PSX rallies as Pakistan reaches staff-level agreement with IMF
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Pakistan's stock and currency markets surged on Wednesday after Islamabad reached a staff-level agreement (SLA) with the International Monetary Fund (IMF), easing investor concerns and reinforcing hopes of economic stability.
The IMF announced Tuesday that it had concluded a staff-level agreement on the first review under Pakistan's Extended Fund Facility (EFF), as well as a new arrangement under the Resilience and Sustainability Facility (RSF).
Subject to approval from the IMF's Executive Board, the deal will unlock about $1 billion, bringing total disbursements under the EFF to approximately $2 billion.
The development sparked a sharp rally at the Pakistan Stock Exchange (PSX), with the benchmark KSE-100 Index hitting an intraday high of 118,220 points—up 1.4 per cent or 1,588 points. The index eventually closed at 117,772 points, marking a 1 per cent daily gain.
'Definitely, the IMF agreement on Pakistan's first review and climate financing was a major trigger for the market,' said Sana Tawfik, Head of Research at Arif Habib Ltd. She added that the index could hit a record 123,000 points by June, fueled by IMF inflows and improved market sentiment.
Finance Adviser Khurram Schehzad emphasised the government's commitment to structural reforms, stating, 'We are committed to structural reforms for sustainable long-term growth and prosperity.' Pakistan projects a 3.6 per cent GDP growth for the current fiscal year.
Rupee remains steady amid IMF boost
Alongside the stock market, the Pakistani rupee also gained slightly, closing at Rs280.2 against the US dollar in the interbank market—a 0.1 per cent appreciation. The rupee, which has seen a 0.7 per cent depreciation since July, has remained largely stable in the Rs280-281 range.
'The rupee would have taken a hit had this agreement not been made,' said Owais ul Haq, a foreign exchange dealer at Arif Habib Ltd, who projected continued currency stability. 'Anything below this rate would hurt exporters,' he noted.
A steady inflow of remittances has also helped support the rupee. Pakistan expects over $35 billion in remittances this fiscal year, with a record $1.3 billion received in February—boosted by seasonal events such as Ramadan and Eid.
Muhammad Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan, said the IMF agreement had a calming effect on the currency market. 'The rupee has shown some appreciation and will strengthen more in the days to come,' he stated.
PM cites progress on tax collection, economic reform
Addressing the federal cabinet on Wednesday, Prime Minister Shehbaz Sharif said the IMF agreement would contribute to long-term economic stability. He highlighted an improved tax-to-GDP ratio of 10.6 per cent, surpassing the IMF's target of 10.2 per cent, and marking the highest ratio in four years.
He said the IMF had originally required tax collection of Rs12.9 trillion this fiscal year but later revised the target to Rs12.1 trillion. Pakistan set its own target at Rs12.33 trillion and has achieved a 26 per cent increase in revenue collection, which the premier described as a 'quantum jump.'
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