• The KSE-100 index closes at 117.001.09, up 801.50 points.
• Intraday High reaches 117.202.09, an increase of 1,002.5 point.
• Index affects low at 116,490.82 during trade session.

The stock market extended its Bullish strip on Tuesday and closed higher as investor optimism remained strong after the development of circular debt resolution and continued progress in the International Monetary Fund (IMF) program.

Pakistan Stock Exchange’s (PSX) Benchmark KSE-100 index got 801.50 points, or 0.69%, to close at 117,001.09, up from the previous end of 116,199.59.

The index touched at an intraday height of 117.202.09, while the lowest level recorded during the session stood at 116,490.82. Especially the energy sector so strong buying interest as investors responded to potential improvements in cash flow and the broader consequences of the government’s debt structure efforts.

“Optimism in terms of dissolution of circular debt, improvement in the cash flow of energy chain and success for the IMF program,” said Samiullah Tariq, head of research at Pak-Kuwait Investment Company, which highlighted the factors that burn the market’s Rally.

In a significant development, the IMF has authorized Pakistan to borrow RS1.25 trillion ($ 4.5 billion) from domestic banks to tackle its mounting of circular debt without adding its public debt portfolio, according to officials who are familiar with the case.

This agreement was reached after political discussions between Pakistani authorities and the IMF, where Islamabad presented a six-year roadmap to manage RS2.4 trillion circular debt that has weighed the electricity sector.

The IMF’s approval gives the government much needed fiscal space, as the new borrowing will not be included in the country’s official debt statistics. To finance repayment of these loans, Pakistan continues to charge an RS3 per Kilowatt-Time Debt Service Supplement (DSS) on electricity bills, which are expected to generate over RS300 billion annually.

According to the plan, the government intends to retire RS1.5 trillion in circular debt through a combination of bank loans and income generated from the supplement. In addition, authorities expect to save RS463 billion after renegotiations with independent power producers (IPPs) to lower capacity payments and adjust customs structures.

The IMF’s willingness to meet this restructuring reflects its wider support for Pakistan’s reforms of the energy sector under the current expanded fund facility (EFF) of $ 7 billion (EFF). Officials have stated that Pakistan has assured the fund that improved collection mechanisms and operating efficiency will prevent the resumption of circular debt in the future.

Power Minister Awais Ahmed Khan Leghari commented on the case and said that although the government has not yet received a formal decision, he remains optimistic that the IMF has approved the loan plan. He also clarified that DSS will remain unchanged and will continue to be part of any completed term with banks where the additional fee remains below RS3 per year. Unit.

Meanwhile, the IMF has shared a draft of the Memorandum of Economic and Financial Policices (MEFP) with Pakistani authorities marking another step towards completing the ongoing loan notification process. The fund has also signaled its willingness to provide some relief to the construction and property sectors, although it remains uncertain whether such incentives will be implemented immediately or included in the next fiscal budget for 2025-26.

Pakistan and the IMF team ended discussions last week without securing a staff agreement (SLA), which is a prerequisite for Islamabad’s formal request to receive the next $ 1 billion tranche under EFF. The delay means that further political negotiations will take place in the coming days to reach consensus before the IMF’s Executive Board reviews Pakistan’s case.

PSX began the week on a strong note and continued the bullish momentum observed in previous sessions. On Monday, the benchmark KSE-100 index closed 663.42 points higher or 0.57%at 116,199.59 points, up from 115,536.17 points registered in the previous session.

The highest index level reached during Monday’s session was 116,626.83, while the lowest level was registered at 115,883.22 points.