Pakistan Gets $7.6 Billion Loan Package From IMF

In this file photo, currency dealers count the Pakistani rupees at his shop in Peshawar, Pakistan....

In this file photo, currency dealers count the Pakistani rupees at his shop in Peshawar, Pakistan. Pakistan, the front-line state in the battle against Islamist terrorism, has won final approval for a $7.6 billion loan from the International Monetary Fund to help stave off a possible economic meltdown.

(Muhammad Sajjad/AP Photo)

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

The IMF said a first installment of $3.1 billion will be transferred immediately to the nuclear-armed nation, which is struggling with deteriorating security, higher oil and food import prices and the global financial and credit crisis.

"By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country's improved macroeconomic prospects," said IMF acting Chairman Takatoshi Kato in a statement released after the decision Monday in Washington, where the fund is based.

Pakistan's young government had been reluctant to go to the IMF but had little choice after close allies — the United States, China and Saudi Arabia — turned down pleas for significant bilateral aid.

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Opposition and nationalist lawmakers have criticized the government for turning to the fund, saying the IMF will impose austerity measures that will hurt ordinary Pakistanis, two-thirds of whom live on $2 dollar a day or less.

"This IMF loan the government is getting is in fact poison, and the nation has been forced to drink it," said Javed Hashmi, a senior figure in the main opposition party, told reporters.

The loan removes the most pressing risk facing the country — that it would not be able to repay dollar-denominated government bonds due to mature early next year, said Muzammil Aslam, an economist at the Pakistani securities firm KASB.

Aslam and other economists said Pakistan's government had already made some tough decisions, such as increasing fuel and electricity prices.

Many Pakistani economists and commentators argued that the country had no choice but to turn to the IMF. They say it is now critical that the money is well spent — always a worry in corruption-prone and chaotic Pakistan.