Stocks continued their upward trajectory on Friday, nearing an all-time intraday high close to the 95,000 level, driven by positive developments such as reduced concerns over the potential IMF-required mini-budget, which lifted investor sentiment.
During early trading, the Pakistan Stock Exchange’s (PSX) benchmark KSE-100 Index surged to a record high of 94,982.28 points, up by 790.39 points from the previous close of 94,191.89.
The market’s growth reflects increasing investor confidence, bolstered by favorable economic indicators.
Ahsan Mehanti, Managing Director & CEO at Arif Habib Commodities, attributed the new all-time high to diminishing fears over a mini-budget and relief from the Islamabad High Court (IHC) on banking sector tax levies.
“Declining bank lending rates and rupee stability are also driving the ongoing rally in the capital market,” Mehanti added.
As of November 8, central bank-held foreign exchange reserves reached a two-year high of $11.26 billion, while the rupee rose for the second consecutive day on Thursday, fueled by strong dollar sales from exporters and remittances, which surpassed importers’ demand.
Reports suggest that the IMF has raised no issues regarding Pakistan’s revenue collection targets, alleviating fears of new taxes or a mini-budget. This has further boosted investor sentiment and activity across sectors.
The IMF mission, led by Nathan Porter, is visiting Pakistan to review the performance of the Extended Fund Facility (EFF) program and recent developments. Following discussions with Pakistani authorities, the IMF staff has reportedly approved a notable increase in the tax-to-GDP ratio, which has reached an improvement of nearly 1.5 percentage points, a significant achievement by the Federal Bureau of Revenue (FBR).
This progress has removed the immediate need for supplementary tax measures.
The IMF had previously set a target for Pakistan to raise tax revenues by 1.5% of GDP for fiscal year 2024-25, with a total increase of 3% planned over the course of the 37-month program.
The banking sector remained in focus after reports revealed that about a dozen banks in Pakistan had received temporary relief from the IHC regarding government taxes imposed on lenders with lower-than-target private sector lending.
