Share the post “Pakistan’s Debt Crisis Is About Expenditure, Not Taxes — And PSX Knows It”
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Raise government borrowing costs
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Crowd out private investment
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Inflate domestic debt servicing
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Compress equity valuations on PSX
Analytical conclusion:
Monetary tightening treated symptoms while deepening the fiscal disease.
Why IMF Programs Move PSX — But Don’t Fix the Problem
Pakistan has entered 23+ IMF programs since 1958. Only about nine were completed fully.
Short-Term Market Effect
IMF announcements usually:
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Stabilize reserves
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Reduce default probability
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Anchor FX expectations
Markets rally because tail risk collapses.
A notable example:
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June 2023 SBA → KSE-100 surged ~5.9% in one day, the biggest in 15 years, followed by ~20% gains over the quarter.
Long-Term Reality
Over time:
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Austerity suppresses growth
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Higher taxes meet rigid spending
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Earnings struggle to compound
Empirical findings you cited show mixed to negative long-term equity effects, depending on global conditions and political execution.
Key insight: IMF programs buy time, not governance.
As you framed it bluntly:
IMF programs end only when governance begins.
Share the post “Pakistan’s Debt Crisis Is About Expenditure, Not Taxes — And PSX Knows It”
