Pakistan’s financial markets are set to benefit from an unexpected early agreement with the International Monetary Fund (IMF) on a $7 billion loan. This 37-month deal could push the stock market beyond its recent high of 81,000 points. The Pakistani rupee is expected to stabilize around 278 per dollar in the short to medium term of FY25.
The agreement, which is subject to approval by the IMF Executive Board, may also unlock more funds from other international lenders like the World Bank and Saudi Arabia. This could attract foreign investment into Pakistani government bonds and stocks, boosting foreign exchange reserves.
Experts foresee a positive impact on the Pakistan Stock Exchange, with a potential increase of 1-1.5% on Monday, potentially surpassing recent highs. They predict a strong annual return for FY25 and expect the index to rise significantly by mid-2025.
The rupee, which has recently stabilized around 278 per dollar, is expected to stay steady due to this new agreement. This stability could continue until later in 2024, reducing immediate pressure for depreciation.
The agreement includes measures for Pakistan to increase its tax revenues and implement fiscal policies to support economic stability. However, challenges remain, such as potential inflation due to rising prices of essential goods.
Overall, Pakistan’s economy is expected to grow modestly in FY25, with sectors like energy and manufacturing likely to benefit from the IMF program.
