Pakistan avoids loan default

LAHORE, August 8: Pakistan avoided a loan default by paying 40 million dollars to World Bank WB and Asian Development Bank ADB with K...

LAHORE, August 8: Pakistan avoided a loan default by paying 40 million dollars to World Bank WB and Asian Development Bank ADB with Kuwait bailing it out. Pakistan used part of the 250 million financial assistance from Kuwait to repay the loan, reports here said today.

More assistance is on way with Islamic Development Bank IDB alone pledging 1.5 billion support, giving Pakistan two to three months8217; breathing time, daily Nation said. Pakistan paid 40 million yesterday as interest on the loan outstandings from the multi-lateral agencies, the paper said adding the only way out from the economic crisis was a moratorium.

quot;It the payments would help to support Pakistan8217;s case among multi-lateral donors, who also have some indications from us administration to carve out a salvage plan for our survival,quot; Nation quoted an economist as saying adding that the country needed at least 6 billion dollars upfront. There were also indications that the country would honour its private sector debt servicingcommitments with international banking and financial companies, the paper said. These payments, totalling 25 million dollars, were expected to be made after the weekend, it said. Pakistan received a roll over of 25 million dollar credit from Bahrain-based Habib Bank last fortnight.

The freeze on foreign exchange currency by the Pakistan government on may last proved fatal, eroding the confidence of rich and mighty Pakistanis, who have 11 billion dollars in bank accounts, the paper said.

quot;No one other than the government aides are responsible for the present situation, when expatriate Pakistanis do not want to remit a single penny into national debt retirement scheme and their forex accounts,quot; the paper said.

quot;We have lost an opportunity to issue infrastructure bonds like India did on Thursday to finance highway and other construction projects through flotations of bonds outside India,quot; a banker said.

He said Pakistan have to create confidence among resident and non-resident Pakistanis by issuingbonds, similar to bonds issued by India for expatriate Indians. This would be vital for improving the country8217;s financial viability.