Pakistan Daily Economy Update - 24 April

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1. Apr . 24, 2018 KCCI - eBulletin PKR 118.30/dollar: SBP warns speculators as rupee hits all-time low in open market The SBP has warned dealers against betting on depreciation of rupee, asking them to strengthen the embattled local currency as ample liquidity is available in the open market to meet foreign exchange demand. The Executive Director Banking Policy at the SBP also advised people to refrain from speculations/rumours and to avoid unnecessary purchasing of the US dollar, otherwise they will bear loss. He held an urgent meeting with officials of the exchange companies and expressed concerns over increasing rates of US dollar against rupee in the kerb market. The PKR slumped to an all-time low of 118.30 against the dollar in the open market on Monday (23rd Apr). The News. Govt. has no plan to devalue rupee: SBP The SBP has assured exchange companies that the govt. has no plans to devalue the PKR against the USD. During a meeting with representatives of exchange companies, SBP officials reiterated that there is no justification for a steep increase in the value of the USD, as there is no shortage of US dollar in the country and the supplies of cash US dollar are available in sufficient quantity with the central bank. They also committed adequate dollar supply as per demand for maintaining exchange rate at a reasonable level. BR. PML-N fails to get tax amnesty bills passed through NA panel The federal govt. has failed to get two of its endorsed bills passed from the National Assembly Standing Committee on Finance. The bills were tabled to seek the parliament’s nod for the recently promulgated tax amnesty scheme. However, the govt. still has a chance to get the amnesty scheme passed from the National Assembly by embedding related legal amendments in Finance Bill 2018 that it will table in the Assembly on Friday (27th Apr). The scheme is already in effect through promulgation of four Presidential Ordinances; the validity period of any ordinance is four months and the govt. has offered the scheme only for 80 days. Despite the bills’ rejection, legally, the scheme will still be considered valid. Tribune. NA body urges govt. to present budget for only four months The govt.'s problems for seeking approval of the budget for the entire FY19 deepened after some members of the ruling party joined opposition members in their move to prevent the outgoing govt. from presenting full fiscal year budget. During a meeting of National Assembly Standing Committee on Finance, chairman Qaiser Ahmed Sheikh and another member of the ruling party supported a resolution that recommended the govt. to present budget for only four months. Later this resolution was accepted with a majority vote. BR. Budget outlay set to rise to PKR 5.7Tn With addition of PKR 180Bn in project aid and PKR 100Bn allocation for public-private partnership (PPP) investments, the total development programme for FY18 is being pitched at PKR 2.043Tn and overall federal budgetary outlay at PKR 5.7Tn. PM Abbasi is to preside over a meeting of the National Economic Council today (24th Apr’18) to finalize the estimated development programme including a federal PSDP of PKR 1.03Tn and provincial ADP worth PKR 1.01Tn. Dawn. PKR 1.5Tn liabilities to be parked outside budget The Finance Ministry has said that the federal govt.'s liabilities of power sector's circular debt, outstanding refunds and rebate, PSEs' debt and circular debt of LNG (totaling around PKR 1.5Tn) will be parked outside the budget for FY19, owing to their impact on the fiscal deficit. This was disclosed during a meeting of National Assembly Standing Committee on Finance. However, PKR 10 20Bn will be earmarked in the budget as arrangement cost for circular debt resolution. BR. PM steps in to resolve K-Electric-SSGC row PM Shahid Khaqan Abbasi has stepped in to resolve the tussle between the K-Electric and SSGC, bringing a possible end to the electricity crisis that crippled Karachi for about a month. Abbasi, after a meeting of the Cabinet Committee on Energy, stated that gas will be supplied to KE as and when needed. The govt. also constituted a committee, headed by the PM’s Adviser on Finance Miftah Ismail, to settle the issue of outstanding payments between KW&SB, KE and SSGC within 15 days. Abbasi also said that complete eradication of load shedding is possible only after 100% recovery of bills is made. He hoped that the water shortage issue would also be resolved after improvement in the electricity demand and supply gap. After the meeting, gas supply to KE increased to 130mmcfd from 90mmcfd, improving the power supply in the city. