An International Monetary Fund (IMF) mission and Pakistan have made significant progress towards reaching a staff-level agreement for an extended fund facility, the global lender said on Friday.

 

The IMF has opened discussions with Pakistan on a new loan programme after Islamabad last month completed a short-term $3 billion programme, which helped stave off a sovereign debt default.

 

An IMF team, led by mission chief Nathan Porter, concluded discussions with the authorities on Thursday after arriving in Pakistan on May 13, the lender said in a statement.

 

“The mission and the authorities will continue policy discussions virtually over the coming days aiming to finalise discussions, including the financial support needed to underpin the authorities’ reform efforts from the IMF and Pakistan’s bilateral and multilateral partners,” Porter said.

 

The IMF’s comments helped the benchmark share index scale a record high of 75,950. The index was last up 1.1 per cent.

Adnan Sheikh, assistant vice president, research at Pak Kuwait Investment Company, attributed the rise to the IMF’s comment and the United Arab Emirates (UAE) promising investment.

 

“Despite the 90 per cent run-up in dollar terms over the past year, The KSE 100 is trading at price-earnings ratio 4x, which is well below its average,” said Sheikh, adding that the ratio suggested that Pakistani equities might still have healthy room for further upside.

On Thursday, the UAE committed $10 billion to invest in promising economic sectors in Pakistan, without specifying the areas. The announcement came during Pakistani Prime Minister Shehbaz Sharif’s UAE visit.

 

Pakistan is likely to seek at least $6 billion under the new programme and request additional financing from the IMF under the Resilience and Sustainability Trust.

 

Ahead of the discussions, the IMF had warned that downside risks for the Pakistani economy remained exceptionally high.

“The authorities’ reform program aims to move Pakistan from economic stabilization to strong, inclusive, and resilient growth,” Porter added.

First Published: May 24 2024 | 12:46 PM IST