Latest news with #Pakistan-IMF
Express Tribune
12-03-2025
- Business
- Express Tribune
Stocks fall on policy rate status quo
Listen to article Pakistan Stock Exchange (PSX) on Tuesday closed modestly lower by 179 points, which analysts attributed to thin trade and investor caution following the State Bank of Pakistan's (SBP) decision to keep policy rate on hold amid inflationary pressures, price volatility and external account challenges. Despite a surge in the latter half fuelled by robust remittances, global equity sell-off, a weak rupee and uncertainty surrounding the International Monetary Fund (IMF) review dampened investor sentiment. According to Ahsan Mehanti of Arif Habib Corp, stocks closed lower amid thin trade after the SBP maintained the status quo in its key policy rate owing to the persistent core inflation, price volatility and external account pressures. He said that late-session support emerged in the wake of upbeat data showing $3.1 billion in remittances, a surge of 40% year-on-year in February 2025. Global equity sell-off on US recession worries, a weak rupee and uncertainty about the outcome of Pakistan-IMF talks played the role of catalysts in bearish close at the PSX, Mehanti added. At the end of trading, the benchmark KSE-100 index recorded a decrease of 178.69 points, or 0.16%, and settled at 114,177.66. In its market review, Topline Securities commented that the KSE-100 index witnessed a fierce tug of war between bulls and bears. The market opened on a negative note, reacting sharply to the State Bank's decision to maintain the policy rate at 12%, despite a significant decline in inflation, it said. "This decision dampened investor sentiment, pushing the index to the intra-day low of 746 points." However, the second half of the session saw a resurgence of buying interest. Market participants responded positively to speculation about possible clearance of the longstanding circular debt. The optimism propelled the index to the intra-day high of 129 points, Topline said. The positive movement was primarily fuelled by Pakistan State Oil (PSO), Pakistan Petroleum, Oil and Gas Development Company (OGDC), Meezan Bank and Hub Power, which together contributed 425 points to the index. Conversely, UBL, Service Industries, Fauji Fertiliser Company and Engro Fertilisers pulled the index down by 210 points, it added. Arif Habib Limited (AHL) remarked that the KSE-100 index saw an early decline to 113,600 points, following the SBP's decision to leave the policy rate unchanged, before a sharp recovery that brought the index in the green. Some 26 shares rose while 70 fell with PSO (+6.67%), Pakistan Petroleum (+2.86%) and OGDC (+1.89%) contributing the most to index gains. On the flip side, Service Industries (-5.25%), Engro Fertilisers (-0.83%) and Systems Limited (-1.21%) were the biggest drags, it said. "The key benchmark indices continue to indicate that accelerated gains are on the menu. The weekly objective remains to be 116,000 points," the brokerage house added. JS Global analyst Muhammad Hasan Ather said that the KSE-100 witnessed a range-bound session, with the benchmark index settling at 114,178, down 179 points. The decline followed the State Bank's decision to keep the policy rate unchanged, contrary to market expectations. Selling pressure was observed in key sectors including cement and banks, he said. "Looking ahead, market volatility may persist due to the global protectionist policies and food price fluctuations. Investors should remain cautious and monitor economic indicators," Ather added. Overall trading volumes decreased to 318.5 million shares compared with Monday's tally of 324.7 million. Shares of 438 companies were traded. Of these, 132 stocks closed higher, 233 fell and 73 remained unchanged. The value of shares traded during the day was Rs22.9 billion. Sui Southern Gas Company was the volume leader with trading in 26.4 million shares, gaining Rs1.58 to close at Rs37.03. It was followed by The Bank of Punjab with 22.1 million shares, gaining Rs0.04 to close at Rs13.16 and Worldcall Telecom with 18.1 million shares, falling Rs0.02 to close at Rs1.33. During the day, foreign investors sold shares worth Rs315.9 million, the NCCPL reported.
