PSX witnesses sharp rise as budget changes rekindle hopes for IMF loan revival

KARACHI: Pakistan Stock Exchange's (PSX) benchmark KSE-100 index Monday jumped more than 1,000 points as the country expects to sign a deal with the International Money Fund (IMF) to unlock much-needed funds.

The benchmark index rose 1371.78 points and closed at 41,437.10 points as the market anticipated that Pakistan could revive the stalled IMF loan to avoid a sovereign default.

Saad Ali, a capital market expert, told Geo.tv that the revised budget had revived hopes among the market stakeholders after the government added fresh taxes to the Finance Bill 2023-24.

"The revised budget with additional tax measures have revived market hopes of the resumption of IMF programme as the new budget might meet IMFs condition for adequate fiscal contraction," he said.

Echoing Ali, Head of Research at Pakistan-Kuwait Investment Company Samiullah Tariq said "optimism" regarding the IMF deal resulted in today's market surge.

Tariq also believes that the Pakistani authorities and the IMF could sign the staff-level agreement (SLA) within this week.

The National Assembly passed the Finance Bill 2023-24 with a majority vote Sunday, with a revised outlay of Rs14.48 trillion after adopting certain amendments to the proposed budgetary measures.

In a last-ditch effort to clinch a stalled rescue package with the IMF, the government introduced a number of changes to its budget for the fiscal year 2024.

The decision to amend the budget had come after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.

Around five days remain before the IMF's Extended Fund Facility (EFF) agreed in 2019 expires on June 30.

Under the $6.5 billion facility's ninth review, negotiated earlier this year, Pakistan has been trying to secure $1.1 billion of funding stalled since November.