A stable, democratic, prosperous Pakistan is considered vital to U.S. interests. U.S. concerns regarding Pakistan include regional and global terrorism; stability in neighboring Afghanistan; democratization and human rights protection; the ongoing Kashmir problem and Pakistan-India tensions; and economic development in the region. Progress on these issues was severely threatened in 2008 by a sharp decline in Pakistan's economic stability, culminating in an immediate need for capital assistance. U.S. officials and independent analysts are increasingly concerned that a failing Pakistani economy could undermine multilateral efforts to stabilize South Asia and curtail the incidence of Islamist radicalism. Since his ascension to the presidency in September 2008, President Asif Ali Zardari has attempted to address Pakistan's economic problems, with the support of his chief economic advisor, Shaukat Tarin. On September 19, 2008, acting finance minister Naveed Qamar released new economic policies designed to bring about macroeconomic stability and avoid seeking IMF assistance that included the elimination of fuel, electricity and food subsidies, and a reduction in the government deficit. On November 3, 2008, Tarin announced reforms of Pakistan's tax system, including the politically sensitive taxation of large landowners, to reduce the incidence of tax evasion. President Zardari has emphasized the importance of his nation's economic problems, stating, "The greatest challenge this government faces is an economic one." Despite the September announcement of new economic policies, Pakistan's foreign exchange reserves declined markedly throughout 2008. The State Bank of Pakistan's holdings of foreign exchange reserves fell from $14.2 billion at the end of October 2007 to $3.4 billion at the end of October 2008—barely enough to cover one month of imports. Pakistan needed $4 billion to $5 billion in assistance by the end of November in order to avoid defaulting on maturing sovereign debt obligations. During the autumn of 2008, Pakistan sought the needed capital from a variety of sources, including the International Monetary Fund (IMF), China, Saudi Arabia, the United States, and an informal group of nations known as the "Friends of Pakistan." Although some assistance was provided by international organizations such as the Asian Development Bank (ADB) and Islamic Development Bank (IDB), as well as $500 million from China, most of the capital Pakistan required to avoid the impending capital crisis came in the form of a $7.6 billion "stand-by arrangement" with the IMF, finalized on November 24, 2008. The IMF stand-by arrangement provided for $3.1 billion in immediate assistance, with the remainder to be distributed over the next two years, following quarterly reviews of Pakistan's economic progress. Access to the IMF assistance was subject to a number of "conditionalities," including a significant reduction in Pakistan's fiscal and current account deficits; a tightening of Pakistan's monetary policy (via higher interest rates); and "a strengthening and better targeting of social assistance." Even though the autumnal capital crisis was averted, Pakistan claimed it needed $10 billion to $15 billion over the next two to three years to continue to service its capital account deficits and its outstanding debt. As a result, it continues to seek assistance from various sources. Pakistan reportedly requested an additional $4.5 billion in assistance from the IMF during bilateral talks in Dubai in mid-February 2009. A few days later, President Zardari traveled to China, where he reportedly requested aid. In addition, there are signs that Pakistan's economic problems are growing worse. The global economic recession has apparently contributed to a slowdown in Pakistan's merchandise trade. Despite the decline in global food and energy prices, inflation remains high in Pakistan, causing economic hardship for Pakistan's urban and rural poor. Pakistan reportedly requested an easing of the IMF conditionalities during the meetings in Dubai. There is rising concern that the economic conditions are contributing to a growth in support for Pakistan's Islamist extremists, including al Qaeda and the Taliban. In his testimony before the Senate Select Committee on Intelligence, Director of National Intelligence Dennis Blair stated: The [Pakistan] government is losing authority in parts of the North-West Frontier Province and has less control of its semi-autonomous tribal areas: even in the more developed parts of the country, mounting economic hardships and frustration over poor governance have given rise to greater radicalization. In a February 2009 report, the Atlantic Council stated, "Pakistan faces dire economic and security threats that threaten both the existence of Pakistan as a democratic and stable state and the region as a whole." The Atlantic Council called for an additional $4 billion - 5 billion of immediate financial aid for Pakistan to avert "an economic meltdown." The report's honorary co-chair Senator John Kerry has indicated that he and Senator Richard Lugar "will soon introduce our Enhanced Partnership