The Pakistan Stock Exchange (PSX) dropped by 1061.98 points on Monday as the government’s inaction over the growing economic crisis mounted selling pressure on the bourse.
According to the PSX website, the KSE-100 Index opened at 43,486.46 points and immediately fell by 806.95 points.
After the 2.4% drop, the PSX benchmark KSE-100 Index declined to a two-month low at 42,443 points at around 10:22 am.
Govt not increasing petrol prices “for now”: Miftah Ismail
It comes a day after Finance Minister Miftah Ismail announced that the government was not increasing petrol prices “for now,” going back on an important pre-condition set by the International Monetary Fund (IMF) for the resumption of its $6 billion loan programme.
Ismail said he would talk to the IMF and find a solution, adding that Prime Minister Shehbaz Sharif “is not in favour of putting this burden [increased oil prices] on people.”
“I had recommended him to increase [petrol] prices but he said people can’t bear it,” the finance minister said.
He, however, emphasised that petrol prices could be “adjusted anytime in the future,” keeping in view international prices.
The revival of the programme would see the government receiving a loan tranche of $1 billion from the IMF and the flow of additional funds from other bilateral and multilateral lenders.
Pakistan is scheduled to meet the IMF delegation on Wednesday in Doha for the next rounds of talks to resume the loan programme.
The likely inflow would begin to overcome the shortfall of foreign exchange reserves and improve Pakistan’s balance of international payments.
The country’s reserves have depleted quickly and are now at a critical level of around one and half months of import cover at around $10.3 billion.
Pakistan also faces the risk of default on its international payments for the first time if its reserves are not improved.
Govt’s indecisiveness keeps rupee, PSX under pressure
The PSX and the rupee have come under pressure over the past week as the new coalition government has failed to take decisive economic decisions, most prominent among which is a reversal of fuel subsidies.
Read more: PSX plunges by over 1000 points
Analysts and experts have linked the economic pressure to uncertainty over the continuation of the IMF loan programme coupled with a rising oil import bill and widening trade deficit.
On Monday, the greenback climbed to Rs194.30 in the interbank market, reaching a new all-time high as analysts continue to express concern over the country’s rising import bill, mainly due to the country’s rising import bill.
According to the Forex Association of Pakistan (FAP), the greenback gained Rs1.30 from Friday’s close around 11:30 am in the interbank trade.