ISLAMABAD, Aug 29(ABC): With all eyes on the executive committee’s meeting of the International Monetary Fund (IMF) scheduled to be held on Monday cash-strapped Pakistan is confident to evade a near-term default, reported.
The leadership expects the Washington-based lender to resume the month-long stalled $6 billion bailout programme; however, a rally in the nation’s assets may fizzle out amid escalating political tensions.
According to Columbia Threadneedle Investments, Tellimer Limited and Natixis SA predictions, Pakistan will win a loan approval from the IMF board when it meets on Monday, “paving the way for the release of $1.2 billion in immediate funds.”
However, amid ongoing political turmoil in the country, it is expected that the two-day later focus will shift to PTI Chairperson Imran Khan’s court hearing as he battles a string of legal troubles.
“I do think the bulk of the market rally is already in the price,” said Eng Tat Low, an emerging-market sovereign analyst at Columbia Threadneedle in Singapore. “I expect the next 12 months to be challenging with the general elections looming. The risk of worsening political backdrop is definitely still considerable and elevated, and is a risk that is unlikely to dissipate anytime soon.”
It should be noted that Pakistan’s dollar bonds have been the top performers in emerging markets in August after Belarus. Meanwhile, the rupee also soared above its peers as investors cheer the prospect of IMF funds.
However, the development on the political front can put fragile financial stability at risk as supporters of Imran Khan stage protests.
“The political uncertainties will persist with speculations on early elections,” said Junyu Tan, an economist at Natixis in Singapore. “This will pose a major risk for Pakistani assets.”
