THE letters exchanged between Britain`s Chancellor of the Exchequer, Sir Stafford Cripps, and Pakistan`s Finance Minister, Mr Ghulam Mohamad, during the recent sterling balance negotiations in London, the text of which has been released in Karachi, give the terms of the agreement reached between Britain and Pakistan. The British Chancellor of the Exchequer ... recognised the special position of Pakistan in view of her need to develop her economy for the first time as an independent State. ... According to the agreement, there shall be transferred from the No. 2 to the No. 1 Account of the State Bank of Pakistan between July 1, 1948 and June 30, 1949, a sum of £5 millions forthwith and further sums not exceeding £5 millions, for the purpose of meeting Pakistan`s external expenditure.

Pakistan undertakes to limit her expenditure in hard currency areas so that it may not exceed the equivalent of £5 million during the above period. Pakistan`s sterling pensionary obligations have been capitalised [at] £8,166,848 ... and the UK Government will pay Pakistan sterling pensions during the years 1948-49 to 1997-98 in accordance with the scheme set out... .