- The KSE-100 index closes at 117.001.09, up to 801.50 points.
- The maximum IntradÃa reaches 117,202.09, an increase of 1,002.5 points.
- The index plays low of 116,490.82 during the negotiation session.
The stock market extended its upward streak on Tuesday, closing higher as the optimism of investors remained firm after the developments regarding the resolution of the circular debt and continuous progress in the International Monetary Fund Program (IMF).
Benchmark KSE-100 KSE-100 index of the Pakistan Stock Exchange (PSX) won 801.50 points, or 0.69%, to close at 117.001.09, above the previous closure of 116,199.59.
The index touched an intradic maximum of 117,202.09, while the lowest level registered during the session was 116,490.82. The energy sector, in particular, saw strong purchase interests, since investors responded to possible improvements in the cash flow and the broader implications of the restructuring efforts of the government’s debt.
“Optimism regarding the resolution of the circular debt, the improvement in the cash flow of the energy chain and the success of the IMF program,” said Samiullah Tariq, Pak-Kuwait Investment Company research head, highlighting the factors that feed the market rally.
In a significant development, the IMF has authorized Pakistan to borrow RS1.25 billion ($ 4.5 billion) of national banks to address their growing circular debt without adding to their public debt actions, according to officials familiar with the matter.
This agreement reached the political discussions between the Pakistani and the IMF authorities, during which Islamabad presented a six -year road map to administer the circular debt of RS2.4 billion that the electricity sector has weighed.
The IMF’s approval gives the government very necessary fiscal space, since the new loans will not be included in official debt statistics in the country. To finance the reimbursement of these loans, Pakistan will continue to collect a surcharge for debt service (DSS) of Kilovatio in the electricity invoices, which is expected to generate more than RS300 billion annually.
According to the plan, the government intends to withdraw RS1.5 billion in circular debt through a combination of bank loans and income generated by surcharge. In addition, the authorities anticipate saving RS463 billion after renegotiations with independent energy producers (IPP) to lower capacity payments and adjust tariff structures.
The will of the IMF to accommodate this restructuring reflects its broader support for the reforms of the Pakistan energy sector under the installation of extended funds (EFF) ongoing $ 7 billion. Officials have declared that Pakistan has assured the fund that improving the collection mechanisms and operational efficiencies will avoid the resurgence of circular debt in the future.
The power minister, Awais Ahmed Khan Leghari, commented on the matter, stating that although the government has not yet received a formal decision, it is still optimistic that the IMF has approved the loan plan. In addition, he clarified that the DSS will remain unchanged and will continue to be part of any term ending sheet with banks, and the surcharge remains below RS3 per unit.
Meanwhile, the IMF has shared a draft of the Memorandum of Economic and Financial Policies (MEFP) with the Pakistani authorities, marking another step to end the process of reviewing ongoing loans. The Fund has also indicated its willingness to provide a certain relief for the construction and real estate sectors, although it remains uncertain if such incentives will be implemented immediately or will be included in the next fiscal budget by 2025-26.
Pakistan and the IMF team concluded the discussions last week without ensuring a personnel level agreement (SLA), which is a prerequisite for the formal request of Islamabad to receive the next section of $ 1 billion under the EFF. The delay means that more policy negotiations will be carried out in the next few days to reach a consensus before the IMF Executive Board revives the case of Pakistan.
The PSX began the week with a strong note, continuing the bullish impulse observed in previous sessions. On Monday, the Reference KSE-100 index closed 663.42 higher points, or 0.57%, with 116,199.59 points, compared to 115,536.17 points recorded in the previous session.
The highest index level reached during Monday’s session was 116,626.83, while the lowest level was recorded at 115,883.22 points.
