SBP buys back govt paper worth Rs 27.9b
KARACHI: Pakistani stocks ended lower on Tuesday, jolted by political uncertainty after another member of the country's governing coalition said its two ministers in the federal cabinet would resign.
In the money market, overnight rates ended lower at between 13.00 percent and 13.50 percent, compared with the previous day's close of 13.90 percent after the State Bank of Pakistan bought back government paper worth 27.9 billion rupees in six-day reverse repo contracts.
The Muttahida Qaumi Movement, the dominant political party in Karachi, said in a statement that the ministers' resignations were a first step and a decision on whether to stay part of the federal, as well as the provincial Sindh government would be taken soon.
The Karachi Stock Exchange's benchmark 100share index .KSE ended 0.52 percent, or 61.68 points, lower at 11,848.05.
"Bearish activity was wit- nessed on rising political uncertainty and investors are also still concerned over a rising fiscal deficit after extension approval of the IMF loan programme," said Ahsan Mehanti, director at Arif Habib Investments Ltd.
The IMF on Monday approved a nine-month extension of Pakistan's $11 billion loan, which was scheduled to end this year.
The standby loan programme with two tranches remaining was scheduled to end Dec. 31, but will now run through Sept. 30, 2011, with the two tranches broken up and spread out over that time. Pakistan applied for the extension because it was unable to implement fiscal reforms such as a reformed general sales tax (RGST) on schedule. The extension likely will worsen Pakistan's fiscal deficit because its fiscal year ends on June 30 and part of the money originally scheduled for 2010/11 will now fall in 2011/12, creating a larger shortfall for the current fiscal year. - PB News