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Pakistan Asks for $10 Billion from IMF

CNBC.com
Saturday, 18 Oct 2008 | 7:30 AM ET

The Pakistani government will ask for $10 billion from the International Monetary Fund on Monday, CNBC has learned.

The government will meet with IMF leaders in Dubai on Monday to help with its problem with foreign reserves.

CNBC.com

Since 2001, the United States has given Pakistan around $10 billion in aid, most of it to the military to help it pay for operations against militants near the Afghan border.

Through much of its history, Pakistan has struggled with chronic economic instability and foreign debt, but the current crisis comes at an especially dangerous time.

Militants sheltering along the border region with Afghanistan are blamed for the rising violence in that county as well as a string of bloody attacks at home. Osama bin Laden and other top al-Qaida leaders are thought to be hiding in the frontier region.

Last month, a suicide bomber struck the Marriott Hotel in Islamabad, killing 54 and leading the U.N. and foreign embassies to withdrew families of foreign staff.

Pakistan's overwhelmingly poor population is already suffering from skyrocketing food and fuel prices and are enduring daily power cuts due to energy shortages.

Defaulting on its debt risks shattering any remaining local and foreign investor confidence in the battered economy as well as its government. It could escalate into an economic meltdown with out-of-control price increases, fewer jobs, more power shortages and a general breakdown in law and order in the country of 160 million people.

"Bankruptcy, should it happen, could unleash a massive tidal wave of social unrest," the U.S.-based intelligence risk assessment agency Stratfor said in a report released Friday, "exactly what the jihadists on both sides of the Afghan-Pakistani border would like to see to advance their goals."

-- The Associated Press contributed to this report

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