with Pakistan legislation." The legislation is expected to be very similar to the "Enhanced Partnership with Pakistan Act of 2008" ( S. 3263 ), introduced in the 110 th Congress by then-Senator and currently Vice President Joseph Biden. Other legislation has been introduced during the 111 th Congress designed to help improve the economic situation in Pakistan. After seven years of generally strong economic growth, Pakistan's economy ran into problems in 2008. Real GDP growth, which had been averaging above 7% per year since fiscal year 2000/2001, declined to 5.8% in fiscal year 2007/2008 and is expected to decline to 2.5% in fiscal year 2008/2009. Pakistan's consumer price index (CPI), which had fluctuated around 7%-9% for several years, jumped to over 25% during the summer of 2008, primarily due to a sharp increase in global food and energy prices. More alarming, however, was the dramatic decline in Pakistan's foreign exchange reserves, which plummeted from over $14 billion in June 2007 to $3.4 billion in October 2008, driven by a rapidly deteriorating current account balance. In the autumn of 2008, Pakistan was in danger of defaulting on its sovereign debt. During September and October 2008, Pakistan sought assistance with its capital crisis from a number of sources, including the ADB, China, the IMF, Saudi Arabia, the United States, and the World Bank. At first, Pakistan was unable to secure a firm commitment for support from most of these sources. There was speculation that the individual nations were waiting to see if the IMF would provide assistance, and what conditions the IMF would place on this aid. Pakistan, however, was initially reluctant to accept IMF support, for fear that its "conditionalities" would generate unacceptable hardship for Pakistan's poor and possibly threaten the stability of the Pakistan government. For a time, Pakistan sought other sources of support than the IMF. Pakistan's initial approach, termed "Plan A," was to obtain loans from selected sources, such as the ADB, the World Bank, the United Kingdom's Department for International Development (DFID), and the Islamic Development Bank (IDB). The ADB did agree to provide Pakistan with a $500 million loan "to address harm done to poor families and the country's economy by unprecedented international food and fuel price hikes." In addition, the World Bank originally offered $1.4 billion in assistance. However, the combined ADB and World Bank loans were insufficient to address Pakistan's current capital shortfall. When Plan A proved unworkable, Pakistan shifted to Plan B, which was to secure commitments for support from an informal group of nations known as the "Friends of Pakistan." On September 26, 2008, a group of nations met President Zardari in New York City to discuss ways to support Pakistan with its political, economic, and security problems. Zardari reportedly sought $100 billion in aid from the group. Calling themselves the "Friends of Pakistan," the informal coalition includes representatives from 11 nations (including China, Saudi Arabia, and the United States), as well as the European Union, the United Nations, and the IMF. The group did not, however, offer Pakistan any financial support following their September meeting. At the second meeting of the Friends of Pakistan held on November 17, 2008, in Abu Dhabi, Pakistan again requested assistance, but no commitment to aid was forthcoming. As part of the Plan B initiative, President Zardari traveled to Beijing in mid-October 2008 to strengthen ties between the two nations, as well to ask for financial assistance. Following a meeting between President Zardari and China's Premier Wen Jiabao, a spokesperson for China's foreign ministry stated, "As a long-time friend of Pakistan, China understands it is facing some financial difficulties. We are ready to support and help Pakistan within our capability." Although China provided no further details on the form and extent of its intended support to Pakistan, they did agree to foster closer economic relations between China and Pakistan, setting the goal of increasing bilateral trade from $7 billion in 2007 to $15 billion in 2011. On November 14, 2008—after Pakistan had formally requested the IMF loan, but before the terms of the loan were settled—China pledged to provide Pakistan with $500 million in financial assistance. President Zardari and Tarin left for Riyadh on November 4, 2008, to reportedly ask for Saudi support for Plan B and up to $6 billion in deferred payments for petroleum imports. The deferred oil payments would free up capital that Pakistan could then use to pay its other international obligations. In an interview prior to his departure, Tarin stated, "We will not require IMF support in case we succeed in getting money from Saudi Arabia." Saudi relations with Pakistan, however, have been cool lately for several reasons, including Pakistan's quest for an oil facility from Iran. There was no public announcement of support at the end of President Zardari's Saudi Arabia trip. With the apparent failure of both Plans A and B, Pakistan moved on to Plan C—formally requesting IMF assistance.