(Releads with IMF, adds analyst quote)

By Mubasher Bukhari

LAHORE, Pakistan, Sept 2 (Reuters) - The International
Monetary Fund will give Pakistan $450 million in emergency
flood aid, providing some relief for a government overwhelmed
by the disaster and facing renewed militant violence.

IMF Managing Director Dominique Strauss-Kahn said in
Washington on Thursday that the funds would be dispersed in
"coming weeks".

Strauss-Kahn said discussions with a delegation led by
Pakistan's Finance Minister Abdul Hafeez Shaikh on how to
"reorganise" an $11 billion IMF loan program would continue.

He said Islamabad remained committed to terms including tax
and energy sector reforms.

The floods struck just as the army said it had made progress
in the war against the al Qaeda-linked Sunni Taliban.

Pakistan tightened security in the eastern city of Lahore
on Thursday after three bomb attacks killed 33 people and
wounded 171. A new wave of violence would be especially
difficult to manage given the enormity of the task of providing
relief to millions of flood victims.

The IMF package had kept afloat and economy that was
already fragile before the floods rampaged from the northwest
to the south, damaging crops and infrastructure which Prime
Minister Yusuf Raza Gilani estimated could hit $43 billion,
almost one quarter of last year's gross domestic product.

The Lahore blasts which hit a Shi'ite procession on
Wednesday bore all the hallmarks of pro-Taliban insurgents, who
have carried out sectarian violence designed to destabilise the

"Security has been tightened in the city to prevent any
such incident. We had called the (paramilitary) rangers after
the blasts last night, and they are on high alert and can be
called again any time if needed," Sajjad Bhutta, Lahore's top
administration official, told Reuters.

Reflecting the growing reach of the Pakistani Taliban, U.S.
prosecutors overnight charged its leader Hakimullah Mehsud in
the plot that killed seven CIA employees at an American base in
Afghanistan last December.

The United States also added the Pakistani Taliban to its
list of foreign terrorist organisations and set rewards of up
to $5 million for information leading to the capture of two of
its leaders, Mehsud and Wali-ur-Rehman.


Washington wants to see a stable Pakistan that can help
fight militancy in Afghanistan and inside its own borders.
Pakistani and U.S. officials are concerned that militant groups
could seize upon the disorder caused by the floods to gain

Moody's Investors Service changed to negative from stable
the outlook on the long-term local currency deposit ratings and
financial strength ratings of five leading Pakistani banks, due
to economic damages caused by the floods.

The rating agency says it expects economic growth to slow
down and inflationary pressures to rise sharply on account of
factors such as food shortages.

Analysts said the IMF decision was a vote of confidence.

"This definitely sends out a positive signal that Pakistan
is still on track in terms of getting financing from
multilateral donors, which it critically needs, despite the
country's slippages on the fiscal side," said Asif Qureshi,
director at Invisor Securities Ltd.

Millions of flood victims are still homeless and
potentially fatal diseases threaten to bring a new wave of

Pakistan has only secured 63 percent of the $459 million in
funding needed for the initial emergency aid, the U.N. said.

Red Cross workers have faced angry crowds when distributing
food and other supplies to flood victims, a disturbing trend
that could jeopardise operations, a senior official said in

There was also good news from the World Bank, which has
increased funding to help Pakistan cope with the floods by $100
million, to a total of $1 billion.
(Additional reporting by Faisal Aziz and Sahar Ahmed in
Karachi and Chris Allbritton in Charsadda and Stephanie Nebehay
in Geneva and Paul Eckert in Washington; Writing by Michael
Georgy; Editing by Miral Fahmy)

(For more Reuters coverage of Pakistan, see: