KARACHI: Pakistan’s stock market fell by more than 3% on Monday, its biggest daily decline in five months, and the rupee continued its slide against the dollar as uncertainty grew over the new government’s economic plans to restart a stalled IMF programme, Reuters reported on Monday.
“Delay in IMF, lack of clarity on the new government’s economic plan and (the) rising political temperature are badly affecting Pakistan stocks,” Mohammad Sohail, CEO of Topline Securities, said on Twitter.
The Pakistan Stock Exchange 100 index dropped by 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 premier Imran Khan, who was blamed for mishandling the economy.
Sharif’s government, however, is yet to implement economic policies such as curtailing costly energy subsidies, which were introduced by Khan’s government in his last days in power as he faced mounting pressure due to rising inflation.
The new government’s reluctance to withdraw the subsidies as agreed with the IMF last month is worsening the situation, said Samiullah Tariq, head of research and development at Pak Kuwait Investment Company.
Pakistan is in dire need of external financial support due to a widening current account deficit and foreign 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 was unable to secure any hard assurances of funding.
When the new government took over last month the stock market index rose to 46,601 points on April 15, from 44,444 points on April 10 when Khan’s government was ousted. Since then, the index has plunged by 3,208 points or 6.9%.
With uncertainty over additional support for Pakistan’s public finances, the Pakistani rupee slipped to 187.53 rupees to the dollar on Monday compared with a close of 186.63 on Friday.
Political uncertainty has 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 fresh elections.