Monday, January 12 2026

PSX falls for second day on profit-taking
Stocks closed lower on Friday as late-session profit-taking erased early gains, pushing the benchmark KSE-100 index down by around 1,130 points to 184,410. Market participants initially maintained a positive stance during morning trade; however, selling pressure intensified in the latter half as investors chose to lock in gains ahead of the weekend, resulting in another negative close for CY26. At the end of trading, the benchmark KSE-100 index posted a decline of 1,133.34 points, or 0.61%, and settled at 184,409.67. "Market sentiment stayed positive during the morning session; however, profit-taking and selling pressure dominated the latter half, forcing the benchmark index to register another negative close for CY26," said Ali Najib, Deputy Head of Trading at Arif Habib Ltd (AHL). AHL noted that the KSE-100 index underwent further consolidation within the 184,000-185,000 support zone and concluded a volatile week in which the benchmark managed to post a weekly gain of around 3%.
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Pakistan to exit IMF programme this year
Rana Mashhood Ahmad Khan, Chairman of the Prime Minister's Youth Programme (PMYP), announced that Pakistan will exit the International Monetary Fund (IMF) programme by June next year. Addressing a diaspora gathering in London on Saturday, he said Pakistan was steadily moving towards economic self-reliance and would no longer require IMF support by mid-2026. He added that the country's recent economic direction had restored confidence among investors and overseas Pakistanis. Referring to past economic challenges, Mashhood said IMF-linked policies imposed after 2018 had slowed growth, but the current government had placed the economy back on the path of recovery. The PMYP chairman highlighted the sharp rise in workers' remittances as a sign of renewed confidence, noting that overseas Pakistanis sent billions of dollars home in 2025, providing a significant boost to the country's economy.
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Inflation targeting-lite: strategic transition or operational stopgap?
In August 2009, the State Bank of Pakistan (SBP) officially changed its monetary policy framework from targeting monetary aggregates to an interest rate-based monetary policy framework, known as the inflation-targeting-lite regime, by introducing the interest rate corridor (IRC). Within international systems, the adoption of IRC would be a transitional move for implementing a flexible or full-fledged inflation targeting monetary policy framework, where the policy rate is used as a primary tool for anchoring inflation expectations (Stone, 2003). Indeed, most inflation-targeting central banks place corridor systems not only to stabilise overnight rates but also to anchor these rates around a policy rate, thereby strengthening monetary policy transmission and policy signalling. This has been quite contrary to the case of Pakistan, where a significant domestic literature and official SBP communication, such as working papers, research bulletin, and policy notes emphasise that the IRC was introduced as a means of reducing volatility in the weighted average overnight repo rate (repo), which has weakened policy signalling and disrupted money markets (Mahmood, 2016).
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Pakistan makes major strides in regulatory reforms
Pakistan has taken bold steps forward in modernising its regulatory landscape, delivering significant enhancements to anti-money laundering safeguards, corporate transparency, and the simplicity of starting a business, initiatives that have positioned the country as a more competitive and compliant player on the global stage. At the heart of these achievements is the Securities and Exchange Commission of Pakistan (SECP), which earned the title of national "Reforms Champion" from the prime minister in December 2025 during the launch of the National Regulatory Reforms initiative. The recognition highlights the regulator's dedication to institutional integrity, digital innovation, greater ease of doing business, and updating the Companies Act, 2017, to international standards.
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Rewiring Pakistan's growth model
Pakistan's economic policy framework is increasingly being shaped by sector-specific reforms aimed at correcting long-standing structural distortions and reviving growth. Among the most significant developments are the gradual deregulation of the sugar sector, a renewed emphasis on an ambitious agriculture export strategy, and sustained efforts to attract foreign direct investment (FDI). These initiatives are closely interlinked and reflect a broader shift away from heavy state intervention towards market-oriented, export-driven and investment-friendly policies. While challenges remain, official data and historical experience suggest that progress in these areas could strengthen Pakistan's external position, raise productivity and generate much-needed employment. The sugar sector has historically symbolised Pakistan's interventionist economic approach. For decades, it operated under extensive government controls, including administratively fixed sugarcane support prices, restrictions on exports and imports, regulated stock releases and recurring subsidies. Although these measures were intended to stabilise prices and protect farmers, they often produced the opposite effect.
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