The government has forwarded a proposal regarding the removal of floor at Karachi Stock Exchange (KSE) to the International Monetary Fund (IMF), which has reportedly opposed the removal of floor or injection of funds in the stock market.According to reliable sources, the Ministry of Finance forwarded the proposal - the one submitted to the government for the floor removal by the KSE authorities - to IMF.
The proposal spells out the strategy that could bring the trading at market to normalcy, which has been suspended for more than three months to save the market from disaster."What are the reservations of IMF over the removal of market floor and the stabilisation fund are still unknown and the government officials are still to share this information with the board of the exchange, which has been kept in dark so far by the authorities," a director of the board told Daily Times. Sources said that IMF would take the decision in December and in case of a favorable outcome, the floor would be lifted next week, as was also proposed during the informal meeting of KSE' members on Monday.
The meeting was arranged to discuss the prevailing jittery situation in the market in the absence of any substantive action on the part of the government to come up with the promised fund. The meeting proposed that market could be opened with the lower circuits at two percent, with a gradual increase of one percent, to reach it to its normal lower circuit of five percent in the coming days.About the market support fund, the KSE' authorities are still hopeful that government would honour its promise to inject the fund in the market. "I am sure that fund would come and if is being delayed solely because of IMF conditions," the director of KSE said.
The government pledged to give Rs 50 billion - Rs 20 billion market stabilisation fund and Rs 30 billion in put option to foreign investors - to stock market in the beginning of last month. Sources said KSE proposed that the Government of Pakistan should finance the deficit in the market support fund for early removal of floor.
The participants of the support fund including NBP, NIT, State Life and EOBI are ready to contribute Rs 12.5 billion and the GoP has been asked to arrange for the remaining. As per IMF conditions the government needs the IMF's approval for such spending. Meanwhile, the election for the five member-directors of KSE for calendar year 2009 will be held on Wednesday. A total of eleven contestants are in the run for the directorship of KSE for 2009
Comments