Pakistan may need as much as $10 billion from donors over the next two years to avoid defaulting on its debts, the International Monetary Fund said. The Pakistani government calculated “they needed financing somewhere in the region of $3 billion to $4 billion,” IMF Regional Director Mohsin Khan said in an interview in Dubai on Monday. “We thought that it was closer to $5 billion; $5 billion this year and $5 billion next year,” he said. Pakistan's foreign reserves have plunged more than 74 percent to about $4.3 billion in the past year, increasing the risk that the country will be unable to pay the $3 billion in debt-servicing costs due in the coming year. Officials from Pakistan and the IMF were meeting in Dubai Tuesday to work out what can be done to help South Asia's second-largest economy. The Pakistani rupee had its biggest gain in seven years on Monday day on optimism a bailout may help avert a crisis. Pakistan came off its last IMF program in Dec. 2004. The currency rose for a second day on Tuesday, increasing 0.4 percent to 80.90 per dollar at 11:00 A.M. in Karachi. President Asif Ali Zardari chaired discussions in Islamabad on Monday to prepare for a meeting of the “Friends of Pakistan” group to be held in the United Arab Emirates next month. The group, whose members includes the US, UK, China and Saudi Arabia, was established last month to help Pakistan “meet domestic and global challenges,” the state-run Associated Press of Pakistan reported. Pakistan faces the politically unpopular decision to seek an IMF bailout after China rebuffed its neighbor's request for cash, the New York Times reported last Saturday. In the Dubai meeting, the IMF should have a “firm idea of how much they need, who else is in the picture, and then it will be worked out what the IMF can do,” said Khan.
