Welcome to Pakistan's “Street of Dreams” - your chance to buy into a future free of suicide bombers, power cuts, crumbling infrastructure and bad shopping.

So goes the sales pitch for Canyon Views, a 1,000-acre complex of 5,000 luxury homes in Tuscan, Portuguese and Moorish styles being built on the outskirts of the Pakistani capital. “It's a dream come true,” said a sales executive on a recent tour. “This is the new Islamabad.”

When a Dubai-based developer invested $2.4 billion (£1.6 billion) in this and two similar projects in Pakistan in 2006, the dream seemed almost real. The economy was booming, the consumer class spending, the stock market outperforming the world. The first 250 villas - costing as much as $400,000 each - sold in a flash.

How times have changed.

Pakistani officials are in Abu Dhabi today to ask for billions of dollars from Britain and 11 other “Friends of Democratic Pakistan” to help to save their nation from economic collapse and military defeat by Islamist insurgents.

The meeting comes just two days after Pakistan agreed to a loan of $7.6billion from the International Monetary Fund - a humiliating climbdown for Asif Ali Zardari, the country's new President.

Pakistani officials say they are over the worst of a crisis that has brought them within days of defaulting on foreign debt repayments and which has threatened to derail a military campaign against Taleban and alQaeda militants on the Afghan border. “We have fulfilled our commitment that Pakistan will never default,” said Shaukat Tareen, finance adviser to Pakistan's Prime Minister.

Yet the IMF bailout falls far short of what officials and economists estimate the country of 165 million people needs to stay afloat economically - and continue the costly fight against the militants.

Pakistan's foreign exchange reserves have now plummeted to less than $7 billion, enough to pay for just two months of imports. The rupee has slumped by one fifth this year, the stock market by more than a third. Inflation stands at 25 per cent.

“It's a nightmare,” said Khalil Afridi, 41, who fears he will have to close his small mobile telephone shop in the city of Lahore by January. “First, there were the terrorists - now this.”

Rich Pakistanis have exacerbated the crisis by illegally transferring an estimated $10 billion overseas in the past year.

Pakistani officials estimate that they may need $15 billion over the next two years to service foreign debt and pay for imports, especially oil, and the campaign against the militants. They expect the World Bank and other international agencies to add to the IMF's $7.6 billion. But Mr Zardari hopes that the rest will come from the “Friends”: Britain, the United States, China, Saudi Arabia, Japan, France, Germany, Italy, Australia, Turkey, the United Arab Emirates, the United Nations and the European Union.

The informal group rebuffed his appeal for cash in September out of concern that it would be mishandled without an IMF programme to raise taxes and curb the amount of government spending.

Washington was particularly wary, having already given Pakistan $10billion since 2001 - of which American officials estimate 70 per cent was mis-spent. Only China, which is one of Pakistan's closest allies, agreed before Saturday to lend it $500 million.

Pakistani officials, who have emphasised the economic cost of supporting the War on Terror in recent days, say that they expect good news from today's meeting, now that the IMF loan has been agreed upon.

The Friends, however, are playing down expectations - not least because of their own pressing financial woes.

“Most people are pretty adamant it's not going to be another donors' conference,” one Western official said. “It's there to support the democratic process in Pakistan.”

The likely outcome of the meeting is that the Friends will agree to help Pakistan secure more funds from international agencies such as the Asian Development Bank. To do that, however, Pakistan will have to abide by unpopular IMF conditions, which could precipitate another political crisis. Already the Government is under fire for failing to curb its own profligacy or clarify what strings are attached to the IMF loan.

Ahsan Iqbal, a spokesman for the opposition Pakistan Muslim League, criticised Mr Zardari for expanding the Cabinet to 60 ministers and taking 200 people with him on a recent visit to Saudi Arabia.

Murtaza Mughal, of Pakistan Economy Watch, said he should have turned to Pakistani businessmen, rather than the IMF or the Friends. “I have never seen a developing country do well out of an IMF loan,” he said.

None of this appears to worry the sales team at Canyon Views - their customers are either overseas Pakistanis or from the wealthy elite. They say they are on schedule to complete the project, plus another complex of 5,000 homes outside Islamabad and a seafront development of 4,000 units in Karachi by 2011.

Beyond the Street of Dreams, however, the view is decidedly less rosy.

From crisis to crisis

2007

March President Musharraf dismisses Chief Justice, prompting widespread protests from lawyers

July Mr Musharraf proposes power-sharing deal with Benazir Bhutto, below, former Prime Minister

October Ms Bhutto returns from exile

November Nawaz Sharif, former Prime Minister, returns from exile. Mr Musharraf steps down as army chief and wins new term as President

December Ms Bhutto is assassinated during election rally

2008

February Ms Bhutto’s Pakistan People’s Party (PPP) wins parliamentary elections

March PPP forms coalition Government with Mr Sharif’s Pakistan Muslim League

August Mr Musharraf resigns as President. Coalition Government collapses

September Asif Ali Zardari, Ms Bhutto’s widower and PPP leader, wins presidential election. US launches ground assault and escalated missile attacks on northern Pakistan. Mr Zardari asks “Friends of Democratic Pakistan” for billions of dollars in aid

November Pakistan agrees to borrow $7.6 billion from the International Monetary Fund

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