Economic policy

Pakistani stock market tumbles as investors worry about unclear economic policy

KARACHI, Pakistan (Reuters) – Pakistan’s stock market fell more than 3% on Monday, its biggest daily decline in five months, and the rupee continued to fall against the dollar as uncertainty grew over the country’s economic plans. new government to revive a stalled IMF program.

“The IMF delay, lack of clarity on the economic plan of the new government and (the) rising political temperature are seriously affecting Pakistani stocks,” said c, CEO of Topline Securities, on Twitter.

The Pakistan Stock Exchange 100 index fell 1,447.67 points, or 3.23%, to 43,393.14, its lowest close since March 22.

Prime Minister Shahbaz Sharif took over last month after ousting former Prime Minister Imran Khan, accused of mismanaging the economy.

Sharif’s government, however, has yet to implement economic policies such as cutting costly energy subsidies, which were introduced by Khan’s government in its final days in office as it faced a increasing pressure due to rising inflation.

The new government’s reluctance to withdraw subsidies as agreed with the IMF last month is making the situation worse, said Samiullah Tariq, head of research and development at Pak Kuwait Investment Company.

Pakistan is in desperate need of external financial support due to a growing current account deficit and foreign exchange reserves falling below $10.5 billion, equivalent to less than two months of imports.

Prime Minister Sharif visited Saudi Arabia and the United Arab Emirates last week, but could not obtain firm assurances of funding.

When the new government took power last month, the stock index rose to 46,601 points on April 15 from 44,444 points on April 10 when Khan’s government was overthrown. Since then, the index has plunged 3,208 points or 6.9%.

With uncertainty over further support to Pakistan’s public finances, the Pakistani rupee slipped to 187.53 rupees to the dollar on Monday from a close of 186.63 on Friday.

Political uncertainty also continued to simmer, with Khan announcing he will march with hundreds of thousands of supporters to the capital Islamabad on May 20 to demand immediate new elections.