Pakistan Daily Economy Update - 12 October

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1. Oct . 12, 2017 KCCI - eBulletin Economic Indicators Govt. disputes World Bank report Finance Ministry has stated that the report released by the World Bank is based on misinterpretation of standard definition of gross financing needs of the country. The ministry has pointed out that as per international standards, country’s gross financing need is an aggregate of Current Account Deficit (CAD) plus debt servicing of the year. Based on this standard, Pakistan’s gross financing need for FY18 is about $ 18Bn (5.3% of GDP) rather than $ 31Bn (9% of GDP). The Ministry further went on saying that as external account has shown strong performance, misinterpreting data to deliberately paint negative picture is uncalled for. BR. USD-Interbank USD-Open MKT KSE-100 index FIPI Trade deficit swells by 29.75% to $ 9.01Bn in 1QFY18 Pakistan’s trade deficit widened to $ 9.01Bn during 1QFY18 as against $ 7Bn in 1QFY17, showing an increase of 29.75% mainly due to massive growth in imports. A widening of trade deficit is increasing the current account deficit, which stood at $ 2.6Bn during 2MFY18. The exports registered a growth of 10.84% to $ 5.17Bn during period under review compared to $ 4.67Bn in 1QFY17. Meanwhile, the imports showed an increase of 22.19% to $ 14.26Bn from $ 11.67Bn 1QFY17. Pakistan’s foreign exchange reserves are continuously declining tumbled by over $ 4Bn in one year to $ 19.8Bn due to widening of current account deficit and repayment on foreign loans. The Nation. FBR seeks to work with businesses as partner in tax collection FBR Chairman Tariq Pasha has said that the FBR wants to engage the business community in increasing the country’s tax base. Speaking after a meeting, he disclosed that directives have been passed on to all FBR offices to show respect to traders; regular consultation sessions are being held with traders and the business community to make amendments aimed at facilitating taxpayers. Tribune. FBR’s actions on suspicious transactions comply with anti-money laundering law FBR has said that action under anti-money laundering law (AML) was taken only on the basis of suspicious transactions reports (STRs), brushing aside the concerns the law was being triggered without any evidence. The FBR was responding to consultants/practitioners’ apprehensions the FBR was acting on its own under AMLs and freezing bank accounts. It said that the objective of the FBR was not to compromise the dignity of taxpayer. The News. Gross debt to soar to 68.7% of GDP IN 2018: IMF The IMF’s report on “Fiscal Monitor, tackling inequality” has projected an increase in Pakistan govt.’s gross debt by 0.7% to 68.7% of the GDP in 2018 against 68% in 2017. The report further projects that after increase in govt.’s gross debt in 2018, it would decline to 68.2% in 2019. Similarly, the govt.’s revenue has been projected to increase to 16.2% of GDP in 2018 against 15.7% in 2017. BR. Army chief says economy showing mixed indicators Chief of the Army Staff has said that the army is keenly watching developments in the country’s economy and shares some of the apprehensions being voiced about it. Speaking to the business community, Army chief said that the economy is showing mixed indicators. Growth has picked up but the debts are sky high. The situation regarding infrastructure and energy have improved considerably but the current account balance is not in our favor, he claimed. Dawn. Ministry releases PKR 147.29Bn for 291 development projects in Q1 Ministry of Planning has released PKR 147.29Bn for 291 development projects during 1QFY18. However, Finance Ministry’s data showed that the utilization under PSDP stood at PKR 84Bn in 1QFY18 against released amount of PKR 147.2Bn. Almost 74% of the estimated outlay for CPEC is for energy sector. The News. CM orders to expedite work on Karachi package \ Sindh CM has said that with the completion of Karachi package phase I and starting of its phase II soon, not only would the ‘lights’ of the metropolis be fully restored, but it would also become a beautiful city of the country. These views were expressed by the chief minister while he was presiding over a meeting to review the progress of Karachi package. Dawn. Change Daily Crude (DE'17) Gold (NO'17) Gold (10g) Local Silver (NO'17) Cotton(KHI)-40 kg Kibor-6M 105.42 107.20 40,504 6.99 51.38 1,292.1 45,171 17.17 6,537 6.15% Forex Reserves 29-Sep $ Bn 19.76 -0.02% 0.28% -0.26% NM** 0.31% 0.23% 0.19% 0.32% 0.00% -0.02% WoW -1.44% YoY 1.05% 10.84% 22.19% -29.75% -102.10% 154.74% Jul-Sep 17 Remittances $ Bn 4.79 Jul-Sep 17 Exports* $ Bn 5.17 Jul-Sep 17 Imports* $ Bn 14.26 Jul-Sep 17 Trade Balance* $ Bn -9.09 Jul-Aug 17 Current Account $ Mn -2,601 Foreign Direct Inv. $ Bn 0.46 Jul-Aug 17 Jul-17 LSM Growth* % 12.98 % 3.39 Jul-Sep 17 Avg. CPI-FY18* Discount Rate % 5.75 Sep-17 WoW= week Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 155 GBP, 11-Oct-17, 138.7 145 135 125 EUR, 11-Oct-17, 124.3 115 105 95 Oct-16 USD Jan-17 GBP EUR Apr-17 USD, 11-Oct-17, 105.0 Jul-17 Oct-17 Source: KCCI Research ; Oanda.com Quote of the Day "To give without any reward, or any notice, has a special quality of its own." Anne Morrow Lindbergh Chart of the Day TOTAL ADVANCES OF SCHEDULED BANKS (STOCK) 7,000 4,565 3,831 4,000 4,283 5,000 5,120 6,000 3,723 FCA sets wheat production target at 26.46Mn tons The Federal Committee on Agriculture (FCA) has fixed the Rabi FY18 production target for wheat at 26.46Mn tons on 8.95Mn hectares. The meeting presided over by National Food Security Minister Sikandar Hayat Khan Bosan, the sugarcane production for FY18 has been estimated at 81.4Mn tons from 1.31Mn hectares, rice production is estimated at 7.3Mn tons from 2.88Mn hectares, maize production has been estimated at 5.3Mn tons from 1.24 Mn hectares. Pakistan has achieved self-sufficiency, rather exportable surplus in major crops by surpassing the targets both in terms of area under cultivation and production. The Nation. Value PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 3,415 PIA cuts Karachi-Bangkok fare by 40% PIA has announced a special offer of 40% discount on fare between Karachi and Bangkok which will remain valid till Nov. 30, 2017. The PIA as an introductory offer on its three weekly flights to Bangkok has reduced its fare along with free baggage allowance of up to 40 Kg per passenger. The Nation. Unit 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 11-Oct 3,270 Western route of CPEC: Panel recommends allocation of funds The govt. has urged for allocation of adequate funds for construction of roads in Balochistan province as well as Western route of CPEC. At the meeting of Functional Committee on Problems of Less Development Areas, it was stated that work on Western route of CPEC on – Park Zhob – Zhob- Quetta and Quetta-Sohrab Road, has not been started yet. The reason for the delay has been stated as allocation of PKR 15Bn only as against requirement of PKR 55Bn for purchase of land. BR. Date / Period 6,137 Don’t look at CPEC from Indian perspective, Pakistan asks US Interior Minister Ahsan Iqbal has urged the US to not to look at CPEC from the Indian perspective as it was an economic plan for bringing peace and stability to South Asia and adjacent regions and not a security strategy. He claimed that CPEC is not a conspiracy against anyone. It’s a plan for economic prosperity, which is bringing investment in the energy, infrastructure and other key sectors. Dawn. List of Indicators 3,000 2,000 Source: KCCI Research, SBP Value in PKR Bn Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk