· Rejoice, for the IMF is finally here! While Pakistan’s staff level agreement (SLA) for the SBA caught everyone off-guard, Board approval for the same had widely been expected.

· Overall, the SBA has been approved by the lender’s executive board for US$3bn (SDR2,250mn), with US$1.2bn (SDR894mn) set to be disbursed immediately.

· After securing endorsement from the IMF, the country will be able to mobilize further funding from bi-lateral, multi-lateral and other sources which will help shore up FX reserves

· The IMF’s targets portend a challenging year ahead, particularly with respect to primary account. We believe GoP may find it hard to depict a surplus of 0.4%, while IMF’s average inflation at 26% is significantly above our expectation of avg. 21.4%

· On the market side, with FX reserves firming up, consequent improvements in the PkR/US$ parity, GoP having announced elections and a still sub 3x market P/E to result in a cautiously optimistic view going ahead

Courtesy- AKD Research