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 23-Apr 115.62 118.15 0.00% 0.51% Crude (JU'18) 23-Apr 23-Apr 23-Apr 23-Apr PKR PKR Pts. $ Mn $/bbl 45,372 -2.13 68.92 0.25% NM** 1.16% Gold (MY'18) Gold (10g) Local 23-Apr 23-Apr $/oz PKR 1,322.3 51,183 -0.93% -0.31% Silver (MY'18) Cotton(KHI)-40 kg 23-Apr 23-Apr $/oz PKR 16.60 8,038 -3.07% -1.31% Kibor-6M 23-Apr % 6.52 $ Bn 17.55 0.00% WoW -0.53% Remittances 13-Apr FY18 Jul-Mar 18 $ Bn 14.61 YoY 3.55% Exports* Imports* Jul-Mar 18 Jul-Mar 18 $ Bn $ Bn 17.08 44.38 13.08% 15.57% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Mar 18 Trade Balance* $ Bn -27.30 Jul-Mar 18 Current Account $ Mn -12,029 Foreign Direct Inv. $ Bn 2.09 Jul-Mar 18 Jul-Feb 18 LSM Growth* % 6.24 % 3.20 Jul-Mar 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; -17.18% -50.55% 4.44% Major Currencies 175 GBP, 23-Apr-18, 162.0 165 155 145 EUR, 23-Apr-18, 141.7 135 125 115 USD, 23-Apr-18, 115.8 105 95 Apr-17 Jul-17 GBP USD EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "If you are not willing to risk the usual, you will have to settle for the ordinary." \ Interior minister tells KE to activate all its power generation plants at once Jim Rohn Blaming the K-Electric for the prevailing power crisis in Karachi, Planning Minister Ahsan Iqbal has asked the utility service to immediately make all its generation plants functiona. He said that after the premier’s intervention, the power utility service should immediately start its closed generation plants to end the prevailing electricity crisis in the city. He maintained that a few decisions cannot derail the country from its path towards prosperity, and claimed that the country is moving in a positive direction despite the recent ups and downs. The News. Chart of the Day TRUCKS VS. BUSES SALE IN PAKISTAN 50MW power station for K-IV bulk water supply scheme approved A meeting of the Public Private Partnership Policy Board of the Sindh govt. has approved the establishment of a 50MW power station for the K-IV Greater Karachi Bulk Water Supply Scheme, near the Keenjhar Lake. Phase-I of the project envisages bringing 260mgd of water to Karachi and that the project requires 50MW of power to meet its energy needs. The plant is expected to be supplying power through transmission lines. The News. 8,000 FBR mulls sales tax hike for steel industry The FBR is considering an increase in sales tax on steel industry to PKR 15/electricity unit from the existing PKR 10.5/unit to bring it at par with other sectors. Current sales tax for steel melters is much lower than the standard rate. The FBR calculates sales tax on the steel sector on per unit of electricity consumed, considering that 800 units of electricity are required for one ton of steel. The News. 4,000 Caution and optimism at CPEC conference Federal Commerce Secretary Younus Dagha has that said FTAs are the main reason behind surging trade deficits of the country. However, if CPEC related imports are growing under capital goods then this is not a serious concern, he said while addressing the 2day CPEC Summit, organised in collaboration with Ministry of Planning. Loan repayments will increase Pakistan’s balance of payments deficit with China, but we can persuade Beijing to set up industries in Pakistan instead of other countries which would help bridge the gap. Investments in trade should be at high priority instead of brick and mortar investments, he added. CEO of China Harbor Engineering Company said there is a need to upgrade technology in the industries of Pakistan besides changing business models towards latest communication technology. Dawn. Textile exports increase to $ 9.9Bn Exports of textile and clothing products recorded a 7.7% growth year-on-year to $9.99Bn in 9M FY18. The main driver of growth was the value-added textile sector as exports of ready-made garments went up 12.56% during the period while those of knitwear edged up 14.12%. Exports of bedwear went up 4.99%. Dawn. 7,499 7,000 6,000 5,000 3,000 2,000 1,000 0 6,796 5,550 4,111 1,948 510 FY13 2,663 577 FY14 569 FY15 TRUCKS 1,017 FY16 1,130 FY17 509 9MFY18 BUSES Source: KCCI Research, PAMA 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