Express Tribune
10-03-2025
- Business
- Express Tribune
PSX flat over policy rate, IMF uncertainty
Pakistan Stock Exchange (PSX) on Monday closed almost flat amid uncertainty surrounding the State Bank of Pakistan's (SBP) monetary policy decision later in the day and the outcome of review talks between Pakistan and the International Monetary Fund (IMF). Analysts attributed the bearish performance to foreign fund outflows, a weak rupee and expectations of an increase in the Consumer Price Index (CPI)-based inflation. The KSE-100 index fluctuated between the peak of 650 points and the low of 246 points, before settling at 114,356, reflecting a thin decline of 42 points. Ahsan Mehanti of Arif Habib Corp stated that stocks closed flat amid uncertainty about the SBP's monetary policy and the outcome of Pakistan-IMF talks after reports suggested that the lender had opposed the idea of circular debt settlement through taking loans from banks. Foreign outflows, a weak rupee and an expected surge in CPI inflation played the role of catalysts in bearish close at the PSX, he said. At the end of trading, the benchmark KSE-100 index recorded a decrease of 42.36 points, or 0.04%, and settled at 114,356.34. In its review, Topline Securities commented that the stock market experienced a volatile session, with the benchmark index fluctuating between the peak of 650 points and the low of 246 points. It ultimately closed at 114,356, reflecting a modest decline of 42 points (-0.04%). The market's performance was largely influenced by prevailing uncertainty surrounding the monetary policy and circular debt concerns, it said. The positive movement was primarily fuelled by Engro Holdings, UBL, HBL, Pakistan Oilfields and Service Industries, which together contributed 504 points to the index. Conversely, Pakistan Petroleum, Oil and Gas Development Company and Pakistan State Oil (PSO) weighed on the market, pulling the index down by 317 points, Topline noted. Arif Habib Limited (AHL) reported that the week started flat at the PSX, ahead of the SBP's monetary policy committee meeting, with the high-on-day touching 115,000 points. Some 42 shares rose while 53 fell, with UBL (+1.98%), Engro Holdings (+4.06%) and HBL (+2.23%) contributing the most to index gains. On the flip side, Oil and Gas Development Company (-4.05%), Pakistan Petroleum (-2.76%) and Pakistan State Oil (-3.84%) were the biggest index drags, AHL commented. "Venturing above 115k bodes well for the remainder of the week, with expectations of gains towards 116k," it added. Ali Najib of Insight Securities stated in his market review that the PSX resumed trading in the new week in a consolidation mode as the KSE-100 index ended on a flat note at 114,356, down 42 points, or 0.04%. During the day, a mixed behaviour was witnessed, ahead of the crucial monetary policy announcement by the State Bank for the next couple of months. "The street view was scattered from maintaining the status quo to a 100-basis-point cut," he said. Najib added that movements in the KSE-100 index remained range bound amid a low trading volume. Overall trading volumes decreased to 324.7 million shares compared with Friday's tally of 404.4 million. Shares of 435 companies were traded. Of these, 194 stocks closed higher, 170 fell and 71 remained unchanged. The value of shares traded during the day was Rs20.7 billion. Power Cement was the volume leader with trading in 24.8 million shares, gaining Rs0.6 to close at Rs11.76. It was followed by Fauji Cement with 22.2 million shares, falling Rs2.08 to close at Rs43.91 and Maple Leaf Cement with 19.8 million shares, falling Rs0.6 to close at Rs56.03. During the day, foreign investors sold shares worth a net Rs186.5 million, according to the National Clearing Company.
