Shares at the Pakistan Stock Exchange soared on Monday with analysts attributing the rally to revisions made by the government in the budget 2023-24 to allay the International Monetary Fund’s (IMF) concerns.
The benchmark KSE-100 gained nearly 1,034 points to reach 41,100.65 points, or 2.58 per cent around 10:42pm.
Talking to Dawn.com, Intermarket Securities’ Head of Equity Raza Jafri said the pending ninth IMF review, which seemed to have been written off by markets, was now seeing “fresh hope” after the government made changes to the budget and removed import restrictions.
He said cyclicals such as cements and import-dependant sectors such as autos were leading the rebound.
Similarly, Salman Naqvi, the head of research at Aba Ali Habib Securities, attributed the surge to one primary reason —the government’s proximity to striking an IMF deal.
According to Naqvi, “The government has nearly fulfilled the IMF’s requirements and made changes to the budget as desired by the IMF.”
He said it was now anticipated that the IMF loan will be approved.
Naqvi noted that the market had been in an “oversold zone,” experiencing a downward trend for several days, and it required a “breaking news” to trigger improvement, which was witnessed today.
While Naqvi acknowledged that the market volume was still not significantly high, he emphasised that if the IMF loan was approved, it could lead to a substantial market rally.
The National Assembly on Sunday approved the next fiscal year’s budget, which was revised a day earlier to meet IMF conditions in a last-ditch attempt by the government to secure much-needed bailout funds.
“Almost all the irritants between the IMF staff and the Ministry of Finance were addressed hours before the finance minister’s wind-up speech on Saturday,” Dawn quoted an official as saying, adding that the announcement about the successful completion of the ninth review was an IMF’s privilege and just a formality now.
A few days ago, the IMF had raised several issues with Pakistan’s budget for fiscal year 2024, saying that some of the proposed measures went against the EFF programme’s conditionality.
Esther Perez Ruiz, IMF representative for Pakistan, had earlier said Pakistan needed to satisfy the IMF on three counts, including the budget for the upcoming fiscal year, before its board will review whether to release the pending tranche.
For its part, the government had responded to the IMF’s concerns, saying that it was “flexible” on the budget and remained engaged with the international lender to reach an “amicable solution”.
With reserves at critical levels for the past several months, Pakistan is in dire need of an IMF bailout, without which it may default.
The country was expected to get around $1.2 billion from the lender in October last year as part of the EFF’s ninth review. But almost 8 months later, that tranche has not materialised as the IMF says Pakistan has been unable to meet important prerequisites.
from The Dawn News - Home https://ift.tt/zOHvoTf
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