion dollar dam to produce 4,500 megawatts of power to help overcome the nation’s severe electricity shortages, a minister said.

Germany said on Tuesday Pakistan needed an agreement on financial help within days and it would help Islamabad in negotiating a deal with the International Monetary Fund (IMF).

The International Monetary Fund said Wednesday that Pakistan has asked for its help to avoid a looming financial crisis brought about by high fuel prices and dwindling foreign investment.

Cash-strapped Pakistan is working on a plan to avert an economic crisis, the prime minister said, as speculation grew that the country may seek politically unpopular aid from the International Monetary Fund.