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'Pakistan sitting on a debt bomb'

After more than a week of talks with international lending agencies, debt-burdened Pakistan is ''hopeful'' of an economic bailout that would avoid a possible default on external credit repayments, a senior Pakistani official said on Tuesday evening.

''We are hopeful we will negotiate a good deal with the IMF (International Monetary Fund),'' deputy chief of the Planning Commission Ahsan Iqbal said. ''Our economic reforms were derailed by the sanctions. And we are trying to put across our case to the IMF.''

A joint IMF and World Bank team has been in Pakistan for the past 11 days to try to put together a package of credits and loans to this troubled nation, burdened by a $ 32.1 billion external debt and an acute shortage of foreign currency.

The foreign exchange reserves stand at roughly $ 700 million, barely enough to cover imports for the next one month.

The country has been pushed to the brink of economic collapse by international sanctions that followed its tit-for-tat nuclear tests in May.

The country is sitting on a ''debt bomb'' that has killed the economy, said Iqbal. Earlier Pakistan said it would consider requesting a moratorium on payment of its debt if international donors do not release the promised loans.

UNI