Islamabad: Pakistan is poised to see an upswing in investor confidence following a new agreement with the International Monetary Fund (IMF) for a $7 billion Extended Fund Facility (EFF). This deal, still pending approval from the IMF’s Executive Board, is aimed at enhancing economic stability and fostering development.

According to AKD Securities Limited, the staff-level agreement between the IMF and Pakistani authorities is a crucial step in securing the new EFF, which is expected to notably improve the climate for both domestic and foreign investments. The current price-to-earnings ratio of equities in Pakistan stands at 3.9 times, which is seen as an attractive valuation by market analysts.

The agreement also includes commitments from provincial governments to increase spending on social services and regional development projects while boosting revenue through the implementation of a General Sales Tax on services and an agriculture income tax as part of the National Fiscal Pact. Additionally, the plan involves phasing out various regulatory and tax-based incentives, agricultural support prices, subsidies, and the practice of guaranteeing returns to level the economic playing field.