Islamabad, Mar 22 (IANS): Pakistan approved a supplementary grant of 27 billion PKR to avert a looming default on account of diesel purchase payments to Kuwait -- a move that might create problems in other areas because of the country's efforts to keep the overall expenses within the limits agreed with the International Monetary Fund (IMF).

The Economic Coordination Committee (ECC) of the cabinet, which approved the supplementary grant to settle the diesel payments, also sanctioned another 2.9 billion PKR to partly offset the wheat shortage in the Gilgit-Baltistan region, The Express Tribune reported.

The two decisions by the cabinet body show the extreme economic difficulties that the government is facing in avoiding a default in one area but ending up creating troubles in others.

Sources in the finance ministry said there were verbal instructions to the Accountant General of Pakistan Revenue (AGPR) to delay the clearance of some non-salary bills for a few weeks to create fiscal space.

A Finance Ministry handout read that the Petroleum Division had submitted to the ECC a summary on the credit facility extended by the Kuwait Petroleum Corporation (KPC) against the supply of diesel under a contract with the Pakistan State Oil (PSO) since 2000.

Under a deal with the IMF, Pakistan is committed to either slash expenditures equal to a supplementary grant or levy additional taxes of the same amount, The Express Tribune reported.

In December last year, the ECC had avoided taking the responsibility and did not clear requests for Rs17 billion in supplementary grants.