Yet to be paid war on terror dues of 500 mln dlrs may cripple Pak economy

Islamabad, Apr 3 : Already facing an economic crisis-like situation, the new federal government in Pakistan might face trouble in controlling the rising budget deficit if the US doesn't reimburse 500 million dollars which it had committed to Islamabad to continue its fight against terror, especially in tribal areas.

The US was supposed to reimburse the amount last year. Pakistan has so far received only 281 million dollars out of the 750 million dollars the US had promised Islamabad for combating terrorism in tribal areas.

The amount should have been reimbursed last year, adding that the non-payment would create serious problems for the new government in controlling the rising budget deficit," said a well-placed in the Pakistan government.

"Pakistan has been regularly receiving the reimbursement until March 2007 by the US authorities for the money it spent on military operations to combat militancy in tribal areas," the Dawn quoted him as saying.

According to the paper, the finance ministry has placed the amount under the head "Expenditure", and the amount has been reflected under the account of "Non-revenue" measures.

The amount had been withheld despite the fact that Pakistan had already submitted details of the fund spent on the war on terror to the US authorities through its embassy in Islamabad, said the source.

A senior official said that the country had received 9.343 billion dollars till December 2007 from the US under different accounts from 2001-02. Of this, 5.042 billion dollars had been reimbursed to Pakistan on account of the war of terror, which was not assistance. And an amount of 1.495 billion dollar debt had been written off, he added.

Under the Camp David accord signed in 2003, the US agreed to provide 3 billion dollars in assistance to Pakistan -- half military and half budget financing. That meant payment of 600 million dollars per annum -- 300 million dollars each for military and finance assistance -- in five years.

However, the budget-financing amount has been reduced to 200 million dollars while 100 million dollars has been directed to USAID.

The official said the US government had now decided to divert the remaining 200 million dollar budgetary grant to USAID from the year 2007-08, adding to the problems of the new government.

Under the accord, it was agreed that 200 million dollars would be paid to the Pakistani government for financing balance of payment and 100 million dollars would go to USAID. The official said this sudden change in the US policy would create serious problems for the new government in budget making and balance of payment.

ANI