US sends first war reimbursement since 2010 to Pak

Islamabad: Cash-strapped Pakistan has received $1.118 billion from the United States as reimbursement for its expenses on the war on terrorism, the first payment from the Coalition Support Fund since December 2010.

The State Bank of Pakistan received the payment from the US on Thursday morning, SBP chief spokesman Syed Wasimuddin said on Thursday. The amount will be reflected in the foreign exchange reserves for next week, he said.

Wasimuddin said this was the first payment from the Coalition Support Fund since $633 million was received in December 2010.

Washington released the funds after it signed a memorandum of understanding with Islamabad on Tuesday for transporting supplies for NATO troops in Afghanistan through Pakistani soil.

The MoU, drafted in line with recommendations made by Pakistan's parliament for resetting ties with the US, replaced existing arrangements for NATO supplies. The agreement will be valid till the end of 2015.

The United States has released the funds to Pakistan as reimbursement for the costs it had incurred on anti-militancy operations.

The spokesman said the United States had paid Pakistan a total of $8.8 billion between 2002 and 2011 but the Pakistan government stopped claiming the money as relations were strained after the US operation in Abbotabad in May 2011 in which they killed Osama bin Laden.

The crisis hit a new low when US air strikes killed 24 Pakistani soldiers and Islamabad imposed a seven-month blockade on NATO traffic in protest.

Wasimuddin said the funds had been received from the coalition support fund on Wednesday.

Financial and political analysts believe that the release of the funds comes at a critical time for the Pakistan government as it is facing a new crisis created due to poor generation of tax revenues and because of subsidising fuel and other commodities.

The US commander of NATO troops in Afghanistan, General John Allen, held talks with Pakistan Army Chief General Ashfaq Parvez Kayani today in Pakistan for the first time since the NATO supply lines resumed.

He later said that "significant progress" was being made in improving cooperation with Pakistan, from which US officials have sought more action to eliminate Taliban safe havens on its soil.