Islamabad, Aug 15 : Noting that the US' reimbursements for expenses incurred in global war on terror were not contributing to Pakistan's economy, instead increasing its fiscal deficit, Islamabad is likely to soon propose changes to the US in its reimbursement mechanism, said the country's Finance Minister Naveed Qamar.
Qamar's statement assumed significance in the wake of recent reports that over 700 million dollars each year had been misused. He said that the reimbursement mechanism needed to be refined in line with the country's economic constraints.
"We will take up this issue with Washington to review the mechanism," The News quoted Qamar as saying.
Under the existing mechanism, the government first spends the money on military operations against the militants and then it gets the amount from the US after submitting receipts. In this process, the government has to borrow from banks at higher interest rates, which are causing more financial miseries to the country's economy.
However, the finance minister said the US was compensating the country in other heads and would also give 1.5 billion dollars each year as democracy dividend for the next 10 years. The US aid under democracy dividends would start from 2009.
In addition, the Pakistan government is also considering floating of the Workers Remittances Securitization Bond worth 800-850 million dollars to provide cushion to the worsening foreign reserves situation. Qamar said: "We have almost finalised the negotiation process for loan agreements with the World Bank and the Asian Development Bank under which both the donors would extend credit supply of one billion dollars in total. Each bank is to give 500 million dollars to Pakistan."