Pakistan stocks soar 1.5% as IMF unlocks $2.3 billion

Pakistan's stock market opened on a positive note, climbing 1.5% after the government reached staff level agreement with the International Monetary Fund (IMF) for the release of $2.3 billion.

The benchmark KSE-100 index gained 1,500 points, trading around 118,151 points at one stage, driven by optimism following the IMF's nod, which came earlier than expected.

The international lender plans to release $1 billion from the current 37-month, $7 billion program, bringing total disbursements to $2 billion.

Additionally, $1.3 billion will be released under the IMF's climate resilience fund, a 28-month program aimed at strengthening efforts against climate-related risks.

In a statement, the IMF said, "While economic activity is expected to steadily improve, downside risks remain elevated." The IMF flagged macroeconomic policy slippages, geopolitical shocks to commodity prices, tightening global financial conditions, and rising protectionism as potential threats to Pakistan's economic stability.

The lender emphasized the need for Pakistan to solidify progress made over the past 18 months by enhancing public finances, ensuring price stability, rebuilding external buffers, and eliminating economic distortions.

It stressed the importance of resilience-building measures to combat climate-related challenges.

Salman Ahmad, Head of Retail Sales at Aba Ali Habib Securities, expressed relief over the IMF agreement, saying, "The long wait is finally over. Market participants were anxiously awaiting positive developments."

The government has been making sustained efforts to stabilize the economy, broaden the tax base, reduce losses in state-owned enterprises, and privatize entities like Pakistan International Airlines Corporation (PIAC).

Investor confidence received an additional boost following the Economic Coordination Committee's (ECC) approval of funding for the Reko Diq copper and gold mining project.

The Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) announced funding for the initiative. Both companies reported gains, with OGDC shares rising 4% and PPL shares climbing 3%.

In filings to the PSX on Tuesday, OGDC and PPL revealed that the feasibility study for the Reko Diq project has been completed. The mine having life of 37-year is expected to produce 13.1 million tons of copper and 17.9 million ounces of gold.