Economic Crises
See also: Periods of stagflation in PakistanFrom 14 to 17 October 2008, he was in China to negotiate foreign aid, as Pakistan faced the possibility of defaulting on its payments. China refused to offer any aid commitments, but instead promised to provide assistance in the development of two nuclear power plants and more future business investments.
After Saudi Arabia, Britain, China, the United States, and the United Arab Emirates refused to provide any bailout, he officially asked the International Monetary Fund (IMF) for assistance in solving Pakistan's balance of payments problem on 22 October.
He went to Saudi Arabia from 4 to 6 November in hopes of obtaining financial aid and securing trade agreements. However, leaked cables revealed increasingly strained relations between Zardari and Saudi royalty, primarily because of Saudi distrust of Zardari and preference for Sharif. Weaker cooperation led to decreased oil subsidies as part of a broader Saudi policy of withholding monetary assistance.
In mid-November 2008, Zardari's government officially sent a letter of intent to the IMF regarding a bailout to help increase its foreign exchange reserves. In a $11.3 billion multi-year loan package, Pakistan received a $7.4 billion loan for 2008–10. The IMF stipulated stringent reform conditions, which included rebuilding the tax structure and privatising state enterprises. The World Bank and Asian Development Bank withheld a combined $3 billion aid in the 2010–11 fiscal year and the IMF withheld since May 2010 the last segment of its aid package.
In January 2011, the MQM withdrew from the government. Zardari's ruling coalition averted a government collapse by accepting the opposition's economic proposals, which restored gas subsidies and abandoned many of the IMF's suggested reforms.
In an effort to curb government expenditures, Zardari swore in an "austerity cabinet" in February 2011 which reduced the cabinet from 60 ministers to 22.
Read more about this topic: Asif Ali Zardari, President of Pakistan
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