Jan 7 (Reuters) - Pakistan's MQM party said on Friday it will rejoin the ruling coalition, restoring its parliamentary majority, after the government put off reforms demanded by the International Monetary Fund.
The Muttahida Qaumi Movement (MQM), the second largest party in the coalition, defected to the opposition on January 2, depriving the government, a strategic U.S. ally, of its majority and sparking a political crisis.
"MQM in a gesture of goodwill, for the promotion of democracy and in the face of critical condition of the country, will again sit on the treasury benches," Raza Haroon, a top party leader, told reporters as he stood with Prime Minister Yusuf Raza Gilani.
But Haroon said the MQM would not immediately rejoin the federal cabinet, indicating the party was holding out for more concessions.
The MQM, which dominates the country's financial capital Karachi, cited a new year fuel price increase as the main reason for its defection.
Thursday, the government cancelled the fuel price rise, prompting sharp criticism from both the IMF and U.S. Secretary of State Hillary Clinton.
In another blow to a reform program agreed in exchange for an $11 billion IMF loan, Gilani said Friday a reformed general sales tax would be put off until a political consensus could be reached.
"We have deferred ... We will not go forward until consensus is evolved," he said.
The MQM had strongly opposed the tax, calling it regressive.
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