Linking the package to the Comprehensive Test Ban Treaty could prove counter-productive and instead of dictating terms the IMF must support Pakistan's home-grown package of reforms aimed at IMF-type objectives," said Hafiz Pasha, premier Nawaz Sharif's top economic adviser.

Pakistan is in an advanced stage of negotiations with the Islamic Development Bank for as much as $1.5 billion and Islamabad is also seeking resumption of IMF aid apart from a $3 billion dollar package, he told Wall Street Journal.

However, the official said he expected the loan size to be commensurate with Pakistan's desire to sign the CTBT.

If Islamabad does not pledge to sign the CTBT as sought by the United States, an IMF package would still materialise but it would be considerably smaller and mightalso require tough policy changes, ranging from devaluation, cut in defence spending and hikes in utility tariffs.

Even with an IMF bailout, Pakistan needs to overhaul its economy and government finances to prevent further crises, the official said while claiming that his appointment to the post too was a result of the growing realisation that it required experts to tackle the complex problems.

"It is clear now that we need structural changes. We cannot rely on growth of external debt, which is unsustainable and unworthy," he said.

Pasha's immediate task is to borrow yet more to cover most of the estimated $4.5 billion balance of payments shortfall for the fiscal year ending June 30, 1999.

Pakistan's foreign currency reserves are just $772 million while its September debt service bill is higher -- at least $600 million to multilateral agencies and an equal amount to commercial creditors.

In fact, the country's economic woes go far deeper than just debt. Recent hikes in petrol and power ratescoupled with a 30 per cent depreciation of the rupee since the may nuclear tests have revived double-digit inflation.

Contrary to former finance minister Sartaz Aziz's view that Islamabad was only facing a cash crunch, Pasha maintains that without raising tax revenues and restructuring the highly inefficient public utilities and banks, Pakistan can never improve its credibility with foreign lenders.