PSX shaken by IMF conditions and budget fears

PSX shaken by IMF conditions and budget fears - What’s fueling the panic?

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May, 24 2025

KARACHI (Web Desk): The Pakistan Stock Exchange has faced intense pressure this week as uncertainty over the upcoming budget and the IMF’s tough demands rattled investor confidence, pulling the market sharply down.

According to the weekly report, the benchmark KSE-100 index fell by 546 points and closed at 119,103. The index had briefly crossed the psychological barrier of 120,000 points multiple times during the week but failed to sustain it — signaling growing instability in investor sentiment.

This week, the market seemed to be completely dominated by rumors, fears, and uncertainty. Talks around aggressive tax reforms, strict IMF conditions, and the government’s unclear economic plan triggered cautious behavior among both local and foreign investors.

Mutual funds and foreign portfolio managers were seen pulling out their shares to avoid further losses, focusing on risk management strategies instead. On the other hand, large individual investors and some government-backed institutions tried to take advantage of the lower prices and stepped in for selective buying.

Due to this nervous environment, daily trading volume dropped by 25%, reflecting a slowdown in market activity. The overall market capitalization dropped by Rs4,400,000,000, bringing the total value down to Rs14,385,000,000,000.

Financial analysts are warning that the market could see further pressure if the upcoming budget fails to introduce business-friendly policies. Investors are now anxiously waiting for the final budget announcement, which is expected to set the tone for the coming financial year.

This week’s market behavior reveals a fragile investment climate driven by economic uncertainty and global lender influence. The inability of the KSE-100 index to hold above 120,000 shows that despite momentary confidence, long-term stability is still lacking. The aggressive stance by the IMF is clearly putting Pakistan’s policymakers in a tight spot — and the real question now is: can the government balance reforms with growth incentives?

If the budget leans too heavily on IMF demands, investor flight may accelerate. But if it supports the business sector with strategic relief, the market might regain momentum. For now, all eyes are on the finance ministry’s next move.