Deal comes through

A sigh of relief for the troublesome economy as the much-desired 25th IMF programme stands approved. As an instant endowment, Pakistan will receive around $1 billion out of the $7 billion tranche that has been borrowed at an interest rate of 5%. It took a lot of dovetailing and turned out to be a tale of bitterness and retreats as the government was under the pressure to sign on the dotted line of harsh conditionalities. But the appreciative side is that the 37-month Extended Fund Facility has come full circle, shunting away fears of default at a time when the economy is projected to grow at less than 2%, exports are nosedived and the rupee is in an embattled trajectory.

While biting the bullet of the new deal, the beleaguered government had agreed on some stringent conditionalities that pertain to raising the tax base up to Rs1.8 trillion and enhancing electricity prices up to 51%, apart from promising to sell off assets that are worth their salt. This is meant for ushering in transparency in the affairs of the Sovereign Wealth Fund, consolidating public finances and buoying forex reserves. The lender has also been assured that the private sector will be encouraged, and little is known as to how strictly the government is going to cut down on the public sector and bureaucracy by instilling effective austerity measures.

It goes without saying that if it had not been for the benevolence of friendly states that rolled over outstanding loans to the tune of $12 billion and helped generate an additional $2 billion, the Fund would have looked the other way. An all-time expensive loan of $600 million to win a board meeting date from the IMF was another footnote of the deal. To term it a pleasant ending of loan pursuit or a tough beginning of a new era, Pakistan will have to keep its fingers crossed as it goes on to implement the deal. Claims that this will be the last IMF programme merits a litmus test as we reform our governance, subject to the tall order of wealth generation. The consolation is that the economy has attained liquidity and is out of the woods.