The Pakistan Stock Exchange (PSX) dropped by over 1,000 points immediately after opening on Monday as the government's inaction over the growing economic crisis mounted selling pressure on the bourse.
After the 2.4% drop, the PSX benchmark KSE-100 Index declined to a two-month low at 42,443 points at around 10:22 am.
Finance Minister Miftah Ismail announced on Sunday that the PML-N coalition government "is not increasing petroleum product prices for the time being".
The International Monetary Fund (IMF) had set the condition of removal of subsidies on petroleum products and electricity for the resumption of its $6 billion loan programme.
The revival of the programme would see the government receiving a loan tranche of $1 billion from the IMF and the flow of additional funds from other bilateral and multilateral lenders.
Pakistan is scheduled to meet the IMF delegation on Wednesday in Doha for the next rounds of talks to resume the loan programme.
The likely inflow would begin to overcome the shortfall of foreign exchange reserves and improve Pakistan's balance of international payments.
The country's reserves have depleted quickly and are now at a critical level of around one and half months of import cover at around $10.3 billion.
Pakistan also faces the risk of default on its international payments for the first time if the country's reserves are not improved.
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