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$7.5bn IMF bailout package on 22nd Loan to be disbursed on quarterly basis
The International Monetary Fund (IMF)’s executive board’s meeting, scheduled for Nov 22, is likely to approve a two-year $7.5 billion bailout package under the stand-by arrangement (SBA). The loan will carry 6-6.5 per cent interest against the SDR (special drawing rights) of $1.3 billion to help Pakistan restore financial and economic discipline, a senior government official in the finance ministry told our sources.
“Pakistan is to pay $45-50 million more to the IMF apart from repaying principal of $7.5 billion under the stand-by arrangement if the loan is obtained at interest rate of 6-6.5 per cent.” The repayment timeframe, the official said, would be decided by the IMF. However, the official said $7.5 billion loan will be paid quarterly and not in one go. The size of the first instalment may hover around $3-4 billion and the remaining amount would be delivered on a quarterly basis.
The IMF will extend $7.5 billion loan under the newly created short-term liquidity facility (SLF). Under this facility, all the emerging economies with a strong record of implementing rigid macroeconomic policies, but caught up in the global financial crisis, are eligible for loans.
The government of the day is struggling for the said loan by selling the economic performance during the Musharraf regime owing to which the country has been lifted from a low-income to the medium-income country.
Pakistan’s ailing economy, with fast dwindling net foreign reserves that have reduced to $3.4 billion, burgeoning trade deficit of $7.5 billion and 25 per cent inflation, is left with no option but to obtain the IMF loan. So much so Standard & Poor’s—one of the well-reputed rating agencies in the world—has also included Pakistan in the list of those Asian countries most at risk of credit-rating downgrade as the global economy heads into recession and funds become scarcer.
“The IMF loan is the only recipe for Pakistan, keeping in view the bitter facts; otherwise, no one will come to its rescue from being declared a defaulting country.” Prime Minister Syed Yousuf Raza Gilani on Monday allowed the economic managers’ team headed by Finance Adviser Shaukat Tareen to formally place the request with the IMF after failure of two bids by President Asif Ali Zardari to seek direct financial help from China and Saudi Arabia. The federal cabinet in its next meeting will approve the plan to move the IMF.
Under this scenario, Pakistan is to formally request the IMF on Nov 15, seeking 500 per cent of its quota, that stands at $1.5 billion, to bail out its ailing economy. The official said the fund is to accord approval to the said loan for Pakistan on Nov 22 when its executive board’s meeting will be held.
The Friends of Pakistan group have already advised Islamabad to first move the International Monetary Fund to qualify for their formal financial commitments which they will make in a meeting to be held in Dubai on Nov 17.
The top leadership of the country had earlier decided to formally request the IMF after the Dubai meeting of the Friends of Pakistan, but in the new scenario, particularly after the visit of President Asif Ali Zardari to Saudi Arabia, the government has made up its mind to formally move the IMF on Nov 15 to avoid any default-like situation.
Munaf Kalia shifted to Lahore Javed Khanani, Munaf Kalia sent on remand; experts retrieve data of transactions
The Federal Investigation Agency (FIA) brought Khanani and Kalia International Director Munaf Kalia to Lahore from Karachi on Monday, as technical experts of the agency have retrieved all the data of transactions from the main server of the K&K company.
Javed Khanani and Munaf Kalia were arrested on Saturday after the agency launched a crackdown to probe flight of US dollar from the country. FIA investigators said they had retrieved the record of transactions worth billions of rupees from the main server of the company, which was installed in its head office at Karachi.
FIA’s Lahore director, meanwhile, constituted a team comprising Chaudhry Mushtaq Ahmed, deputy director NR3C, Sohail Arif Awan, assistant director, Muhammad Ahmed, Inspector, Muhammad Sarwar, Inspector, Muhammad Usman, hardware engineer NR3C, to interrogate Munaf and Javed while passport cell deputy director Muhammad Basharat, who had served in FIA’s SIG Group, was directed to closely monitor the overall investigation. The FIA deputy director (law) was also tasked to coordinate with the investigating team on legal issues.
A senior FIA official told this scribe that patrolling by the Inter-Provincial Task Force, a body made to curb human trafficking, along the Pakistan-Iran and Pakistan-Afghanistan borders had been increased to stop any kind of smuggling especially of foreign currency from the country.
FIA’s NR3C Wing was also involved in the case and providing technical expertise and assistance to the investigators. Meanwhile, the FIA tightened its monitoring on all the country’s exit and entry points and no person was allowed to take foreign currency abroad, especially US dollars, over the prescribed limit.
