China to help Pakistan out of economic crisis - envoy

ISLAMABAD (Reuters) - China has assured Pakistan of help to get out of its economic crisis, the Pakistani ambassador to Beijing said on Friday, but he gave no details and did not say if China had agreed to urgently needed new loans.

Pakistan, a nuclear-armed U.S. ally, is struggling to come to grips with a financial crisis. Islamabad's rapidly dwindling foreign reserves are at their lowest level since 2002.

It needs $3 billion to $4 billion or it risks defaulting on a $500 million bond due to mature in February, economists say.

President Asif Ali Zardari, the widower of former prime minister Benazir Bhutto, ended a four-day visit to China on Friday during which Premier Wen Jiabao pledged cooperation.

"There will be a negative impact on Pakistan of the world financial crisis. We have to make efforts ourselves but China has assured us, and they will help us to come out of this crisis," said Masood Khan, Pakistan's ambassador to China.

The Washington Post said on Thursday Pakistan was seeking up to $3 billion from China. The Financial Times reported earlier that Zardari hoped to secure concessional loans of $500 million to $1.5 billion.

"There has always been cooperation between Pakistan and China in a specific framework, and this time too we have made efforts to increase bilateral cooperation through various existing mechanisms," Khan said. He did not elaborate.

Pakistan is facing a balance of payments crisis, inflation running at close to 25 percent and heavy government borrowing from the central bank to cover a budget deficit.

The rupee weakened 2.78 percent to a record low of 84.40 rupees to the dollar on Friday after reserves fell by $570 million and on pressure from import payments, dealers said.