KARACHI - Karachi Stock Exchange (KSE) has been officially assured of getting Rs14.5 billion out of Rs20 billion promised by the government before the floor rule was lifted and the KSE had sent a summary to the government for the removal of floor. Whereas, the government had sent the summary to the International Monetary Fund (IMF) to seek its approval for removing the floor mechanism. In its summary, the KSE had suggested the govt to remove the floor rule soon after the Eid-ul-Azha According to unimpeachable source the MD of KSE, Adnan Afridi informed a meeting of the KSE members held on Monday at the KSE house that the government had assured the abovementioned funds and had informed that it was trying to arrange the remaining Rs5.5b before the stock is freed from the floor mechanism. However, the MD was not sure whether the shortfall would be met because National Investment Trust which was among the four state owned companies that had promised to raise Rs20 billion as market support fund, had informed that due to lack of liquidity it would not be able to put in its share of Rs5 billion in the promised fund. The NBP which had originally agreed to chip in Rs5 billion in to the promised "floor lifting fund" increased it share by Rs2 billion after the NIT informed its inability to give it share. MD had said that EOBI would contribute its share of Rs5 billion. While State Life Insurance Company would put in half of its share in the promised market support fund, source said. MD also informed the members of KSE that the International Monetary Fund (IMF) had clearly asked the government to consult the international body before lifting the floor. The IMF is apprehensive that when the floor was removed there would be large scale of outflow of foreign funds, source said. It wanted to stop this outflow which may hurt the interest of the KSE and the current crisis in the stock market may go from bad to worse. The source said that the MD had highlighted an interesting figures and said that during the period of floor rule, which went into fourth-month the foreign investors have sold off shares worth about Rs7 billion and bought up shares worth around Rs8.7 billion. In light of this figures, it could be said that foreigners had been buying in the share market during the prolong period of floor mechanism, which implemented on August, 27, 2008. Source said that during the briefing MD had mentioned that KSE management in its summary sent to the government highlighted the transactions of foreigners during the period of floor rule and suggested the government that if the floor was removed, the stock market could get foreign inflows. However, MD also said that KSE had informed the government that if the foreign investors opted to sell-off their shares, the size of share selling would not exceed from US$ 400 million and there would be no panic selling as well, source said. In its summary the KSE had also suggested the government to remove the floor in phases, in the initial phase government should reduce the lower limit to 2 per cent and in the second phase gradually bring the lower limit to its normal parameters, source said. Source said that it seems that the government is not serious to lift the floor before the first month of next year because the MD of KSE during its briefing had said that IMF had concern that if the floor was removed before the foreign inflows from other donors, the present crisis in the stock markets would further deepen. MD had said that IMF condition regarding the floor issue was mentioned on the web-site of IMF, source said. Source said that the participation of KSE members in the meeting was not as high as it was recorded in the last meeting, he added around 90 members of the KSE had attended the meeting held on Monday. Moreover, a number of brokers were of the view that members of the KSE would prefer veteran members to new members in the election of board of directors of KSE, scheduled to be held on December, 2, 2008. In the light of this assumption, Haji Ghani Haji Usman, Mohammad Yasin Lakhani, Zafar.S.Moti and Munir Ladhan would likely to win the election.