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Pakistan faces economic crisis

ISLAMABAD, Pakistan — Pakistan's new leaders are scrambling for foreign cash to ward off a possible economic meltdown at a time when they are trying to contain soaring violence by Islamic fundamentalists.

Battered by high inflation and a plunging currency, the nuclear-armed country hopes global powers and financial institutions will not want to see it further destabilized and hand over the dollars it needs.

But the plea for help comes as potential donors in the West are distracted by the global financial crisis and deepening fears of recession in their own economies.

Pakistan requires an immediate commitment of at least $2 billion to restore confidence in the country after an alarming slump in its foreign reserves, economists say. Up to $8 billion more will be needed to repay sovereign debts due to mature in 2009, they say.

President Asif Ali Zardari returned Friday from neighboring China with a promise of assistance from an "all-weather friend," but no specific public commitment.

Pakistani finance officials have also visited Washington and Middle Eastern capitals.

"Countries are busy with their own housekeeping, but they will not leave Pakistan in the middle of the road," said Muzammil Aslam, chief economist at the Pakistani security firm KASB. "It is the world's first line of defense against Taliban and al-Qaida."

Others are not so sure. Some predict Pakistan will have to seek assistance from the International Monetary Fund, a last resort given that such help is often conditioned on deeper cuts in public spending.

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