Pakistan Suddenly Receives Mysterious $1.5 Billion
Back in January, I mused on whether Pakistan was making a play for counterterrorism funds that were being freed up by the US cutting back on its funding plans for Afghanistan. It now appears that Pakistan is not only starting to receive renewed flows of US defense funding, but US development funding is flowing, as well. I probably shouldn’t be so surprised by this, since the article I cited on the US cutting back on Afghanistan funding mentioned both defense and development funds, but it still remains remarkable that those funds are being so clearly moved from Afghanistan to Pakistan.
It appears that Pakistan has had to quickly establish a new fund for accepting the newly designated development money, which totals a whopping $1.5 billion in only one month:
As the State Bank of Pakistan remains tightlipped over the source and purpose of funding, Pakistan received another tranche of $750 million in the newly-established Pakistan Development Fund (PDF), taking the total contribution to $1.5 billion so far.
Highly-placed sources told The Express Tribune that friendly countries have injected another sum of $750 million in the PDF – an account opened to channel money from abroad. The last tranche was received in February that stabilised the dwindling official foreign currency reserves.
It is the first time that any country has generously given $1.5-billion assistance to Pakistan within one month, as Islamabad never received such an amount as ‘upfront’ payments. The US, which remains the largest contributor, always gave amounts in tranches spreading over several years. Under its five-year, $7.5-billion Kerry Lugar aid package, Washington gave less than $2.5 billion in government-to-government assistance in over three years.
However, it was not clear whether the money received is a grant or depositary loans aimed at temporarily bailing out the country.
At the very end of the article, the Express Tribune notes that Pakistan is also asking the US to expedite payments under the Coalition Support Fund, which is the route through which Pakistan is reimbursed for its defense spending related to Afghanistan security. That is very interesting, since it was only a month ago that there was a major disbursement in the CSF:
United States has released second tranche of $352 million out of a total of $1.4 billion Coalition Support Funds (CSF) that Pakistan is budgeted to receive during the current fiscal year.
This was revealed by US Ambassador Richard Olson in a meeting with Finance Minister Ishaq Dar on Tuesday.
According to Finance Ministry, the ambassador assured the Financial Minister that the remaining amount will be disbursed as soon as possible,
Pakistan had hoped to receive the second tranche in December last year.
It certainly stands out that what changed between December and February was Pakistan’s new-found enthusiasm for military action against the Taliban. The article also notes that this payment was meant to cover Pakistan’s expenses incurred during January to March of 2013, so the payments are lagging spending by about a year. That would be why today’s news has Pakistan urging the US to shorten the time until reimbursement: Read more →