INSUBCONTINENT EXCLUSIVE:
Pakistan secured a badly-needed $3 billion short-term financial package from the International Monetary Fund on Friday, giving the South
Asian economy respite as it teeters on the brink of default.In a long-awaited decision for Pakistan, the IMF said it had reached a
staff-level deal with the 220 million nation, which will now be subject to approval by its board in July.The new nine-month standby
arrangement came hours before a current IMF agreement expires, offering relief to Pakistan, which is battling an acute balance of payments
crisis.Prime Minister Shehbaz Sharif said it would put Pakistan &on the path of sustainable economic growth&.With sky-high inflation and
foreign exchange reserves barely enough to cover one month of controlled imports, which analysts say Pakistan&s economic crisis could have
spiraled into a debt default in the absence of an IMF deal, Reuters reported.The deal came only after Sharif held marathon meetings with IMF
head Kristalina Georgieva on June 22, which he said represented &a turning point& as the fund&s managing director had not initially appeared
very forthcoming.Pakistan will receive formal documents on the deal later on Friday, Finance Minister Ishaq Dar told Reuters, which he said
he would &sign, seal and return by tonight&.The new deal, which Dar said on Thursday was expected soon, will disburse an upfront amount of
$1.1 billion shortly after the IMF board&s meeting in July, he said.Dar said Pakistan aimed to take the central bank&s foreign exchange
reserves to $14 billion by the end of July
&We have stopped the decline, now we have to turn to growth,& he added.Pakistan&s sovereign dollar bonds were trading higher after the
announcement, with the 2024 issue enjoying the biggest gains, up more than 8 cents at just above 70 cents in the dollar, according to
Tradeweb data.The gains were most pronounced in shorter-dated bonds, reflecting lingering skepticism over the longer-term fiscal outlook for
the country.The $3 billion IMF funding is higher than expected as it looks set to replace the remaining $2.5 billion from a $6.5 billion
longer-term Extended Fund Facility agreed in 2019.The deal will also unlock other bilateral and multilateral financing
Long-time allies Saudi Arabia, the UAE and China have already pledged or rolled over billions of loans.&This will support near-term policy
efforts and replenish gross reserves,& the IMF said.The new arrangement builds on the 2019 programme, IMF official Nathan Porter said in a
statement, adding that Pakistan&s economy had faced several challenges in recent times, including devastating floods and rising commodity
prices.&Despite the authorities& efforts to reduce imports and the trade deficit, reserves have declined to very low levels
Liquidity conditions in the power sector also remain acute,& Porter said.&Given these challenges, the new arrangement would provide a policy
anchor and a framework for financial support from multilateral and bilateral partners in the period ahead.&Porter also pointed out the power
sector&s buildup of arrears and frequent power outages, Reuters reported.Reforms in the energy sector, which has accumulated nearly 3.6
trillion Pakistani rupees ($12.58 billion) in debt, has been a cornerstone of the IMF talks.The IMF said it would want steadfast policy
implementation by Pakistan to overcome challenges, &particularly in the energy sector&, where it expects a rise in electricity prices.Dar
confirmed that the hike will come ahead of the IMF board review of the bailout, saying the rebasing to be done in July will make about three
to four rupees a unit difference.&Reform does not, must not, mean raising tariff endlessly,& Pakistan&s Minister for Power Khurram Dastgir
told Reuters.With the tenure of the current government ending in August, Dastgir said it had put in place an &aggressive medium-to-long-term
plan& to increase renewable energy which was only possible if long-term assistance is available.Reforms takenIslamabad has taken measures
demanded by the IMF since its mission arrived in Pakistan earlier this year, including revising its 2023-24 budget and a key policy rate
hike to 22% in recent days.It also got Pakistan to raise more than 385 billion rupee ($1.34 billion) in new taxation to meet the IMF&s
fiscal adjustments.The IMF said the central bank should remain proactive to reduce inflation and maintain a foreign exchange framework.The
painful adjustments have already fuelled all time high inflation of 38% year-on-year in May.&The FY24 budget advances a primary surplus of
around 0.4 percent of GDP,& Porter said, adding it will be important that the budget is executed as planned, and authorities resist
pressures for unbudgeted spending or tax exemptions.&This new programme is far better than our expectations,& said Mohammed Sohail of
Topline Securities in Karachi, adding there while were a lot of uncertainties on what would happen after a new government comes to power it
would &definitely help restore some investor confidence&.‘Tough journey& aheadMeanwhile, on Friday night, Pakistan&s Prime Minister
Shehbaz Sharif took to twitter and said while the IMF stand-by agreement &is a much-needed breather, which will help the country achieve
economic stability, the nations are not built through loans
I pray for this new program to be the last one.&He went on to thank Pakistan&s &friends - partners such as China, Saudi Arabia, UAE -
Islamic Development Fund for standing by Pakistan at the time of massive economic challenges.&Under a whole-of-the-government approach, we
have worked out an Economic Revival Plan, which will focus on unlocking our strategic potential in agriculture, mine - minerals, defense
production - information technology
The Plan will bring up investments of billions of dollars - create job opportunities for four million people.&It may be a tough journey but
as they say, ‘When the going gets tough, the tough gets going&,& he said.The post Pakistan clinches last-gasp $3 billion IMF bailout first
