The Pakistani Economic Crisis

Seen on: YouTube

South Asia's second-biggest economy needs external aid after its foreign-exchange reserves shrank 75 percent in the past year to $3.5 billion, threatening its ability to repay debt. The State Bank of Pakistan increased its benchmark interest rate by 2 percentage points, the most in more than a decade, on Nov. 12, citing inflation that has reached a 30-year high.

Info via Bloomberg

IMF to Help Pakistan

Pakistan's new agreement with the International Monetary Fund over a $7.6 billion loan may lead to more help from other donors.

But the IMF's package falls well short of the $10 billion to $15 billion that Pakistani officials have said they need over the next two years to fix the economy.

Some of that shortfall will be made up by loans from the World Bank and Asian Development Bank. The IMF will deliver $4 billion – the amount Pakistan says it needs immediately to avoid defaulting – this year, with the rest to be disbursed in 2009, said Shaukat Tarin, an economic adviser to Pakistan's prime minister.

Via WSJ