ISLAMABAD, Pakistan | Pakistan may have to accept politically unpopular International Monetary Fund assistance to ward off a possible economic meltdown if wealthy nations turn down its request, the government said Sunday.
Battered by high inflation and a plunging currency, nuclear-armed Pakistan needs up to $5 billion to avoid defaulting on sovereign debt due for repayment next year.
Foreign Minister Shah Mehmood Qureshi said Sunday that the “IMF was an option” but no decision had been taken yet.
The crisis comes as the country’s new civilian leaders struggle to battle Islamic militants in the northwest blamed for soaring violence at home and in neighboring Afghanistan.
Shaukat Tareen, the finance official leading the country’s efforts to secure the money it needs, said he was confident it would not default. He predicted that the country would soon receive more than the $4.5 billion through the acceleration of planned development loans and direct assistance from rich countries.
But he said the International Monetary Fund may be needed as a “plan C.”
“We can go to the fund if we want, but only as a backup,” he told reporters Saturday.
Seeking help from the IMF would be politically difficult for the government because such loans are often conditioned on deep cuts in public spending that can affect programs for the poor.
President Asif Ali Zardari returned Friday from wealthy China with no public commitment of help.
Pakistan hopes its front-line status in the war on terror will mean the international community will not have the stomach to see it default. But its plea for help comes as many nations are distracted with the global economic crisis.
“Countries are busy with their own housekeeping, but they will not leave Pakistan in the middle of the road,” said Muzammil Aslam, chief economist at the Pakistani security firm KASB. “It is the world’s first line of defense against Taliban and al Qaeda.”
Through much of its history, Pakistan has struggled with chronic economic instability and foreign debt. The current crisis comes at an especially dangerous time.
The country has seen more than 90 suicide blasts since July last year. Last month, a suicide bomber struck the Marriott Hotel in Islamabad, killing 54 and leading the United Nations and foreign embassies to withdrew families of foreign staff.
On Sunday, Pakistani forces killed at least 30 militants near the Afghan border, as the region’s provincial chief called for “peaceful dialogue” in a meeting with a U.S. State Department official.
The U.S. Embassy would not comment on Assistant Secretary of State Richard Boucher’s meeting with North West Frontier Province Chief Minister Amir Haider Khan Hoti, other than to say his trip had been planned for some time and that he was meeting a range of government officials.
Mr. Boucher’s trip comes amid strains between Islamabad and Washington over suspected American missile attacks targeting militants inside Pakistan. Washington wants Islamabad to do more to root out the al Qaeda and Taliban fighters who are based inside Pakistan are blamed for rising attacks on U.S. troops in Afghanistan and other targets.