The investigators said the record had been retrieved by FIA officials of its forensic laboratory in Islamabad. These officials are foreign qualified and were especially trained to retrieve information even from dead computers.
FIA investigators said they had found that the K&K Company had installed dual software to record its transactions. They said one software was used to record genuine and legal transactions while the other for keeping the record of transactions of Hundi and Hawala. They said the data of both software had been retrieved.
Talking about the ongoing investigation, Sohail Arif said at present both Javed Khanani and Munaf Kalia were being investigated about the transactions. He said the investigation would be completed within a day or two, which would be made public.
To a question about any further raids or arrests of currency dealers, he said FIA was screening the currency market and money-changers as lists of money-changers were being scanned and more crackdowns were expected.
Meanwhile, a judicial magistrate Faisal Jamil sent Javed Khanani, Rustam Ali and Tariq Mehmud on four-day physical remand.Shamim Bano adds from Karachi: The Federal Investigation Agency (FIA) on Monday obtained three-day transit remand of Khanani and Kalia International director Munaf Kalia for further investigation.
The FIA produced him before Umer Awan, a linked judge, as Judicial Magistrate (south) Asif Brohi was on leave. Israr Ahmed, a lawyer representing the FIA, submitted in the court that there were allegations of illegal transfer of foreign exchange currency abroad against the accused.
Defence Lawyer Raza Hashmi said Kalia was unnecessarily being implicated in a ‘baseless case’. He also submitted a medical certificate to prove that his client was ill and demanded his medical check-up.
He also questioned the jurisdiction of the sessions court to try such cases. The judge after listening the arguments from both sides remanded Kalia to FIA custody.
Raza Hashmi, while talking to our sources, said a draft petition is being prepared under the Protection of Economic Reform Act, 1992, which would be submitted in the Sindh High Court on Tuesday. Section 4 of the act reads, “All citizens of Pakistan are free to bring, hold, sell and take out foreign currency in any form and all other persons shall be entitled to hold transfer and take out foreign currency within or out of Pakistan and shall not be required to make foreign currency declaration at any stage nor shall any one question in this regard.”
Hashmi said under this act, every person was free to move foreign currency anywhere in the world and wondered on what charges Kalia directors had been detained.
Obama adviser hails Haqqani’s struggle for democracy
Bruce Riedel, Adviser to President-elect Barack Obama, has termed Pakistan Ambassador to the US Haqqani “a hero of Pakistan’s struggle for democracy”.
Bruce Riedel, a former CIA officer, said: “Haqqani’s message . . . is one that the senator (Obama) understands very well.” Besides the Bush administration, Haqqani has also maintained ties with Democrats. This summer, Haqqani attended the Democratic National Convention and joined a meeting between Obama and Prime Minister Yousuf Raza Gilani.
Addressing a packed audience recently at the Foundation for the Defence of Democracies, a Washington-based think tank, Ambassador Haqqani said a quick infusion of US cash would ensure that Pakistan will be able to afford to keep up its expensive military operations near the Afghan border.
“All Pakistan is asking for is a bailout of $10 billion to fight terrorism” and get back on its feet. Fleeing investors and mounting debts have become serious threats for Pakistan, along with a smouldering insurgency and a history of corruption.
With Pakistan teetering on the brink of bankruptcy, now Haqqani is charged with an almost impossible task: trying to secure more funding from the already depleted coffers of the US government.
Haqqani has been an Islamic activist, a war correspondent, a savvy politician, a beloved professor, and an aide to two rival Pakistani prime ministers. “Pakistan has many security challenges,” he acknowledged. “It’s tough.”
After Sept 11, 2001, the United States had wholeheartedly backed Musharraf, paying about $125 million per month to Pakistan to support 100,000 Pakistani soldiers on the Afghan border. But Musharraf became increasingly unpopular with his dictatorial moves. He also lost favour with many in the US.
This summer, a US House subcommittee uncovered evidence of graft in the more than $6 billion worth of US military aid that went to Musharraf’s government. Haqqani faces the task of rebuilding both the Pakistani image in the United States, and the US image in Pakistan, which has been tainted by the Bush administration’s association with Musharraf.
“I’m the man in the middle,” Haqqani said, adding that he is frequently criticised in Pakistan for being too close to the United States. “It will take a while before the average Pakistani starts trusting the Americans.”
But Haqqani has gone about his work with great enthusiasm, touting Pakistan’s prospects at public speeches across Washington. This summer, he gave gentle reminders to members of Congress that the alleged corruption took place under the previous government, said Representative John F Tierney, a Salem Democrat who headed the subcommittee that investigated the graft.
