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UNCLAS SECTION 01 OF 02 ISLAMABAD 000537 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN EINV PGOV PREL PK
SUBJECT: EAD LAYS OUT STRATEGY FOR PAKISTAN DONORS' MEETING 
 
¶1. (SBU) Summary.  Farrakh Qayyum, Secretary in the Economic Affairs 
Division (EAD), which is in charge of preparations for the April 17 
donors' conference, told DCM March 12 that the GOP is working 
closely with the World Bank office in Islamabad to prepare their 
request.  He noted that the request will be based on the GOP's 
second Poverty Reduction Strategy Paper.  The GOP plans to ask for 
$1 billion each from the World Bank and the Asian Development Bank 
and for $350 million each from the U.S., the E.U., and Japan.  EAD 
is working closely with the Planning Commission and the Ministry of 
Foreign Affairs, which have responsibility for the Friends.  He 
mentioned that the GOP is planning to suggest the second week of May 
for the postponed session of the RECCA.  End Summary. 
 
¶2. (SBU) DCM, AID Director and Econ Counselor met with Farrakh 
Qayyum, Secretary of the Economic Affairs Division, on March 12 to 
discuss plans for the donors' conference.  Qayum began the meeting 
by discussing the postponement of the RECCA, saying that they have 
suggested the second week in May to the Afghans, but are awaiting 
the return of Foreign Ministers Spanta and Qureshi from Tehran 
before formally proposing that date. 
 
¶3. (SBU) Qayyum told us that at the April 17 meeting in Tokyo, the 
GOP would present an overview to Friends in the morning, where the 
GOP expected statements of political solidarity from the 
participants, but that at the afternoon donors' session, actual 
pledges would be made - "the flesh will be put on the whole thing." 
Qayyum said that the Japanese have been "very enthusiastic and keen" 
and have insisted that the World Bank co-host.  Qayyum has prepared 
a draft letter for Tarin's signature asking [World Bank President] 
Zoellick to co-host and asking the Bank to prepare a paper 
"validating our needs" and ensuring that proper capacity and policy 
framework is there.  He said that the Bank has a seven-person team 
in Islamabad which is currently working on this.  Qayyum said that 
the GOP had also requested the involvement of the Asian Development 
Bank ("whose president is Japanese") in validating the program. 
 
¶4.  (SBU) Qayyum confirmed what we had heard previously from Salman 
Farooqui on details of the schedule.  The Ministry of Foreign 
Affairs will brief Ambassadors in Islamabad o/a March 20 or 21, and 
the UAEG has agreed to host experts' meetings April 2-3. 
 
¶5.  (SBU)  Qayyum said that the GOP would be requesting $6 billion, 
or $2 billion annually for the next three years - for its 
medium-term budgetary framework (Note:  the IMF res rep here said 
that the IMF stands by its recommendation of $4 billion over the 
life of the 23 month program.  End note.)  He emphasized the need 
for direct budgetary support and also the use of debt swaps, whereby 
part of Pakistan's annual $1.2 billion in debt servicing could be 
used for rupee-based development programs.  The GOP plans to request 
the World Bank and the Asian Development Bank to contribute $1 
billion each over and above their regular programs, and ask the 
U.S., the EU, and Japan each to give $350 million annually over 
three years. 
 
¶6.  (SBU)  Qayyum shared with the DCM the power point presentation 
outlining the GOP request.  He will focus donor pledges on four of 
the nine pillars of their Second Poverty Reduction Strategy Paper: 
macro economic stability, protecting the poorest, human development 
for the twenty-first century, and governance for a fair and just 
society. 
 
¶7.  (SBU)  Comment:  Qayyum is obviously very engaged in ensuring 
that the conference will be successful, and is coordinating closely 
with the Planning Commission and the Ministry of Foreign Affairs, 
which have the lead on the Friends portion of the meeting.  He took 
on board our message that the Friends was not just about a wish list 
of projects, and his comments about expecting only statements of 
political support from the Friends on April 17 seemed designed to 
smooth over any confusion between the two groups.  We will be 
meeting with the Friends group next week and will continue efforts 
to ensure that expectations for the two April sessions are 
coordinated.  We are also recommending that the GOP include 
 
ISLAMABAD 00000537  002 OF 002 
 
 
presentations on the Donors' Conference to Ambassadors here and 
experts in Abu Dhabi in early April to ensure that the GOP approach 
is effective and realistic. 
 
PATTERSON