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As a stepping stone for the IMF program, the tough and unpopular budget: Abdul Rahman

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After meeting all of the criteria set out by the lender in its annual budget, Pakistan is aiming to secure a staff-level agreement on an IMF rescue of over $6 billion this month, according to Reuters, who spoke with the country’s junior finance minister.

In an effort to secure a loan from the International Monetary Fund (IMF) and prevent another economic collapse, the South Asian nation has set ambitious revenue objectives in its yearly budget, despite growing domestic unrest over new taxing policies.

Minister of State for Finance, Revenue and Power Ali Pervaiz Malik stated on Wednesday that the goal is to reach an agreement at the staff level before the IMF board takes a break, adding that they want to conclude the process within the next three to four weeks.

Regarding the package’s size, he stated, “I think it will be north of $6 billion,” though he stressed that the main focus right now was on the IMF’s accreditation.

With a fiscal deficit that dropped sharply to 5.9 percent of GDP from 7.4 percent the year before, Pakistan aimed for tax collection of 13 trillion rupees ($47 billion) for the fiscal year that started on July 1, a near-40 percent increase from the next year.

The goal of implementing a harsh and unpopular budget, according to Malik, was to pave the way for an IMF program, and the lender was pleased with the revenue measures implemented after their discussions.

Consumers hit hard by food export surge, trade imbalance in Pakistan falls 12.3 percent

“There are no major issues left to address, now that all major prior actions have been met, the budget being one of them,” added Malik.

The budget might get the go light from the IMF, but experts say it might make the public even more furious.

“Obviously they (budget reforms) are burdensome for the local economy but the IMF programme is all about stabilisation,” Malik pointed out.

Given Pakistan’s impending debt repayments and the aftermath of the unwinding of capital and import restrictions, economist Sakib Sherani of private firm Macro Economic Insights warned that the country’s currency and foreign exchange reserves would be under pressure unless the IMF and Pakistan reached a swift agreement.

“If it takes longer, then the central bank may be forced to temporarily re-instate import and capital controls,” he added. “There will be a period of uncertainty, and one casualty is likely to be the rally in equities.”

The benchmark share index of Pakistan climbed 1% during trading on Wednesday, hitting an intraday high of 80,348 points at 0640 GMT, a new record.

With persistent hope for a rescue package from the International Monetary Fund to support the faltering economy, the index has risen by about 10% since the budget was unveiled on June 12.

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Amidst better macroeconomic data, stocks are still rising.

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Following positive remarks made by the International Monetary Fund (IMF) team during its just-completed visit, the Pakistan Stock Exchange (PSX) continued to see bulls’ rise.

The benchmark KSE-100 index gained 813.04 points on Tuesday and was currently trading at 95,808.71 points.

Increased purchasing was observed in a number of industries, including power generation, cement, commercial banks, oil and gas exploration firms, OMCs, and pharmaceuticals.

HUBCO, PSO, SBGPL, MARI, OGDC, PPL, MEBL, and MCB were among the index-heavy stocks that saw a financial bonanza.

A number of variables are thought to be responsible for the market’s ongoing bullish momentum, chief among them being Finance Minister Muhammad Aurangzeb’s refutation of press reports about the potential for a mini-budget.

Investor confidence was also bolstered by an increase in Pakistan’s foreign exchange reserves.

The benchmark KSE-100 index finished Monday at 94,995 points, so keep that in mind.

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Present day gold prices in Pakistan as of today.

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On Tuesday, the price of gold in Pakistan, which mirrors a surge in the international market, experienced a large increase. As per the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold per tola experienced a significant increase of Rs3,600, ultimately reaching Rs273,500.

The price of ten grammes of gold increased by Rs3,086, reaching a final level of Rs234,482 in a similar fashion. On Monday, the price of one tola of gold hit Rs269,900, which was a gain of Rs2,500. The increase in gold prices occurred the day after that, on Tuesday.

As a result of the rise in international gold rates, the local gold prices have also been on an increasing trend. The price of one ounce of gold on the global market hit $2,623 on Tuesday, representing a $36 gain from the previous day for the price. In addition, the APGJSA observed that the worldwide price was increased by twenty dollars.

The price of silver has stayed steady at Rs3,250 per tola, despite the fact that gold prices have been on the rise.

Over the course of the past several months, the price of gold in Pakistan has significantly increased, reaching an all-time high of Rs287,900 per tola in the month of October. As a result of a weakening of the United States dollar and widespread anticipation over impending announcements from officials of the Federal Reserve regarding future interest rate adjustments, the foreign market also experienced a lift on Tuesday.

After a 2% increase on Monday, spot gold reached its highest level since November 12 at $2,623.54 per ounce, showing a 0.4% increase. This marks the highest level since November 12.

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In terms of Pakistan’s Current Account: As information technology exports reached $330 million in October, Pakistan reports a CA surplus of $349 million.

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With a surplus of 349 million dollars in the Current Account for the month of October 2024, Pakistan’s information technology exports reach the 330 million dollar milestone. This is in contrast to the surplus of 86 million dollars and 29 million dollars that Pakistan experienced in September 2024 and August 2024, respectively.

In October 2024, Pakistan’s information technology exports reached 330 million dollars, representing a 36 percent year-on-year increase and a 13 percent month-on-month gain.

IT exports in the first four months of fiscal year 25 were around 1.21 billion dollars, which is a 35% increase from the previous year. This is the thirteenth straight month of year-over-year growth on the IT export front.

In October 2024, Pakistan’s current account showed a surplus of 349 million dollars, which is significantly higher than the surpluses of 86 million dollars observed in September 2024 and 29 million dollars in August 2024, respectively.

It is the third consecutive month that a current account surplus has been recorded, and the volume of this surplus is the greatest it has been since March of 2024, according to statistics that was issued by the State Bank of Pakistan.

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