WASHINGTON/ISLAMABAD, Oct 30: Pakistan and the International Monetary Fund concluded on Thursday their negotiations on a proposed macro-economic stabilisation programme for the country.

The talks that began in Dubai on Oct 21 focussed on a policy framework for a possible rescue package for Pakistan to help prevent an economic meltdown.

Pakistan will now send a letter of intent and a memorandum of economic and financial programme — technical jargon for a formal request for help — to the IMF in a week.

Once the formal request is received, the IMF will put it before its executive board, which is expected to take another week to finalise it.

If all goes well, the IMF may approve a rescue package by Nov 15, two days before a scheduled meeting of the Friends of Pakistan group formed in New York last month to help revive the country’s ailing economy.

Pakistan believes that IMF’s endorsement will have a positive impact on its allies as well and will encourage them to provide the much-needed economic assistance to the country.

Under IMF rules, a country is allowed to receive 300 per cent of its quota, which in Pakistan’s case amounts to about $4.5 billion. But Pakistan has asked for four to six times of the quota — between $6 billion to $9 billion —to meet its immediate needs.

A source in the ministry of finance in Islamabad said that most of Pakistan’s economic stabilisation plan had been agreed upon in eight days of talks in Dubai but a disagreement on one or two points was holding up the package.

Asked if the IMF was seeking a reduction in the defence budget and a raise in discount rate, the source said the issues were of sensitive nature and he would not like to discuss them at this time.

“We have days to talk about these issues,” he said.

The issues will be discussed in detail with the president and the prime minister before a commitment is made. The Fund has in principle approved Pakistan’s plan, the source added.

On Tuesday, German Foreign Minister Frank-Walter Steinmeier told reporters in Islamabad that Pakistan needed help in the next six days.

Mr Steinmeier said the IMF was willing to help the country, but President Asif Ali Zardari said Pakistan could “ill afford” IMF’s preconditions which would require a drastic reduction in the government spending.

Instead, Pakistan is seeking help from countries such as China, and Saudi Arabia that are sitting on big cash reserves of their own and have close ties to the country.

Islamabad believes that these traditional allies would soon overcome their reluctance and commit to help Pakistan at the Friends of Pakistan meeting in Dubai on Nov 17. The group includes China, the United States, Britain, France, Saudi Arabia and the UAE.