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IMF Gives Nod to Pakistan Economic Reforms - 2003-01-20

An International Monetary Fund delegation has met with Pakistani officials giving a positive assessment of the country's three-year-old economic reforms. But the delegation chief warns that a war in Iraq could have a negative impact on the region's economy.

The IMF's Middle East director, George Abed, said he hopes there will be no war with Iraq, adding that Baghdad should cooperate with U.N. inspectors to avert a conflict over suspected illegal weapons of mass destruction. "We are all hoping and praying that a war can be avoided in Iraq that the United Nations can be satisfied with the inspections. I am getting outside my field in the IMF, but war is never the best alternative," Mr. Abed said.

Mr. Abed made the remarks at a news conference in the Pakistani capital, where he said if war comes, its impact on oil prices will cause economic hardship. "A war that lasts two to three months or longer becomes even worse [amd] will of course cause the prices of oil to go up. It will definitely impede tourism, it will impede private transfers and capital investment, it will also impede foreign direct investment in the region. Therefore, war is not good for the region," he explained.

Mr. Abed is in Pakistan leading a three member IMF delegation, which is assessing economic reforms Pakistan introduced three years ago. He said the newly-elected government of Prime Minister Zafarullah Jamali has assured his delegation that it will stick to the reform path to improve Pakistan's economy.

"I was assured that the course that Pakistan itself has chosen the road to reforms, and progress will continue because of the results that these reforms have brought to the country. We are satisfied and we are content with the assurances we have received," he said.

The IMF official praised Pakistan for achieving economic stability in the last three years through what he said was an aggressive reform agenda. But he said that the reforms needed to be consolidated.

Pakistani officials have said they are worried a war in Iraq could increase international oil prices, which will put pressure on Pakistan's economy. But the government said it has prepared a contingency plan that includes maintaining emergency oil reserves.