China - Pakistan: Cash Money No

IHT - ISLAMABAD, Pakistan: Food prices have soared, making some basics, even flour, too expensive for the poorest to afford. No large-scale riots have occurred, but concern is mounting that such protests are not far off.

The new government has reduced subsidies on fuel and food, and the central bank moved on Friday to ease an intrabank liquidity crisis

President Asif Ali Zardari returned from China late Friday without a commitment for cash needed to shore up Pakistan's crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments.

With the United States and other nations preoccupied by a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the IMF

Accepting a rescue package from the fund would be seen as humiliating for Zardari's government, which took office this year.

An IMF-backed plan would require Pakistan's government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan's economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy about exploiting the terrorist threat to try to win financial support, a senior official at the IMF said.

But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.