Express Tribune
04-03-2025
- Business
- Express Tribune
IMF talks begin amid tax challenges
In the first half of FY25, the economic slowdown, exchange rate stability, lower-than-expected inflation, and sluggish LSM recovery led to a revenue loss of Rs338 billion. photo: file Listen to article Pakistan has made a strong start in talks with the International Monetary Fund (IMF), and the tax shortfall is expected to be significantly lower than Rs1 trillion due to anticipated large recoveries in court, Finance Minister Muhammad Aurangzeb said on Tuesday. Aurangzeb stated that the shortfall would be considerably less than Rs1 trillion and that the government would take several steps, including ensuring recoveries from court cases. He spoke to The Express Tribune after the formal opening of Pakistan-IMF negotiations, which will continue until March 14. However, sources revealed that the global lender had been informed that, due to lower-than-projected autonomous growth, the Federal Board of Revenue (FBR) suffered a loss of approximately Rs450 billion by February. No further shortfall on this account is expected until June. Additionally, another Rs540 billion in losses are anticipated due to weak responses to policy measures. The government has struggled to break the strong lobby of traders and the real estate sector. This results in a total revenue shortfall of Rs990 billion, stemming from low economic growth, weak enforcement against traders and real estate, and overestimations of new tax measures introduced in the budget. Despite these setbacks, the IMF was informed that some of these losses would be recovered through court cases related to tax matters. The government set an annual target of Rs12.97 trillion, and after adjusting for these losses, collections are expected to fall below Rs12 trillion, sources said. The finance minister expressed optimism about the talks, stating that the government expects a positive outcome. He also confirmed that Pakistan would discuss the framework for the next budget with the IMF during the ongoing negotiations to create fiscal space for relief measures. "We had a good start in talks today, and the Fund also had productive meetings in Karachi on Monday with the Pakistan Banks Association and the Pakistan Business Council," Aurangzeb said. For the first time, the IMF is holding separate meetings with the State Bank of Pakistan (SBP) and the federal government in different cities, deviating from the previous good practice of conducting all negotiations in one location. Pakistan and the IMF are conducting talks from March 3 to 14 for the first review of the $7 billion package. The discussions will gauge the implementation of agreed conditions for the July-December period of the current fiscal year. A successful review will pave the way for the release of the second loan tranche of over $1 billion. Following a separate meeting in Karachi with the SBP governor, IMF Mission Chief to Pakistan Nathan Porter opened talks with the finance minister in Islamabad. In his briefing, Porter discussed the FBR, the power sector, and the Pakistan Sovereign Wealth Fund (PSWF). He also acknowledged the introduction of agricultural income tax laws in the provinces. On Tuesday, the IMF team held multiple rounds of discussions with the FBR regarding tax collection performance during the current fiscal year. The FBR's eight-month revenue shortfall stood at Rs606 billion, which could rise to nearly Rs1 trillion by June if corrective measures are not taken. The IMF was informed that the government aims to recover approximately Rs300 billion from the Rs4 trillion stuck in court cases. An additional Rs100 billion is expected to be generated by lowering taxes on beverages and cigarettes, sources said. Prime Minister Shehbaz Sharif, during a special open cabinet meeting, stated that the government is working expeditiously to secure court decisions in tax cases involving Rs4 trillion. He highlighted the Rs23 billion recovered in the windfall income tax case, which was ruled in the government's favour by the Sindh High Court last week. The prime minister directed authorities to recover at least Rs500 billion from the Rs4 trillion stuck in court cases by June. Attorney General for Pakistan Mansoor Awan informed the cabinet that the legal team would closely monitor these cases. Awan further stated that tax cases have been delayed due to outdated legal procedures adopted by the FBR. However, with the prime minister's intervention, these mechanisms have been revised. Despite this, the government has provided a conservative estimate of Rs300 billion in recoveries to the IMF, FBR officials said. However, the Supreme Court of Pakistan recently ruled against the government in multiple tax cases, indicating that not all pending cases may be decided in favour of the tax authorities. In the past, the IMF has been sceptical of the government's claims regarding revenue collection from pending court cases and enforcement measures. The IMF's scepticism has often been validated. It remains unclear whether the IMF will accept the government's claim that Rs300 billion will be recovered this time. If the IMF does not accept the government's projections, the Ministry of Finance will need to find alternative ways to reduce expenditures. Development spending has already been curtailed and may face further cuts. According to the FBR's analysis, in the first half of the fiscal year, the economic slowdown, exchange rate stability, lower-than-expected inflation, and sluggish recovery in large-scale manufacturing led to a revenue loss of Rs338 billion. By the end of February, this gap had widened to Rs450 billion, sources said. The government assured the IMF that the economy is expected to recover from March onward, preventing further revenue losses due to autonomous growth in the March-June 2025 period. Aurangzeb told The Express Tribune that many policy measures did not yield the expected revenue results.
