With its foreign-currency reserves shrinking fast, Pakistan is turning to the International Monetary Fund, and an official said the country is looking for $4 billion in aid to avoid defaulting on its debt.

Pakistani and IMF officials are slated to meet Tuesday in Dubai. Pakistan is trying to extricate itself from a financial crisis that threatens to undermine its first democratically elected government in nearly a decade.

"We are hopeful that Pakistan will get approval soon, with the country receiving $1.5 billion in one go and the rest in five equal installments of $500 million," the official said Monday.

A spokesman for the IMF couldn't be reached to comment.

An aid package from the IMF would likely require deep spending cuts and tax increases that could hurt Pakistan's poor and prove politically unpopular. Pakistani officials are holding out hope that the so-called Friends of Democratic Pakistan -- a group that includes the U.S., China and Saudi Arabia -- will instead provide the needed money. A preliminary meeting of the group was held Monday in Islamabad and a summit is planned for early next month in Abu Dhabi.

"A program is not on the cards as of yet," said Finance Secretary Waqar Masud in an interview, referring to an IMF aid package. He added that the government will wait to see if an alternative could be found before going with "Plan B."

Pakistan failed to get any firm assurances of money from China when President Asif Ali Zardari visited Beijing last week, and a senior U.S. diplomat warned Monday that Pakistan should expect no unconditional handouts.

"There is no money on the table," U.S. Assistant Secretary of State Richard Boucher told reporters in Islamabad. "The goal is to put the money where it belongs. It is not a cash advance."

Pakistan's hard currency reserves fell to a six-year low of $7.75 billion in the week to Oct. 11, down from about $8.32 billion a week earlier. Nearly a year ago, the reserves stood at $16.4 billion.




Source: The Wall Street Journal.