PSX faces selling pressure amid IMF review concerns
1. KSE-100 Index plunges 1,634.22 points, or -1.46%, closing at 110,301.16
The capital market endured continued selling pressure on Wednesday as investor sentiment remained cautious ahead of the upcoming International Monetary Fund (IMF) review and growing concerns over expanding revenue shortfalls.
Amid persistent foreign outflows and global economic uncertainties, the market struggled to regain stability, with recent policy changes in the real estate sector further intensifying investor unease.
The Pakistan Stock Exchange's (PSX) benchmark KSE-100 Index dropped by 1,634.22 points (-1.46%), closing at 110,301.16, down from the previous session's 111,935.38.
The index reached an intraday high of 112,234.15 before plunging to a session low of 109,405.53.
Market analysts attributed the subdued sentiment to the looming IMF review, scheduled to begin later this month.
Ahfaz Mustafa, CEO of Ismail Iqbal Securities, told Geo.tv, “Markets are under pressure due to the upcoming IMF review. There is a tax shortfall that needs addressing, and the incentives being offered to the real estate sector are making investors wary as they could complicate the review.”
The Federal Board of Revenue (FBR) is grappling with a massive revenue shortfall of Rs468 billion for the first seven months (July-January) of FY25, having collected Rs6,496 billion against a target of Rs6,964 billion.
The shortfall widened by Rs84 billion in January 2025, with the FBR collecting Rs872 billion, well below the Rs956 billion target. Although the tax authority saw a 29% month-on-month increase, it still lags far behind IMF targets, raising concerns over potential additional tax measures.
Meanwhile, the Prime Minister’s Task Force on Housing has finalized a relief package for the real estate sector, which proposes tax reductions for buyers and sellers to stimulate the market.
The package includes slashing property sales tax from 4% to 2%, cutting the buyer’s tax from 4% to 0.5%, and eliminating federal excise duties on property transactions. It also suggests tax exemptions for first-time homebuyers and increasing the construction limit from two-storey to three-storey buildings.
While these measures are aimed at boosting real estate investment, they have also raised concerns about their potential impact on tax revenue and the complexities they could add to the IMF negotiations.
The Ministry of Finance's debt report revealed that Pakistan’s total public debt surged to Rs71.2 trillion in FY24, a 13% increase from Rs62.8 trillion in FY23.
Despite efforts to curb the debt trajectory, the government failed to meet the public debt reduction targets set under the Fiscal Responsibility and Debt Limitation Act.
Domestic debt stood at Rs47.16 trillion, while external debt, in rupee terms, reached Rs24.08 trillion. This escalating debt burden continues to strain the fiscal outlook, further fueling concerns over financial stability and Pakistan’s ability to comply with IMF-mandated reforms.
The PSX extended its losses on Tuesday, as rising global trade tensions, falling crude oil prices, and significant foreign outflows dampened investor confidence.
The benchmark KSE-100 Index dropped by 809.63 points (-0.72%), closing at 111,935.38 after reaching a high of 113,649.07 and a low of 111,828.10 points.
Analysts highlighted that uncertainty over trade policies, coupled with political instability and rupee volatility, further contributed to the bearish market sentiment.