Express Tribune
03-03-2025
- Business
- Express Tribune
Stocks slump in absence of positive triggers
Thorough research and patience are key. Investors should remain realistic, avoid chasing quick returns and focus on building a stable, long-term portfolio. photo: file Pakistan Stock Exchange (PSX) on Monday came under extensive selling pressure as the benchmark KSE-100 index plunged to the intra-day low of 111,829 points before closing at 111,987, down 1,265 points. The sharp decline, occurring near the close of corporate earnings season, was attributed to a weakening economic outlook, foreign investment outflow, a depreciating rupee, declining global crude oil prices and uncertainty surrounding the outcome of talks between Pakistan and the International Monetary Fund (IMF). Market analysts highlighted that the absence of positive triggers, coupled with disappointing earnings of some key companies, further contributed to the bearish sentiment. According to Ahsan Mehanti of Arif Habib Corp, stocks fell sharply near the close of earnings season due to a weak economic outlook. He added that foreign outflows, a weak rupee, lower global crude oil prices and uncertainty about the outcome of Pakistan-IMF talks in the current week played the role of catalysts in bearish close at the PSX. At the end of trading, the benchmark KSE-100 index recorded a decrease of 1,264.78 points, or 1.12%, and settled at 111,986.89. In its market review, Topline Securities commented that the bourse experienced a decline in Monday's trading session, with the index reaching the intra-day low of 111,829 before closing at 111,987, reflecting a loss of 1,265 points. The negative sentiment was driven by the lack of positive triggers, in addition to lower-than-expected earnings of Engro Holdings, which contributed 424 points to the overall decline. Shorter trading hours also put pressure on the market, it said. Key stocks contributing to the downturn included Engro Holdings, UBL, MCB Bank, Millat Tractors and Pakistan Petroleum, which together accounted for a drop of 731 points in the index, Topline noted. In its report, Arif Habib Limited (AHL) commented that the week started off poorly, where the KSE-100 index dropped to 112,000 points. Some 27 shares rose and 67 fell, with Engro Fertilisers (+0.53%), Hub Power (+0.44%) and Packages Limited (+3.76%) contributing the most to index gains. On the flip side, Millar Tractors (-3.1%), Engro Holdings (-6.98%) and UBL (-2.15%) were the biggest drags, AHL said. It added that National Bank of Pakistan (NBP) announced 4QCY24 earnings per share (EPS) of Rs10.6, up 63% year-on-year. It brought CY24 EPS to Rs12.2, down 51% year-on-year, primarily due to a pension liability settlement of Rs49 billion. NBP resumed dividend payouts after a gap of seven years and announced a final cash dividend of Rs8 per share, its highest-ever annual payout, AHL mentioned. "Despite five consecutive negative closes, we expect 115,000 to be taken out in the near term," it remarked. JS Global analyst Muhammad Hasan Ather stated that the KSE-100 index began the week on a negative note, dropping 1,265 points amid thin trading volumes. Investors exercised caution ahead of the IMF review and with the beginning of Ramazan, contributing to a lower participation. The index reached the intra-day high of 113,592 but retreated to 111,987 at close. Uncertainty about fiscal targets, monetary policy and IMF negotiations weighed on sentiment. Looking ahead, the market's direction would depend on the IMF review outcome and the State Bank's monetary policy stance, Ather commented. Overall trading volumes decreased to 208.9 million shares compared with Friday's tally of 472.1 million. Shares of 438 companies were traded. Of these, 86 stocks closed higher, 287 fell and 65 remained unchanged. The value of shares traded during the day stood at Rs11.9 billion. National Bank of Pakistan was the volume leader with trading in 23.8 million shares, falling Rs0.91 to close at Rs79.1. It was followed by WorldCall Telecom with 17.6 million shares, remaining unchanged at Rs1.41 and Pakistan International Bulk Terminal with 11.7 million shares, falling Rs0.19 to close at Rs9.41. During the day, foreign investors sold shares worth Rs55.7 million, the NCCPL reported.
