The IMF said Thursday it was exploring all avenues to help flood-battered Pakistan amid extensive talks over possible easing of terms of a current 11-billion-dollar loan facility. "We're looking at all options in terms of how we can assist Pakistan in the midst of this tragedy," said International Monetary Fund spokesman Gerry Rice, raising also the spectre of an emergency loan to help it cope with the crisis.
"There is also the possibility of providing financing through an emergency response to natural disasters, that has been used in the past for countries facing the consequences of these events, Rice said. "These discussions are ongoing, they're very active," he said as finance minister Abdul Hafeez Shaikh joined his team Thursday in the talks with IMF on steps to help Islamabad cope with its worst humanitarian disaster. Shaikh will ask the IMF to restructure the current loan or consider new financing in the talks expected to continue up to next week, Pakistan officials had said.
Even before the floods there had been speculation that Pakistan might seek a new loan agreement with the IMF. But in light of the natural disaster, Islamabad now fears it will not be able to meet key IMF-set targets on inflation and budget deficit levels.
The IMF in 2008 approved a 7.61-billion-dollar rescue package for Pakistan as the country struggled to cope with bloody attacks by radicals, 30-year-high inflation and fast-depleting reserves. It was augmented to 10.66 billion dollars last year under the program that was extended to end in 2010. So far, Pakistan has received about 7.27 billion dollars from the IMF loan.