Pakistan Daily Economy Update - 27 April

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1. Apr . 27, 2018 KCCI - eBulletin Govt presents Budget 2018-19 today at twilight of its tenure Amid lingering controversy over the legality of federal budget 2018-19, the govt. is going to unveil its 6th consecutive budget in the National Assembly today (27th Apr) at the twilight of its tenure. The budget will be an all-out effort to build a narrative for winning the next general election. The biggest challenge facing the country in the next fiscal year will be arranging dollar inflows of $20Bn in the wake of rising current account deficit and meeting obligations of debt servicing. Alone in 1HFY19, Pakistan will have to pay back $ 6Bn, including $ 2Bn on maturity of Eurobond. With expected outlay of budget close to PKR 5.5Tn for FY19, the govt. envisages FBR’s revenue target of PKR 4.435Tn and non-tax revenue target close to PKR 1Tn. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 26-Apr PKR PKR 115.62 118.45 0.00% -0.21% Pts. $ Mn $/bbl 45,461 1.57 68.22 -0.56% NM** 0.26% USD-Interbank USD-Open MKT Economic Survey unveiled: Economy set to record fastest growth in 13 years The govt. has acknowledged that increasing exports has been an enormous challenge; however, in spite of sustained export growth, the current account deficit widened to $ 12Bn in 9MFY18 as opposed to $ 8Bn in 9MFY17. Speaking at the launching of Pakistan Economic Survey 2017-18, Advisor to the PM on Finance Dr. Miftah Ismail stated that foreign exchanges reserves have been declining as a consequence of the widening current account deficit, which have raised serious questions over $ 16Bn projection for FY18. The advisor also acknowledged slippages on fiscal deficit and stated that fiscal deficit will be 5.4% for FY18 against the target of 4.3%. Growth will be 5.8% as opposed to target of 6%, claiming it was the highest in 13 years. Agriculture sector will grow by 3.8%, while LSM growth remained at 6.25% which is the highest during the last 10 years while FBR tax collection has increased to PKR 3.94Tn during the last five years. BR. Crude (JU'18) 26-Apr 26-Apr 26-Apr 26-Apr Gold (MY'18) Gold (10g) Local 26-Apr 26-Apr $/oz PKR 1,318.2 50,700 -0.16% -0.67% Silver (MY'18) Cotton(KHI)-40 kg 26-Apr 26-Apr $/oz PKR 16.60 8,038 0.47% -1.31% Kibor-6M 26-Apr % 6.51 $ Bn 17.13 -0.01% WoW -2.37% Pace of growth in revenue remains slow during 2017-18 The pace of growth in revenue remained slow during FY18 as compared to FY17, primarily due to low FBR tax revenues and provincial taxes, according to the Economic Survey 2017-18. In fact, various tax incentives and relief measures to encourage investment, exports and domestic production added to the slower growth in tax revenues during FY18. Overall tax revenues posted a growth of 8.4% against an impressive growth of 21.3% recorded in FY17. FBR tax collection is to grow by 8.2% in FY18 as compared to a remarkable growth of 20.2% witnessed in FY17. In terms of GDP, tax revenues are expected to reduce to 12.4% in FY18 from 12.6% recorded in FY17. Similarly, taxes collected by the provincial govts. are to grow by 13.6% during FY18 against an impressive growth of 37.6% in FY17.BR. Remittances 20-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% Tax exemptions, concessions cost govt. PKR 541Bn Total tax exemptions and concessions to various sectors, lobbies/groups, investors and Chinese imports have cost the govt. PKR 541Bn during FY18 as against PKR 416 in FY17, reflecting an increase of PKR 125Bn. Total cost of exemptions granted on imports from China caused accumulative revenue loss of PKR 32Bn while the cost of exemption of customs duty granted to Chinese imports under CPEC caused a revenue loss of PKR 397Mn. The cost of sales tax exemptions is to total PKR 281Bn in FY18 against PKR 250Bn in FY17; income tax, PKR 61.78Bn against PKR 14Bn and cost of customs duty exemptions is PKR 198Bn against PKR 152 in FY17. BR. Economic Survey sans rate of unemployment The Economic Survey of Pakistan 2017-18 has not computed the rate of unemployment for the ongoing FY18 though it is of critical importance. Economic Survey 2016-17 gave the unemployment rate at 6% for rural areas and 8% in urban areas. Total population of Pakistan increased by 57% to 207.77Mn with an average annual growth rate of 2.4% during 1998-2017, as recorded in the recently held 6th Census. Unlike previous Economic Surveys, the labor force statistic, which