Source: London News

Pakistan has accused the United States of pushing it closer to bankruptcy by witholding up to 1 billion dollar in aid in military contributions despite the country's efforts to fight terrorism.

Pakistan's crucial role in the US-led war on terror has not been reflected in US revenue transfers at a time when Islamabad is desperately seeking an International Monetary Fund bailout; The Telegraph quoted a senior official Shaukat Tarin, as saying.

Tarin, the de facto Minister for Economy, said that a significant portion of the annual US payment for Pakistan's counter-terrorism operations was overdue, causing additional strain on the country's exchequer.

"There is a process of auditing and it is taking longer than it should. There is a cost. We have 100,000 troops fighting this war. That takes hard cash. On top of that we are paying for a loss in investment because of the security situation," he said.

Approvals to release funds appeared to have been delayed by political sensitivities in the lead-up to the US presidential elections, the Paper said.

Pakistan's economic losses from domestic instability are believed to exceed 8 billion dollar a year. America has paid Pakistan almost 10 billion dollar in direct military "reimbursements" since 2002, mostly as part of what are termed as Coalition Support Funds.

The subsidy pays for Pakistani military food, fuel, ammunition and maintenance but has come under scrutiny since last year when US military officials claimed that up to 70 percent of the money was "misspent".

Pakistan has barely enough foreign reserves to cover nine weeks of imports and is struggling to raise funds to avert a balance of payments crisis.

Tarin, a former banker who was drafted in last month to restore some confidence in the ability of the ruling Pakistan People's Party (PPP) to manage the country's economy, has so far had limited success.

The IMF, World Bank and other lenders are expected to provide billions of dollars in loans before the end of this month, after China said it would pitch in with 500 million dollar.

Tarin hopes the IMF will stump up "more or less" 9 billion dollar and that the 'Friends' forum will be a source of further loans.