Pakistan’s stock market opens at record high after IMF deal
After the index reached its upper circuit limit, trading at the Pakistan Stock Exchange was suspended.
After the staff-level accord was revealed last week, it was anticipated that Pakistani stocks would increase.
KARACHI: Pakistan stocks opened at a record high of 2,231 points on Monday as the bulls reacted positively to the much-awaited confirmation of the $3 billion bailout program between Pakistani authorities and the International Monetary Fund (IMF).
Pakistan heaved a huge sigh of relief last week when the IMF reached a staff-level pact with the South Asian country on a $3 billion stand-by arrangement, a decision long awaited by the South Asian nation teetering on the brink of default.
During its trading session on Monday, the Pakistan Stock Exchange began up by 5.3 percent, or 2231 points, for the first time in the exchange’s history. This caused the market to close shortly after it opened since the index reached the 5 percent upper cap limit put on stock prices. Following the opening rise, the market reached a high of 43,721 points; the previous high was 1,700 points, reached in April 2022.
After the short-term financing agreement with the IMF, “this was a much-anticipated rally,” Topline Securities CEO Muhammad Sohail told BeGreen.
The pact has given the current, caretaker, and subsequent governments a future roadmap, so it’s not only the money that matters.
Sohail predicted that after Pakistan receives anticipated inflows from Saudi Arabia and the United Arab Emirates (UAE), the market would reach the 45,000 level in the medium term and soar to the 48,000 level in the long term.
The stand-by agreement (SBA), which is contingent on the IMF board’s approval in July, gives Pakistan’s economy some breathing room and was unveiled one day before the IMF’s previous loan programme for Pakistan of $6.5 billion was about to expire.
Cash-strapped Following the IMF board meeting in mid-July, Pakistan would receive $1.1 billion as part of the new funding arrangement. Pakistan receives more from the new agreement than the $2.5 billion disbursement it was anticipating under the Extended Fund Facility (EFF) programme, which would end indefinitely on June 30, 2023.
After the federal budget was updated by Finance Minister Ishaq Dar and approved by the government on June 9, 2023, a new agreement was reached. Dar raised Pakistan’s revenue collection goal to Rs9.415 trillion ($33 billion) and set the country’s overall spending goal at Rs14.480 trillion ($51 billion), while also raising the petroleum charge from Rs50 to Rs60 per litre.
The government has implemented additional tax measures worth Rs215 billion ($752 million), reduced spending by Rs85 billion, increased Benazir Income Support Programme (BISP) allocations by Rs16 billion, and removed the amnesty on foreign exchange inflows, while the central bank increased its policy rate by 1% to a record high of 22% in an emergency meeting.
Published by BeGreen, 3 July 2023.