is an important input for policy and planning purposes, has also not been tabulated in the Survey 2017-18. The Survey for 2016-17 revealed that Pakistan has 60% economically active population or work force. BR. Country’s installed electricity capacity increases by 30pc to 29,573MW Economic Survey 2017-18 unfolds that Pakistan’s installed generation capacity has surged up to 29,573MW by Feb’ 18 which stood at 22,812MW in Jun’13, showing a growth of 30%. As far as the transmission and distribution losses are concerned, it says that average losses were at 18.9% in 2013 which have now reduced to 17.9%. Recovery of billed amount of electricity sold to consumers stood at 89.6%. Due to significant improvement in the energy mix, the country’s reliance on expensive oil has been reduced. The News. Pakistan’s literacy rate stands at 58% Pakistan’s overall literacy rate remains static at 58%, with literacy rate of males at 70% and 48% for females. Due to the Population and Housing Census, the Pakistan Social and Living Standards Measurement was not carried out for FY18. Therefore, the Economic \ Survey says that figures for FY16 should be considered for FY18 as well. The national net enrollment for primary level for overall Pakistan stood at 54% while Punjab leads with 59%, followed by KP 53%, Sindh by 48% and Balochistan 33%. Public expenditure on education are estimated to be 2.2% of GDP as compared to 2.3% of GDP in FY16. The News. ECC approves PKR 1.733Bn Ramazan Package The ECC of the Cabinet has approved PKR 1.73Bn Ramazan Relief Package to provide subsidy on 19 items through Utility Stores Corporation (USC). A meeting of the ECC, chaired by PM Abbasi, decided to provide the subsidy on flour, sugar, cooking oil/ghee, grams, basen, dates, rice, squashes, milk and tea. BR. Identify those who have repatriated dollars, SC asks SBP The Supreme Court (SC) has directed the governor State Bank of Pakistan (SBP) to provide particulars of persons who have repatriated abroad $ 50,000 or more in the last one year. The SC inquired from SBP Governor Tariq Bajwa whether the central bank has information about people who have sent money abroad to which the governor replied that they have details of such people but the information is confidential under Section 5(3) of the Protection of Economic Reforms Act 19992. The court asked him to provide the list of such people in a sealed envelope on the next date of hearing, while questioning the basis on which the amnesty scheme was launched by the govt., as there is no information about the assets and banks accounts held by Pakistanis abroad. BR. 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; Major Currencies 175 GBP, 26-Apr-18, 161.3 165 155 145 EUR, 26-Apr-18, 140.6 135 125 115 USD, 26-Apr-18, 115.7 105 95 Apr-17 Jul-17 GBP USD EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "The only limit to our realization of tomorrow will be our doubts of today." Franklin D. Roosevelt Chart of the Day Pakistan's GDP Growth Rates 7.00% 6.00% 5.50% 5.00% 4.10% 5.00% 3.84% 3.62% 4.00% 2.00% Forex reserves fall to $ 17.13Bn Pakistan’s foreign exchange reserves fell to $ 17.13Bn during the week ended 20th Apr’18 from $ 17.55Bn a week ago, SBP data shows. Foreign exchange reserves held by the SBP dropped to $ 10.92Bn while reserves of commercial banks rose to $ 6.21Bn. The News. 0.00% 1.00% 3.65% 4.05% 5.40% 5.80% 6.20% 4.50% 2.60% 3.00% Bank holiday The State Bank of Pakistan and all banks will remain closed on 1st May’18 (Tuesday) on the occasion of "Labour Day" as declared by the Govt. of Pakistan. BR. Lucky Cement plans domestic, global investments to enhance capacity Lucky Cement Limited, one of the largest cement maker in the country has said that it plans new international and local investments worth around PKR 30Bn to enhance its production capacity. The company has decided to increase the cement production capacity of its brownfield project in KP and to setup a greenfield clinker production unit in Samawah, Iraq. The capacity of Pezu Plant, KP would be increased by 2.60mtpa at an investment of PKR 17.50Bn, whereas the clinker production facility of 1.20mtpa capacity at Samawah would be setup at an investment of PKR 12.6Bn ($109Mn). Both the projects would be completed by the 4QFY20.The News. -17.18% -50.55% 4.44% 0.40% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18P FY19T *P = Projected, T= Targeted Source: KCCI Research, Eco Survey 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