Haqqani is trying to persuade the Americans to fast-track about $1 billion owed to Pakistan for its military operations from April to October, roughly half a percent of Pakistan’s gross domestic product.
The money has been held up by new Pentagon rules designed to improve accountability, Pakistani officials say. The latest payment was $364.7 million in September to cover costs for military operations from December 2007 through last March, according to Lieutenant Colonel Mark Wright, a Pentagon spokesman. The Pentagon is reviewing claims for April, and seeking additional documentation for May, Wright said. No further claims have been filed.
Privately, some Pakistani officials warn that the funds must come soon, before Pakistan’s economic hardships curb the military operations. But Haqqani issues a more general plea. “If the world is willing to put the resources into Pakistan, there is no reason why Pakistan is not willing to defeat [terrorism] and become a more predictable nation,” he said.
Haqqani is also seeking an additional $10 billion loan from the United States at a “Friends of Pakistan” summit in the United Arab Emirates on Nov 17. US officials have made no commitments so far.
President-elect Barack Obama supports a plan to give Pakistan a $1.5 billion “bonus” if it remains a democratic state. But it is unclear when, or if, that money will come through. Tierney said the current financial crisis has become a major test for Pakistan and for Haqqani.
“In the next couple of months, we will see where they are in this financial thing, how they have been able to get through this,” he said. “They have to make sure that the graft and corruption that was there is not there.”
Haqqani has also became one of the most outspoken voices for democracy, arguing passionately that the United States would be safer from terrorism if it let democracy bloom, rather than back military leaders.
“The average shelf life of a Pakistani dictator is a decade,” he said. In the summer of 2007, President Bush invited him to the White House with other Muslim scholars to give advice on how to improve the US image in the Muslim world.
Iran not expect much change in U.S. policies
Iranian Foreign Ministry spokesman Hassan Qashqavi told reporters in his weakly press conference on Monday that Iran does not expect much change in the U.S. policies.
Asked whether Iran expected U.S. President-elect Barack Obama to talk to the current Iranian government or wait after Iran`s presidential election in June next year, Qashqavi said, "We shouldn`t expect basic changes in American policy."
"This is especially the case with Islamic Republic of Iran," Qashqavi said, adding that Iran`s strategic policies are decided by the will of the late revolutionary founder Ruhollah Khomeini, the guidelines of Supreme Leader Ayatollah Ali Khamenei and the nation`s constitution.
Referring to Obama`s remarks on the Iranian nuclear issue on Friday, the Iranian Foreign Ministry spokesman said that nuclear weapons had no place in Iran`s defense doctrine.
Addressing his first press conference since Nov. 4 election, Obama also said in Chicago on Friday that Iran`s development of nuclear weapon is "unacceptable."
The United States and its allies have accused Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program. Iran denies the charges and insists that its nuclear program is for peaceful purposes only.
In a reply to the criticism by some Iranian official on the congratulatory letter by Iranian President Mahmoud Ahmadinejad to Obama, Qashqavi said, "This letter, on the one hand, represents Iran`s official position towards the U.S. presidential election and, on the other hand, this shows the active diplomatic capacity of Iran and Iran`s president."
Ahmadinejad sent a congratulatory letter to Obama following his historic victory over Republican John McCain on Tuesday.
Obama confirmed that he had received the letter from Iran`s president and said that "I will be reviewing the letter from President Ahmadinejad and we will respond appropriately."
Nawaz calls for tabling abolition of 17th Amendment Bill in Assembly
PML-N Chief Mian Muhammad Nawaz Sharif on Monday underlined that if Government does not moves abolition of 17th Amendment Bill in the Assembly then we will immediately table it as we cannot wait for long.
Nawaz Sharif expressed these views while talking to Journalists after meeting Chinese Ambassador on Monday.
He told Journalists that he has accepted the invitation of Chinese Ambassador to visit China.
Pak attaches significance importance to its relations with China adding the meeting with the Ambassador was held in a cordial atmosphere, he maintained.
"I don‘t accept Musharraf‘s Constitution urging government to stop his policies", Nawaz held.
Replying to a question, Nawaz said that Zardari must fulfill his promise.
"We will continue to fight for democracy and Supremacy of Judiciary in the country", Nawaz pointed.
Responding to a question, he urged Government to table the obliteration of 17th Amendment Bill in the Assembly at the earliest otherwise we will table it.
"I have no grudge whatsoever against the Government but I am disappointed that the promises made with us were not kept adding that there is no case against him" , he added.
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