Daily Times

Massive economic uncertainty envelops Pakistan as market stock shares plummet to their lowest since July last year. Market experts have attributed the plunge to a persistent stalemate with the IMF in relation to the resumption of its $7 billion bailout programme. Automobile, cement, banking, chemical, oil and a vast array of other sectors are all in red, as investors offload their holdings.

Pakistan’s stocks have been under pressure for weeks as the government scrambles to meet its commitments to the IMF, but has yet to reach an agreement, even after assurances that the deal would be sealed earlier this week.

The IMF’s prerequisites, which include additional revenue commitments, an increase in PDL and GST on petroleum products, and a hike in gas and electricity tariffs may be difficult for the government to manage. Amid

increasing public discontent over rising prices, the government is in a tough spot as it seeks to balance its promises to the IMF with its responsibilities towards the country. Regardless of the circumstances behind the delay, there appears to be an overarching sense of negativity that is being reflected both in the stock and currency markets.

The delay comes hand in hand with a whole lot of political uncertainty and falling foreign exchange reserves that have made their first increase, rising $258 million to $4.6 billion on Thursday. The rupee’s downward trajectory as it struggles to assert itself in the global market, after depreciating to RS 269 per dollar, has only complicated the issue. It is believed that the rupee’s devaluation was triggered by the decision among local foreign exchange companies to remove the self-imposed cap on the exchange rate late last month.

In a perfect world, the IMF’s 9th review should have improved market expectations. However, Pakistan faces a serious loss of credibility as investors withdraw their money over concerns that the government won’t get its act together on time. If the government had just been honest in implementing its earlier commitments to the IMF, market sentiment may have been in a better place. It is essential that the government provide a realistic picture of its dealings with the IMF as opposed to issuing arbitrary deadlines that it can follow. *