For the first time since 2001, the State Bank of Pakistan’s foreign exchange reserves fell to $2.9 billion, prompting a mini-economic crisis in the country. Pakistan now has barely three weeks to continue paying its import bill. As a result, the inflation rate has gotten even higher and the Pakistani rupee continues to tank, putting further pressure on finances. To calm markets and a nervous population, Pakistan’s finance minister Ishaq Dar claimed a whole lot of money was on its way, supposedly totaling $8.64 billion through various long-term initiatives. In the short term, however, he seems to be hoping that $790 million billed to the Coalition Support Fund—the vehicle through which American aid has flown through to Pakistan since the war in Afghanistan got started—will come through soon.
“Every dollar on account of the CSF will be taken from the US. It’s not a charity but is Pakistan’s money that it spent 14 months ago,” said Finance Minister Ishaq Dar here on Wednesday while addressing a press conference. […]“I have taken up the issue of CSF with Chuck Hagel and he said Pakistan should fast track the process of submitting claims and the US will also ensure release of the amount on a fast-track basis,” Dar said.He said Hagel had assured that $381 million would be released by mid-January while claims for $409 million had been sent to the US Embassy.In addition to the outstanding claims, he said, another about $800 million had been spent from the budget in the current year and its claims would be filed soon.
Pakistan’s need for cash comes at an awkward time in Pak-American relations. Cricketer-turned-politician Imran Khan has been leading an anti-American crusade guised as protests against drone strikes. His party went so far as to leak the name of the CIA station chief in Islamabad to the media in late November, prompting the official’s swift withdrawal to the US. His latest agitations have led to a partial shut-down of NATO supply routes at the Af-Pak border due to his supporters attacking truck drivers. When Defense Secretary Chuck Hagel visited Islamabad recently, Pakistani media outlets reported that Hagel warned Prime Minister Nawaz Sharif that the US could withhold funds if Pakistan doesn’t work to reopen supply routes to Afghanistan.Chances are this will get resolved—Dar was probably not bluffing, as Washington wouldn’t benefit from Islamabad’s default. But despite an optimistic outlook after Sharif’s visit to Washington in October, it seems that relations have fallen back into a familiar pattern of codependency and mistrust—business as usual.