The standby agreement with the International Monetary Fund (IMF) has reached a key milestone, and Prime Minister Shehbaz Sharif congratulated the nation on Monday, stating that confidence among investors and the business sector is quickly being rebuilt.
The prime minister said that the “consistent hard work” and “correct policies” of the administration were responsible for the exceptional 2,231-point increase in the Pakistan Stock Exchange on the first trading day of the week.
Pakistan, which is on the verge of default, has been waiting for a long time for the global money lender to make a decision on a $3 billion stand-by arrangement, and the PM had earlier declared that an agreement had been reached at the staff level.
Pakistan, which is experiencing a severe balance of payments problem and declining foreign exchange reserves, will receive substantial relief from this credit, which is essentially a bridge loan.
Importantly, the strategy is designed to release the necessary foreign exchange to restart imports, assist publicly traded enterprises in progressively ramping up the partially shut down output, and reinvigorate economic activities in the country.
Nine billion dollars were offered during a summit in Geneva in January 2023, signalling that additional donor organisations and friendly countries will extend further finance to Islamabad in light of the new programme.
The country’s cash flow would improve, and it could then start preparing for resuming imports.
For months, the market had been stuck between 40,000 and 42,000 points while the domestic economy had been partially shut down.
With the IMF plan being revived, the short- and medium-term outlook for the country’s severely low foreign exchange reserves of $3.5 billion has improved.
When the central bank’s key policy rate is at a record high of 22%, it is unclear whether the market will be able to sustain the historic single-day gains in the short term.
But in a statement released today, the prime minister stated, “hope has been revived as the country is on the path towards development once again.”
Shehbaz attributed the renewed optimism of investors to the IMF agreement, saying, “once again the country is on track to development and prosperity as envisioned by [PML-N] leader Nawaz Sharif.”
In the same way that “we had freed the country from the energy crisis, terrorism, and other problems between 2013 and 2018 and ushered economic development,” he continued, “we are once again paving the way for Pakistan’s prosperity.”
Shehbaz emphasised the need of keeping on track with the same level of focus and effort.
Under Nawaz Sharif’s leadership, “we are returning to the time when we had launched CPEC, restored the economy, lowered the inflation rate to four per cent, and lifted the growth rate to 6.1 per cent against a policy rate of 6.5 per cent,” added Shehbaz.
The prime minister announced the government’s plans to boost expansion across all industries, including agriculture, information technology, and manufacturing.
“God willing,” he declared, “we will protect the people from inflation and provide the youth with employment and business opportunities to reach self-sufficiency.”
