With Pakistan forced to ask the International Monetary Fund (IMF)
Wednesday for help avoiding bankruptcy, its government is learning
that having friends in high places doesn't always pay.
Pakistan, a frontline country in fighting global Islamic
militancy, counts wealthy nations like the United States, China, and
Saudi Arabia among its friends - all of whom understand that
Pakistan's shortage of funds will severely handicap its already weak
Yet its tumbling economy has caused even its strongest allies to
so far resist bailing it out.
"If the economy is out of line," says Haroon Sharif, a senior
adviser for the British Department for International Development in
Islamabad, "any lender will think twice before handing out cash."
Pakistan, a country that had boasted some of the highest GDP
growth rates in the world since 2004, now requires up to $5 billion
in immediate cash injections to avoid defaulting on sovereign debt
due for repayment next year.
"The government may have been counting on a bailout for a while
and now that it's nowhere to be seen they're caught off guard," says
Ali Cheema, the head of the economics department at the Lahore
University of Management Sciences.
As late as last week Shaukat Tarin, economic adviser to the prime
minister, called turning to the IMF for a loan a last resort "plan
This week the "Friends of Pakistan" - a group of representatives
from the US, Saudi Arabia, the United Arab Emirates, Britain,
France, and Japan, among others - met with President Asif Ali
Zardari in Islamabad for the second time in as many months to
discuss ways to keep the sinking Pakistani economy afloat.
Richard Boucher, the US assistant secretary of State for the
region, who attended the meeting, warned that the US "wouldn't throw
money on the table" and that there was "not going to be a cash
advance for Pakistan."
President Zardari's first-ever visit to Pakistan's longtime ally
China concluded last week on a similar note, as have Pakistan's
talks with Saudi Arabia and the United Arab Emirates, countries that
have pulled Pakistan out of similar economic trouble in the past.
Mr. Cheema says the Pakistani government might have been counting
on a "democratic dividend" that didn't deliver. The government
assumed that the international community would support the new
democratic regime because of its security needs and regardless of
its economic performance.
Pakistan has been spending far more on imports than it has been
making on exports for several years. …