The Pakistan Stock Exchange (PSX) saw a significant increase on Tuesday, with the benchmark KSE-100 index rising by 1.79%.
Summary of Stock Market Closing as of 21st June 2022. PSX stages 748-point rally on ‘imminent IMF deal’.
This surge in activity can be attributed to investor optimism regarding an upcoming announcement from the International Monetary Fund (IMF) regarding the release of a $1 billion loan tranche to Pakistan.
Raza Jaffrey, head of research at Intermarket Securities, commented on the situation, stating that there is a growing sense of excitement in the market surrounding the potential agreement.
If an agreement with the IMF is reached, it could unlock funding from other sources, build up foreign exchange reserves, and help the rupee recover some ground, Ahsan Mehanti of the Arif Habib Corporation told Dawn.com. The stock market appears to be anticipating this chain of events, he said.
Finance Minister Miftah Ismail had expressed hope on Monday that an agreement for the revival of the Extended Fund Facility (EFF) could be reached within one or two days.
When asked whether the Fund was opposed to the government’s decision to increase salaries of employees by 15 percent and exempt those earning less than Rs 1.2 million annually from taxes, he replied that the IMF has no say in salaries as long as the government has the money. He went on to say that the government will “protect” those earning less than Rs 1.2 million annually.
Pakistan signed a 39-month, $6 billion EFF in July 2019, but the Fund stopped the disbursement of about $3bn when the previous government reneged on its commitments.
Currently, Islamabad wants the IMF to not only resume disbursements, but to also expand the size and duration of the programme.
The Pakistani government and the IMF have not yet been able to come to a staff-level agreement for the revival of the loan programme, leaving the authorities in a difficult position to bridge the gap and get the updated federal budget for the fiscal year 2022-23 passed by the National Assembly.
The finance ministry had been expecting to conclude the staff-level agreement by Sunday (June 19) on the basis of revenue and expenditure measures that could deliver next year’s primary budget (the difference between revenues and expenditures, excluding interest payment) in a Rs152bn surplus.
However, the IMF staff still has reservations over Rs9.5 trillion expenditures projected by the authorities for the next fiscal year. The revenue measures in the budget, according to IMF estimates, are also insufficient to deliver slightly over Rs7tr target.
