KARACHI: Share prices at the Pakistan Stock Exchange (PSX) rose on Monday as the key stock index surged by more than 1,000 points, equity analysts said, citing renewed hopes for a revival of the $6.5 billion bailout deal with the International Monetary Fund (IMF).
The benchmark KSE100 index was trading at 41,134 points after gaining 1,069 points during the mid-day trading session on Monday.
The development came a day after the Pakistani government approved a revised budget to meet IMF conditions in a last-ditch effort to secure the release of more bailout funds.
Analysts attributed the stock exchange rally to the positive sentiment resulting from the recent developments on the IMF front.
“There is speculation in the market that the IMF program will be revived after Pakistan made changes to the federal budget to satisfy the Fund,” Ahsan Mehanti, CEO of Arif Habib Corporation, told Arab News.
On June 9, Pakistan’s Finance Minister Ishaq Dar presented the budget for next fiscal year starting July 1, with an outlay of Rs14.46 trillion ($50.4 billion) targeting 6.5 percent fiscal deficit.
The IMF in mid-June expressed dissatisfaction with the country’s initial budget, saying it was a missed opportunity to broaden the tax base in a more progressive way.
Pakistan’s parliament on Sunday gave a final nod to the country’s budget for next fiscal year which has been revised in line with the Fund’s conditions.
To make the budget aligned with the IMF conditions, the Pakistani fiscal authorities revisited the budgetary measures, following a meeting between IMF managing Director and Pakistani prime minister last week.
On Saturday, Dar revised the revenue collection target to Rs9.415 trillion ($33 billion) and put the total spending at Rs14.480 trillion ($51 billion), increasing the petroleum levy from Rs50 to Rs60.
The Pakistani central bank also recently removed the restriction imposed on imports, which according to analysts was one of the key points in talks with the IMF.
“The IMF wanted to withdraw restriction imposed on imports,” said Tahir Abbas, a senior research analyst.
With currency reserves barely enough to cover one month’s imports, Pakistan is facing an acute balance-of-payment crisis, which analysts say could spiral into a debt default if the IMF funds do not come through.
There are five days to go before the $6.5 billion Extended Fund Facility (EFF) agreed in 2019 expires on June 30. The IMF has to review whether to release some of the $2.5 billion still pending to Pakistan before then. The tranche has been stalled since November.