The Pakistan Stock Exchange (PSX) opened on a positive note on Wednesday, climbing 1.5%, on the back of reports the International Monetary Fund (IMF) had inked a staff-level agreement with the government for the release of $2.3 billion.
The benchmark KSE-100 index gained 1,500 points, trading around 118,151 points, driven by optimism following the IMF’s nod, which came earlier than expected. According to a statement issued by the lender, pending approval by its Executive Board, it will release the next tranche of $1 billion from the ongoing 37-month, $7 billion program, bringing total disbursements to $2 billion.
Additionally, $1.3 billion will be released under the IMF’s climate resilience fund, a 28-month program aimed at strengthening efforts against climate-related risks.
“While economic activity is expected to steadily improve, downside risks remain elevated,” read the IMF statement, highlighting macroeconomic policy slippages, geopolitical shocks to commodity prices, tightening global financial conditions, and rising protectionism as potential threats to the country’s economic stability.
The lender also emphasized the need for Pakistan to solidify progress made over the past 18 months by enhancing public finances, ensuring price stability, rebuilding external buffers, and eliminating economic distortions. It stressed the importance of resilience-building measures to combat climate-related challenges.
Salman Ahmad, head of Retail Sales at Aba Ali Habib Securities, expressed relief over the IMF agreement. “The long wait is finally over. Market participants were anxiously awaiting positive developments,” he said.
Investor confidence received an additional boost after the Economic Coordination Committee (ECC) approved funding for the Reko Diq copper and gold mining project. Announcements from both the Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) to boost funding for the project netted them gains of 4% and 3%, respectively.
In filings to the PSX on Tuesday, OGDC and PPL revealed that a feasibility study for the Reko Diq project had revealed the 37-year project would produce 13.1 million tons of copper and 17.9 million ounces of gold.
Since assuming power last year, the government has been striving to stabilize the economy, broaden the tax base, reduce losses in state-owned enterprises, and privatize loss-making entities like the Pakistan International Airlines Corporation (PIAC).