Coalition Support Fund: US signals clearing unpaid bills for war on terror

IMF estimates that Pakistan can get $400 million at best, as compared to the budgeted $1.3 billion.


Shahbaz Rana February 28, 2012

ISLAMABAD:


The United States conveyed to Pakistan that it will soon disburse the Coalition Support Fund (CSF) that has been withheld for several months, in an attempt to thaw bilateral relations between the two countries.


“Both the governments are engaged on the issue of disbursements of CSF and we are expecting that the US will soon release the amount,” Finance Secretary Abdul Wajid Rana said, without giving further details.

He was speaking to the media after attending a meeting of Senate Standing Committee on Finance.

His statement indicated that the two countries have been engaged in backdoor diplomacy despite apparent strains in ties following last year’s Nato airstrikes on Pakistani border posts, killing 24 soldiers. The crossborder raid prompted the government to block the Nato supply routes and review cooperation with the US.

The CSF was established by the United States in 2001 to support 27 nations, including Pakistan, to partially cover costs they incur during the war against terrorism.

For the current financial year, Pakistan budgeted for $1.3 billion from the US on account of services it rendered while fighting the global war on terrorism. Contrary to that, the International Monetary Fund (IMF) has assessed that the country can get $400 million at best. Despite lapse of seven months, the US has not disbursed any amount from this. Shortfall in the budgeted amount is likely to widen Pakistan’s deficit.

The total reconciled CSF amount is $2.5 billion as opposed to the $3.4 billion bills Islamabad sent to Washington. The US rejected claims worth approximately $900 million.

However, it was not clear whether Islamabad has resumed billing for CSF charges. After the raid in Abottabad that killed Osama bin Laden, Pakistan had stopped sending bills to Washington.

Earlier, while briefing the Senate panel, Rana insisted that the government was hopeful that it will be able to materialise anticipated external inflows including the CSF and $800 million from Etisalat.

“On the basis of these inflows the government still assumes that it will be able to achieve its revised budget deficit target of 4.7 per cent of Gross Domestic Product,” Rana said.

The committee noted that the government may not be able to achieve its revised budget deficit target of 4.7 per cent. The IMF also projected a budget deficit of 6.9 per cent in its Article IV report on Pakistan.

“It seems that the finance ministry does not want to correct mistakes pointed out by both the standing committee and the IMF”, said Senator Ahmad Ali of the Muttahida Qaumi Movement (MQM).

On account of project-based assistance, Pakistan has assessed to receive $403.3 million from the US. “From July through December the country received only $40.9 million,” said Secretary Economic Affairs Division Dr Waqar Masood.

Under the five-year Kerry Lugar civilian aid package, the US has promised to give $7.5 billion but in the last two years it disbursed only $650 million.

Pak-IMF relations

The finance secretary said that Pakistan and the IMF have agreed to remain engaged in future and an IMF mission may visit Islamabad in May or June this year under Post Programme Monitoring mechanism. He said the IMF Executive Board has decided to keep monitoring Pakistan’s economy and will hold biannual reviews until Pakistan returns the entire borrowed amount.

In fall 2008, Pakistan had signed a two-year bailout programme to avoid default on international payments. It borrowed $8.9 billion from November 2008 to May 2010.

However, the secretary said that Pakistan has not yet decided whether to request for a new programme or not but it was not immediately seeking any shadow programme.

Published in The Express Tribune, February 28th, 2012.

COMMENTS (21)

fizza | 12 years ago | Reply

IEDs should be monitored and government need to take action against the use of IEDs.

areej | 12 years ago | Reply

War on terrorism can be won when the government will develop a clear cut strategy to stop the production of improvised explosive devices.

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