Express Tribune
24-02-2025
- Business
- Express Tribune
Carbon levy pops up in talks with IMF
Pakistan on Monday showed reluctance to slap a carbon levy, which the International Monetary Fund wants the government to introduce in an effort to raise funds for the promotion of new energy vehicles as part of its resilience conditions under a new $1 billion loan facility. The brief discussions about the new carbon levy took place during the kick-off meeting to finalise the Resilience and Sustainable Facility (RSF) - an IMF loan package that is largely meant to prepare climate-vulnerable nations for disaster management. The government officials did not support the carbon levy proposal due to its implications for the growth of companies, according to the people privy to the discussions. A detailed session on the carbon levy would take place today (Tuesday), they added. An IMF team is in the town to finalise a new set of resilience conditions that Pakistan will adopt to qualify for and avail the estimated $1 billion climate lending. It will be Pakistan's 26th IMF programme but its purpose will be different from the traditional bailouts for the balance of payments support. The Pakistan-IMF discussions are taking place in the light of the World Bank's Country Climate and Development report. The World Bank has already identified the policy gaps, which the IMF and Pakistan will try to bridge through adaptation of new policies. The sources said that one of the resilience conditions might be the imposition of the carbon levy, which the lenders want Pakistan to impose on traditional fossil fuel-based cars – the internal combustion engine vehicles. According to the government's estimates, 10% of the total carbon dioxide emissions are originating from the transport sector and a shift to cleaner sources of vehicles will require massive funding and efforts. The Ministry of Industries is in the process of finalising a five-year New-Energy Vehicles (NEVs) policy. The ministry's initial estimates show that Pakistan needs at least Rs155 billion additional funding till 2030, if it wants to replace the combustion engine cars and motorcycles with clean-fuel based engines. Pakistan's nearly 80% imported oil is used in the transport sector and the conversion to cleaner energy vehicles can save foreign exchange reserves. However, this conversion is quite expensive, which will require subsidies to reduce the cost of the vehicles and promote new infrastructure, including tax waivers and concessions, said the sources. The traditional two-wheeler motorcycles are up to 100% cheaper than the new-energy fired two-wheelers. The three-wheeler's new energy vehicle will be up to 123% expensive. The plan is that by 2030 up to 90% of new purchases of two and three wheelers should be renewable energy sources based. The new technology-based four-wheeler cars are estimated to be expensive by 65% compared to combustion engines and the government wants that at least 30% of the new buying by 2030 should be based on new technologies, said the sources. The Ministry of Industries is planning to propose multiple measures, which include zero federal excise duty, reduced sales tax rate and zero withholding tax rates on purchase of new-energy vehicles irrespective of the battery size. The losses in revenues are planned to be compensated through the new carbon levy. Other measures may include allowing bank financing for NEVs having worth of up to Rs10 million- up from Rs3 million There is also a proposal for a free registration and no tolls on highways for the new-energy cars, said the sources. The government also plans to set up about 750 new charging stations till 2030. The global lenders are asking to impose carbon levy on fossil-fuel based cars to raise funds for funding the new infrastructure for promotion of the clean energy vehicles, said the sources. According to the World Bank, a carbon tax could, from several perspectives, be beneficial to Pakistan's development. Pakistan imports nearly one-third of its energy in the form of oil, coal, and re-gasified liquefied natural gas (RLNG) at enormous cost, which contributes significantly to the country's chronic fiscal stress, it added. The introduction of a carbon tax would provide a clear signal to both firms and households to start adopting efficiency measures and shift consumption and investment away from fossil fuels to renewable energy sources, it added. A carbon tax would also broaden the tax base by bringing currently untaxed producers who operate in the informal economyestimated to be between 35 and 50%into the tax net at a low administrative cost, stated the World Bank report. The use of traditional tax instruments is more challenging in such contexts. A broad-based carbon tax would circumvent this and could be relatively easy to implement, administratively and politically, if it is introduced gradually, with adequate revenue recycling to protect the poor and to sustain an expansion of shared prosperity. About 51 manufacturers of various types of transport vehicles have secured licenses and the government incentives can help to establish the infrastructure. The government is also planning to introduce National Vehicle Emissions Efficiency Standards aimed at promoting newer more efficient vehicles. The Energy Ministry briefed the IMF about the steps that it was taking to promote the new infrastructure. However, the government has not yet made its final mind on the issue of the carbon levy, said the sources. Any commitment to the IMF about levying the new tax will be given after the consent of Prime Minister Shehbaz Sharif, said the government officials. They said that a clear picture in this regard will emerge by the end of this week. The new IMF facility will also target gradual removal of the subsidy to electric tube-well, gradual phasing out of the natural gas subsidy for fertilizer production, implementing reforms in the sugar sector such as removing entry barriers like licensing restrictions on new sugar mills and removing import duties and export subsidies for sugar, according to the sources.
