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PAKISTAN MAY TURN TO IMF AS LAST RESORT

The nation cites the terror threat in bid for aid.

President Asif Ali Zardari returned from China late Friday without a commitment for hard cash needed to shore up Pakistan's crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments. With the United States and other nations preoccupied with a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the IMF.

Accepting a rescue package from the IMF would be seen as a humiliating step for Zardari's government, which took office earlier this year. An IMF-backed plan would require the government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan's economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy in exploiting the terrorist threat as a way of trying to win financial support, a senior official at the IMF told the New York Times. But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.

"A selling point to us even has been, if the economy really collapses this is going to mean civil strife, and strikes, and put the war on terror in jeopardy," said the official, who declined to be identified because he was not authorized to speak to the news media. "They are saying, 'We are a strategic country, the world needs to come to our aid.'"

Shaukat Tareen, the new Pakistani financial adviser who accompanied Zardari to China, began to prepare the public for an IMF program on Saturday, saying at a news conference that if Pakistan could not stabilize its economy within 30 days, it "can go to the IMF as a backup."

"We may have to go to Plan B," he said.

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