Positivity somewhat returned to the Pakistan Stock Exchange (PSX) amid developments on the economic front, especially over the circular debt settlement, as the benchmark KSE-100 jumped over 700 points during the trading session on Wednesday.
Earlier, the benchmark index hit a high of 62,399.53 before retreating slightly due to latest development on the political front where former prime minister Imran Khan was handed another sentence by the court – this time in the Toshakhana case.
However, by 1:15pm, the index was back up to hover around 62,569.37, an increase of 727.63 points or 1.18%.
Index-heavy stocks including Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) were trading in the green.
At close on Tuesday, volatility on the political front dented sentiment at the bourse as the benchmark index lost over 900 points to settle at 61,841.74.
Experts said that the return of positivity comes amid reports of the resumption of the circular debt by the interim government, which is driving the index-heavy energy sector stocks upwards.
media, citing its sources in the Finance Ministry, reported that Caretaker Minister for Power and Petroleum, Muhammad Ali, has set an extremely ambitious circular debt reduction plan amounting to Rs1,268 billion for caretaker Finance Minister Dr Shamshad Akhtar for onward sharing with the International Monetary Fund (IMF) for its concurrence.
Concurrence from IMF shall be required highlighting a rare opportunity to settle energy sector circular debt (CD) stock of Rs1,268 billion using funding from the government of Pakistan (GoP) for one to two days.
The proposal is not contrary in any manner to MoF’s commitment with regards to supplementary grants (SG) as the SG required for this CD settlement is budget neutral and will be returned with an extra amount for the GoP and tax revenues for FBR.
Moreover, the caretaker federal cabinet has approved reorganisation and digitisation of the Federal Board of Revenue (FBR) after the recommendations of the inter-ministerial committee headed by the finance minister were presented.
In light of these reforms, the Federal Tax Policy Board will be formed in the Revenue Division, which will be responsible for the formulation of tax policy in the country, determination of revenue targets and cooperation between stakeholders. The Federal Policy Board will be headed by the federal finance minister.
As a result of the restructuring, Customs and Inland Revenue will be headed, separately, by Director Generals of the respective cadre.