CSF: Pay up America!

Its that time again. One by one, key ministers and top brass from the GHQ are making their way for the upcoming round of negotiations between Pakistan and the US in Washington. Starting Friday, the dialogue will last three days.
Relations have become frosty, yet again, with instructions of do more emanating from Washington amid anger in Pakistan over escalating coalition activities in the border regions with Afghanistan.
While the discussions are expected to be broad-based, economic managers from Pakistan - led by the Finance Minister Dr. Abdul Hafeez Shaikh - will push for the disbursal of colossal payments due on account of Coalition Support Fund (CSF), amongst others.
Media reports from Pakistan suggest that overdue payments now amount to about $2.5 billion. The figure includes expenses that Pakistani military has incurred in the war on terror on behalf of its allies - read the United States of America.
While the actual disbursal figures are not published, a total of $3.6 billion was earmarked for security related expenses between FY10-11, according to a US State Department publication. Wrangling over the CSF is a problem Pakistan has contended with since 2009.
As recently as yesterday, CNN reported that the Obama administration is laying the final touches on a $2 billion security related aid project, over and above the $7.5 billion Kerry-Lugar Aid. The aim is to provide the necessary resources to the Pakistani military to start the much called for operation in North Waziristan.
General Ashfaq Parvez Kayani has assured Admiral Mike Mullen that Pakistan will act to curb the threat emanating out of North Waziristan, but, on its own timeline. The Pakistan Army is already stretched with the protection of Eastern and Western borders, as well as relief efforts in the aftermath of the massive flooding that hit the country earlier this year.
Economic managers warn that the burden of the overdue CSF is further aggravating the already weak fundamentals. The government may be forced to borrow from the Central Bank to plug slippages in the fiscal deficit.
As it stands right now, the government in Islamabad has budgeted $1.4 billion under CSF inflows. In a similar vein, inflation has already exceeded more than 14.5 percent, and could be seen inching up further in coming months.
CSF flows constitute non-tax revenues, so in addition to the worsening fiscal slippages - which are now projected at 6~6.5 percent of GDP, the country will be forced to print money which will be inflationary in nature. Also, conditions imposed by the IMF Stand-by programme will be even more difficult to meet. And so, Pakistan will be unable to receive IMFs remaining tranches that have already been delayed for almost six months.
The dynamic of the war has changed, now that Washington has clearly indicated its desire to exit out of Afghanistan. Even if Pakistan does not play a central role in brokering a deal with the Taliban, supply routes through the Torkham border are essential to the US exit.
Surely, no one in Washington or Brussels would want another episode of severance of supply routes.