SBP buys back govt paper worth Rs 27.9b

The Pak Banker - - Company& -

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

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