As political unrest was sparked by Punjab Chief Minister Chaudhry Parvez Elahi’s recommendation to the governor to dissolve the assembly, shares at the Pakistan Stock Exchange (PSX) fell on Friday even as the nation received a $4 billion economic lifeline from the United Arab Emirates and Saudi Arabia.
At 11:36 am, the benchmark KSE-100 index dropped 366.73 points, or 0.9%, to hit 40,437.16 points.
The index “opened under pressure due to the revival of political noise and uncertainty in Punjab politics,” according to Raza Jafri, head of equity at Intermarket Securities. As the UAE joined Saudi Arabia in providing support to Pakistan, he continued, this was overshadowing gains on the international front.
Siddique Dalal, CEO of Dalal Securities, added that although the predicted inflows from the UAE and Saudi Arabia should have generated positive momentum, it was suggested that the Punjab Assembly be dissolved instead, which gave the bears the upper hand.
He predicted that uncertainty will reign after the Punjab Assembly was dissolved and before the Khyber Pakhtunkhwa Assembly. A caretaker government would not be able to negotiate with the International Monetary Fund (IMF) to complete the urgent ninth review, and the federal government would also be obliged to dissolve the National Assembly, he warned.
Dalal stated, “There is no consistency as any recovery is not extended and the market cannot sustain upward momentum,” adding that some profit-taking was also anticipated given it was the first rally since the beginning of the of the year.
The UAE had already agreed to give an additional $1 billion and roll over $2 billion in loans that were scheduled to be repaid in February and March.
Separately, in Islamabad, the Saudi Fund for Development (SFD) signed a contract to finance $1 billion in oil imports with deferred payment.
On Thursday, the central bank’s reserves fell to a critical $4.34 billion level, the lowest level since February 2014 and just enough to cover less than one month’s worth of restricted imports.
The rollover, however, now gives the government the chance to restart the IMF programme over the coming days, gradually rebuild foreign exchange reserves, and lift a strict import quota that has crippled the manufacturing sector and contributed to a lack of goods.
The governor’s formal recommendation to dissolve the provincial legislature from Punjab CM Elahi has raised concerns about prolonged political unrest as the nation’s economic problems worsen.
Elahi’s action put an end to several weeks of rumours, legal fighting, and a public display of the disagreements between the PTI and PML-Q, the two parties allied with the Punjabi government to form the government, on whether or not the legislature would be dissolved.
Balighur Rehman, the governor of Punjab, was cited by Geo News as saying that he would make the decision to dissolve the assembly “with a sad heart” because it was the body that served as the voice of millions of people.
The KP Assembly would also be promptly dissolved, according to PTI leader Fawad Chaudhry, and elections would take place across the country in both provinces.
He advised the PDM government to exercise caution, choose an electoral system, and move toward holding national elections in order to assist the country in achieving political stability, ultimately leads to economic stability.
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