ISLAMABAD - PAKISTAN sought help from the International Monetary Fund on Wednesday to avoid a possible economic meltdown amid high fuel prices, dwindling foreign investment and soaring militant violence.

Pakistani officials had previously said turning to the IMF would be a last resort.

Aid from the agency often comes with conditions such as cutting public spending that can affect programs for the poor, making it a politically tough choice for governments.

In a statement, the fund said Pakistan had requested IMF help 'to meet the balance of payments difficulties the country is experiencing.' It said the amount of money requested by Pakistan had yet to be determined and that talks on the loan package would begin in a few days.

Pakistani economists say up to US$5 billion (S$7.5 billion) is needed to avoid defaulting on sovereign debt due for repayment next year, but that US$8 billion more may be need overall.

The country has also asked for loans from wealthy nations and multilateral agencies such as the World Bank. Analysts say the country will probably get that help also because of its front-line status in the war on terror.

Any default would further shatter local and international confidence in the country as it battles violence by Al-Qaeda and Taliban militants near the Afghan border.

High oil prices and dwindling investment from overseas have triggered a balance of payments crisis that is undermining the Pakistani rupee. The country is also battered by high inflation and chronic power shortages.

The total amount of foreign currency in Pakistani banks has fallen by more than half since last year and currently stands at US$7.75 billion.

Through much of its history, Pakistan has struggled with chronic economic instability and has at least two times needed IMF assistance, but the current crisis comes at an especially dangerous time.

Militants sheltering along the border region with Afghanistan are blamed for the rising violence in that county as well as a string of bloody attacks at home. Osama bin Laden and other top Al-Qaeda leaders are thought to be hiding in the frontier region.

Last month, a suicide bomber struck the Marriott Hotel in Islamabad, killing 54 and leading the UN and some foreign embassies to withdraw families of foreign staff.

In the latest violence, Taliban militants bombed a convoy of Pakistani troops and opened fire on the survivors, sparking a battle that killed five security officers and seven attackers, police said.

Taliban spokesman Muslim Khan said 15 troops were killed and only five militants died in the attack on Tuesday in Swat Valley, a former tourist destination where troops have been battling Islamic extremists for a year.

Government restrictions that ban foreigners and most journalists from the restive frontier region make it very difficult for reporters to verify casualty figures from Swat or Bajur, a nearby district regarded as a haven for Taliban and al-Qaida militants and where officials claim to have killed more than 1,000 insurgents since August. -- AP