KARACHI: The Pakistan Stock Exchange (PSX) continued its bullish run on Tuesday, with the KSE-100 Index surging by 801 points to close at 117,001.09, marking a 0.69% increase from its previous close of 116,199.59. The rally was fueled by optimism surrounding IMF discussions and circular debt resolution measures, boosting investor sentiment.
Market Performance and Key Drivers
- Intraday High: 117,202.09
- Intraday Low: 116,490.82
- Major Sectoral Gains: Energy sector saw strong buying interest due to expected improvements in cash flow.
Key Developments Driving the Market
IMF’s Green Light for Circular Debt Resolution
The IMF has allowed Pakistan to borrow Rs1.25 trillion ($4.5 billion) from domestic banks to tackle circular debt without adding to public debt statistics. This move provides much-needed fiscal relief and is part of a six-year roadmap to address Pakistan’s Rs2.4 trillion circular debt crisis in the power sector.
- Debt Service Surcharge (DSS): The government will continue charging Rs3 per kilowatt-hour on electricity bills, generating over Rs300 billion annually to service the debt.
- Debt Reduction Plan: The government plans to retire Rs1.5 trillion in circular debt through bank borrowing and revenue from the surcharge.
- IPPs Renegotiations: Expected savings of Rs463 billion through revised capacity payments and tariff adjustments with Independent Power Producers (IPPs).
IMF Loan Review and Economic Policies
- The IMF has shared the draft of the Memorandum of Economic and Financial Policies (MEFP) with the government, marking a key step toward finalizing discussions under the $7 billion Extended Fund Facility (EFF).
- While Pakistan and the IMF did not reach a staff-level agreement (SLA) last week, further negotiations are underway to secure the next $1 billion tranche of the loan.
- The IMF is considering relief for the construction and real estate sectors, but it remains unclear whether these incentives will be immediately implemented or introduced in the next fiscal budget (2025-26).
PSX Bullish Momentum Continues
- Monday’s Session: The KSE-100 index gained 663 points (+0.57%), closing at 116,199.59, continuing the strong market momentum.
- Investor Sentiment: Optimism around economic reforms, IMF negotiations, and circular debt restructuring has bolstered market confidence.
Outlook and Future Expectations
With IMF-backed economic reforms and government measures to stabilize the energy sector, investor confidence remains high. However, delays in the staff-level agreement and uncertainties in economic policies could influence market trends in the coming weeks.
The upcoming IMF Executive Board review and further clarity on debt resolution and fiscal consolidation will be critical in sustaining PSX’s upward trajectory.
