The Pakistan Stock Exchange (PSX) kicked off the week with strong gains, driven by optimism over progress in negotiations with the International Monetary Fund (IMF) and ongoing efforts to resolve circular debt in the energy sector.
The benchmark KSE-100 Index surged by 663.43 points, or 0.57%, closing at 116,199.59, up from its previous level of 115,536.16. During the session, the index recorded an intraday high of 116,597.89, while the lowest level reached was 115,883.22.
Key Drivers Behind the Market Rally
Market analysts attributed the bullish trend to two primary factors—significant progress in discussions with the IMF and developments regarding circular debt management.
Sana Tawfik, Head of Research at Arif Habib Limited, noted that the positive momentum was largely fueled by encouraging updates on Pakistan’s IMF loan program. The recent advancements in the Staff-Level Agreement (SLA) have boosted investor confidence, with further discussions between the IMF and Pakistani authorities expected in the coming days via video conference.
If the review is successfully concluded, Pakistan is set to receive around $1 billion as part of the next tranche under the $7 billion bailout package, a move anticipated to stabilize the country’s external financial position.
Circular Debt Concerns and Government Efforts
The market also responded positively to efforts aimed at managing the country’s growing circular debt in the energy sector. Recent reports from the Ministry of Energy’s Power Division indicate that circular debt saw a marginal reduction of Rs9 billion in the first half of the fiscal year, falling from Rs2,393 billion in June 2024 to Rs2,384 billion by December 2024. The government attributes this progress to financial restructuring and reforms within the power sector.
However, concerns persist as authorities consider a Rs1.2 trillion borrowing plan from commercial banks to further address the issue. The IMF has expressed reservations about this approach, questioning how the Central Power Purchasing Agency (CPPA) will manage both principal and interest payments if electricity demand declines in the future.
Consistent Market Gains
The PSX had already ended the previous week on a positive note, with the KSE-100 index rising by 442 points on Friday, closing at 115,536.16 from 115,094.24 in the prior session.
For the week ending March 14, 2025, the index recorded a net increase of 1,137 points (1% week-on-week), reflecting strong investor confidence amid macroeconomic developments.
As negotiations with the IMF continue and discussions on circular debt management evolve, market participants remain optimistic about further gains in the coming sessions.
