Special Report: Global Financial Crisis

    ISLAMABAD, Nov. 2 (Xinhua) -- Pakistan has accepted 11 tough conditions from the International Monetary Fund (IMF) to overcome its pending balance of payment crisis, local newspaper reported on Sunday.

    The IMF had proposed 16 conditions for financial assistance to Pakistan during the talks in Dubai last month, and "11 of the 16 conditions have been accepted with slight changes," The News newspaper quoted a finance official as saying.

    Pakistan is lobbying for possible financial help from friendly countries and financial institutions as it faces severe economic difficulties with plunging foreign exchange reserves and high inflation.

    Analysts said the foreign exchange reserves can only afford one or two months imports for the country.

    The rating agency Standard & Poor's has downgraded the country's sovereign debt to level of CCC-plus, close to defaulting on its commitments of external loan repayment.

    Shaukat Tareen, advisor to prime minister on finance, said on Oct. 23 that Pakistan needs 4 to 5 billion U.S. dollars in 30 days for stabilizing the country's economy.

    Pakistan now pins its hope on possible loans from member states of Friends of Pakistan group, which will convene a meeting later this month in the United Arab Emirates.

    But Pakistan insists it will resort to IMF's help as the last option as the IMF often provides loans with conditions attached.

    Pakistani Prime Minister Yousaf Raza told media earlier that he hopes Pakistan can avoid IMF assistance if it wins billions of dollars in aid from friendly governments.

    An IMF package often involves cutting government spending, raising taxes, accelerating privatization, increasing interest rates, etc..

    According to the conditions, the Pakistan government has agreed to gradually impose the Central Excise Duty (CED) on services and agriculture sectors at the rate of 8 to 18 percent in place of the General Sales Tax (GST), the finance official told The News newspaper.

    The Pakistani currency will also be devalued after slight changes in the discount rate and exchange rate will be decreased officially by 6 to 7 percent, the official added.

    Despite all the tough conditions, Pakistan would be compelled to seek the IMF assistance package because no friendly country has so far agreed to extend loan to Islamabad to meet its repayment obligations, the official said.