IMF Deal Sparks Bullish Rally at Pakistan Stock Exchange (PSX)

• KSE-100 closes at 117,772.31, up 1,139.15 points, or 0.98%.

Islamabad-(Mudassar Iqbal)-The Pakistan Stock Exchange (PSX) experienced a robust bullish rally on Wednesday, fueled by the staff-level agreement between Pakistan and the IMF for a new $1.3 billion arrangement. The benchmark KSE-100 Index surged by 1,139.15 points (0.98%) to close at 117,772.31, reflecting strong investor optimism throughout the session, which saw an intraday high of 118,220.88.

The IMF review is the major positive trigger,” said Sana Tawfik, Head of Research at Arif Habib Limited. “We’ve seen the market respond with a gain of over a thousand points. OGDC and PPL announcing the completion of the feasibility study on reko Diq, has also supported sentiment, but overall, it’s IMF-driven.”

The IMF announced that it had reached a staff-level agreement with Pakistan for the new 28-month Resilience and Sustainability Facility (RSF) arrangement and also completed the first review of the 37-month Extended Fund Facility (EFF).

The Fund acknowledged Pakistan’s progress in restoring macroeconomic stability despite global challenges and highlighted that the new arrangement would help address climate-related vulnerabilities. Upon executive board approval, Pakistan will receive an immediate $1 billion tranche, raising total disbursements to $2 billion.

The Reko Diq project added further momentum to energy and exploration stocks. OGDC announced the completion of an updated feasibility study, revealing a 37-year mine life and a $5.6 billion investment plan for Phase 1, which is expected to commence in 2028. Total estimated production includes 13.1 million tonnes of copper and 17.9 million ounces of gold.

Meanwhile, Pakistan’s economic data remains mixed. The Ministry of Finance forecasts CPI inflation to rise to 2–3% in April from 1–1.5% in March. Inflation was recorded at 1.5% YoY in February, down sharply from 23.1% in February 2024.

The oil sector continues to struggle under the weight of a sales tax exemption introduced in the 2024 Finance Act. Industry estimates project combined losses of Rs35 billion, with refineries and oil marketing companies hit by their inability to claim input tax.

The new petroleum minister has yet to engage with industry players, and concerns persist over delays in refinery upgrade agreements with Ogra.

On Tuesday, the PSX had already hinted at positive sentiment, with the KSE-100 closing up 193.55 points, or 0.17%, to 116,633.17 points, up from 116,439.62 points recorded in the last session. The highest index of the day remained at 116,904.55 points, while the lowest level was recorded at 115,877.88 points.

While,

Prime Minister Shehbaz Sharif on Wednesday expressed gratitude to Chief of Army Staff (COAS) General Asim Munir for his role in securing the staff-level agreement with the International Monetary Fund (IMF).

Speaking during a federal cabinet meeting, the premier acknowledged the contributions of Finance Minister Muhammad Aurangzeb, Secretary Finance, Deputy Prime Minister Ishaq Dar, and Minister for Planning Ahsan Iqbal—who is currently observing I’tikaf in Madina.

He emphasised that the Army Chief played a crucial role in the negotiations, ensuring Pakistan met the IMF’s conditions swiftly.

The premier also extended condolences on behalf of the cabinet to General Munir over the passing of his mother, praying for her eternal peace.

IMF agreement and economic reforms

PM Shehbaz announced that Pakistan had successfully secured a $2.3 billion financial package from the IMF, including a $1.3 billion climate resilience program under the Resilience and Sustainability Facility (RSF).

This raises the total IMF package from $7 billion to $8.3 billion, demonstrating Pakistan’s commitment to economic reforms.

Shehbaz Sharif addressed criticism from the opposition regarding the agreement, rejecting claims of an impending mini-budget.

IMF Approves $1.3B Loan to Pakistan for Economic Reforms, Climate Resilience

He stated that tough economic decisions were necessary to stabilize the country, adding that provinces also played a pivotal role in implementing reforms, particularly the passage of the agricultural tax, which was first approved by Punjab and later adopted by other provinces.

He highlighted Pakistan’s record-breaking tax collection, noting that revenue collection increased by 26% last year, surpassing IMF targets. He revealed that the tax-to-GDP ratio, previously at 9%, had now risen to 10%, with the goal of reaching 12.9 trillion rupees this year.

Challenges of inflation, terrorism, and economic reforms

PM Shehbaz acknowledged the hardships faced by the people, stating that inflation and terrorism remain major challenges in two provinces.

He emphasised that economic recovery requires peace and stability, vowing to continue efforts to counter terrorism.

He also discussed government initiatives, including the digitization of the Federal Board of Revenue (FBR) and the establishment of professional tribunals to ensure transparency in tax collection.

He lauded the new taxation mechanism, which helped collect a record Rs 34 billion in revenue, while efforts to curb tax evasion in the sugar sector yielded an additional Rs 12 billion in just three months.

The Prime Minister stressed the need for a new economic mindset, stating, “Nations are built by contributions, not by taking loans.” He criticized lavish expenditures abroad while avoiding taxes at home, calling for a culture of financial responsibility.

Shehbaz Sharif also mentioned the success of the Ramadan Digital Wallet, which disbursed Rs 20 billion, with 60% of funds already utilized to support underprivileged families.

He concluded his address by invoking the legacy of Zulfikar Ali Bhutto, recalling his contributions to Pakistan’s nuclear program. The Prime Minister reaffirmed his government’s commitment to economic stability and l security, stressing that sacrifices are necessary to achieve sustainable progress.