IMF’s Approval for Emergency Funds Helps Boost Pakistan Stocks

(Bloomberg) -- Pakistani stocks rose after the International Monetary Fund said it plans to disburse about $1.4 billion in emergency financing next week to help the nation shield its economy hit by the coronavirus outbreak.

“The IMF and the Pakistani authorities are working hard for a prompt approval and disbursement” in a single installment, Teresa Daban Sanchez, IMF’s chief in Pakistan, said in a response to questions on April 8. The emergency loan will be on top of the $6 billion financial package the south Asian nation secured from the global lender last year.

The benchmark KSE-100 Index rose 2.8% to close at the highest since March 17 while the rupee gained 0.3% to 167.19 per dollar. The nation’s key stock index has recovered 17% in the past two weeks after dropping 37% in the global turmoil.

The loan will help boost the nation’s foreign exchange reserves that fell by about 13% in March, the biggest monthly drop in almost a year. Pakistan’s Prime Minister Imran Khan has announced multiple stimulus packages of more than 400 billion rupees ($2.4 billion) to counter the shocks of the pandemic that slowed down the economy. The outbreak has infected 4,322 people and 63 have died as the country last week extended its lock down till April 14.

The nation’s economy will expand 0.8% in 2020 compared with earlier forecast of 2.8%, according to a Bloomberg survey conducted this month.

Pakistan’s rupee has dropped 8.4% in about a month that makes it the second worst performer in Asia this year, according to data compiled by Bloomberg. The currency is under pressure as global investors have sold local currency treasury bills worth $1.7 billion after eight successive months of purchases that totaled $3.1 billion.

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