By Faisal Aziz
KARACHI (Reuters) - Pakistani Prime Minister Yusuf Raza Gilani will attempt to woo back a vital coalition partner in a bid to save his fragile government Friday after reversing a fuel price rise, a move criticised by the IMF and ally the United States.
Gilani will hold talks with leaders of the Muttahida Quami Movement (MQM), whose powerbase is in the southern commercial hub of Karachi, which defected Sunday over the 9 percent fuel price rise.
MQM leader Faisal Subzwari told Reuters Thursday that his party welcomed the government's change of heart, but that it had no plans to rejoin the government.
A senior party official, however, said the MQM will keep an "open mind" in the Karachi talks.
The talks may help to defuse political tension in Pakistan, where public discontent is growing over rising inflation, suicide bombings carried out by Taliban militants, power cuts, poverty and unemployment.
But the fuel price rollback also brought criticism from strategic ally Washington, and Pakistan's financial lifeline, the International Monetary Fund.
The IMF, which rescued Pakistan's economy with an $11 billion (£7 billion) loan in November 2008, wants greater fiscal discipline from the government through painful measures such as the implementation of a new sales tax.
It sharply criticised the rollback Thursday and said the money could be better spent on social programs.
U.S. Secretary of State Hillary Clinton said she warned Pakistan's ambassador that the reversal would set back progress that was being made to provide a stronger economic base for Pakistan, a nuclear-armed South Asian nation.
Ruling Pakistan People's Party (PPP) officials said the reversal of the price rise, along with assurances on other demands, would likely be enough to get the MQM back on board.
"We are very hopeful. We believe in the policy of reconciliation, and we have sorted out a lot of issues with them (the MQM)," said Sharmila Farooqi, a senior PPP official in Sindh province, of which Karachi is the capital.
The Jamiat-e-Ulema-e-Islam (JUI), a small religious party, also left the coalition last month over Gilani's sacking of one of its ministers.
The possibility of a no-confidence vote seems to have subsided, mainly because the opposition is too divided. But Gilani's language in his announcement of the fuel price reversal suggested the prime minister is feeling highly vulnerable.
"All the political leadership" has agreed to the reversal, he said.
(Editing by Nick Macfie)
