IMF, World Bank step up aid for flood-hit Pak

The International Monetary Fund and World Bank will step up emergency to Pakistan aid for flood relief. The IMF will give the country $450 million and disburse the funds over this month September, IMF managing director Dominique Strauss-Kahn said in Washington on Thursday.

Severe flooding in Pakistan has destroyed cropland and livestock and displaced some 18 million people, causing damage the government has estimated at $43 billion, or almost one quarter of the South Asian nation's 2009 GDP.

"The IMF ... will be the first agency likely to disperse very rapidly money which is absolutely needed," Strauss-Khan he told reporters after more than a week of discussions with Pakistani officials. "The most important thing is to keep the Pakistani economy on track." Islamabad had earlier warned it would not be able to meet key IMF targets on inflation and budget deficit levels without aid.

Talks with a delegation led by Pakistan's finance minister Abdul Hafeez Shaikh on the terms of an $11 billion IMF loan programme left him satisfied with the country's commitment to reforms, the IMF chief said. Under the 2008 IMF loan programme, Islamabad pledged to implement tax and energy sector reforms and give full autonomy to the State Bank of Pakistan.

"What is important is what was decided by the government to do to improve the economic situation, especially in the tax sector but in other fields also," said Strauss-Kahn. "What I heard from the authorities that they really want to move on with the programme.''

He added, "Our dialogue with Pakistan on the current stand-by arrangement is progressing and the authorities have expressed their intention to implement measures for the completion of the fifth review of the program later this year. Completion of the fifth review will allow the fund to disburse an additional $1.7 billion, bringing total IMF disbursements (including emergency assistance) to $2.2 billion in the second half of 2010."