Pakistan Daily Economy Update - 1 February

Transcription

1. Feb . 1, 2017 KCCI - eBulletin Debt fears overblown, says Dar In a long and detailed rejoinder to his critics, Finance Minister Mr. Dar has said that the country’s debt profile is in fact improving, and “predictions of doomsday scenario for Pakistan” regarding public debt are overblown. He said that previous government contracted net debt of PKR 7,833Bn (19% growth) during its term and by contrast, the same figure for the three years of his own government is 9.75%. From FY13 to FY16, the Net Debt-to-GDP ratio has remained unchanged at 60.2%, thus showing no further deterioration, which is a clear sign of improved debt sustainability. Pakistan will continue adding to its debt stock, he argues, because as a developing country it must run deficits in order to support growth. Dawn. Minister confident Pakistan can pay back Chinese loans Planning, Development and Reform Minister Ahsan Iqbal has said that Pakistan will be able to handle repayment of Chinese soft loans to the govt. and businesses, which are part of more than $ 50Bn projects under CPEC. He said that, the bulk of investment coming into CPEC is through private sector investment, foreign-direct-investment, therefore it will not disturb our debt-to-gross domestic product ratio. The size of the Chinese-led investment projects has increased to about $ 55Bn from an initial $ 46Bn announced in 2015. Tribune. NAB signs MoU with China National Accountability Bureau (NAB) has signed a Memorandum of Understanding (MoU) with China to ensure co-operation and oversee transparency in CPEC projects in Pakistan. In this regard, NAB has implemented Internal Accountability Mechanism (IAM) within NAB with a view to weed out such elements that for reasons of inefficiency, misconduct, malpractice and violation of laid down Rules and bring a bad name to the organization. BR. Govt. revenues: Tax collection rises 7%, but falls short of target The tax collection rose 7% to roughly PKR 1.69Tn in 7MFY17, falling short of the target by around PKR 140Bn. The govt. has set the annual tax target at PKR 3.62Tn, which is 16% higher than the revenue receipts in FY16. In terms of growth, the July-January tax collection was 6.9% higher than 7MFY16 when the FBR received PKR 1.58Tn. It needs a 16% growth to achieve the annual target. Tribune. Petrol price increased by only PKR 2.25, HSD PKR 2.26 per liter The govt. has increased petrol prices by PKR 2.25/liter and High Speed Diesel (HSD) by PKR 2.26/liter which will be effective from Feb. 1 – 15, 2017. In order to maintain the prices of both kerosene oil and LDO at current levels, the govt. would not only forego all applicable taxes and duties on them but would also give subsidy to the consumers. BR. Q1: External debt rises by $ 1Bn In its fiscal policy statement 2016-17, Finance Ministry’s Debt Policy Co-ordination Office revealed that Pakistan's external and domestic debts have increased by $ 1Bn and PKR 772Bn respectively during 1QFY17. The significant rise in external public debt is attributed to mobilization of $ 1.83Bn mainly from commercial banks ($ 900Mn). BR. Budgetary spending increases by 3% According to Fiscal Policy Statement 2016-17, the total expenditure stood at PKR 1.3Tn, which resulted in a fiscal deficit of 1.3% of GDP, slightly up from 1.1% recorded in 1QFY16. Total revenue witnessed a decline of 8% at PKR 862Bn as compared to PKR 937Bn last year. Similarly, the non-tax revenue also fell by 42% at PKR 123Bn during 1QFY17. BR. Sindh, Punjab still at odds over IDC collection Punjab Finance Minister Dr. Ayesha has acknowledged that meetings with the federal government to resolve the issue of the Infrastructure Development Cess (IDC) collection with the Sindh government failed to bear fruit. The minister said she asked the Punjab Revenue Authority (PRA) chairperson to take up this matter with the Sindh Revenue Board (SRB) next week to avoid a persistent loss of provincial revenues. Dawn. Cronyism led to selective lending, cost GDP 1.6% A report by the World Bank reveals that politically connected firms in Pakistan received 45% more credit than others between 1996 and 2002. Such loan recipients were less productive and had 50% higher default rates. Based on the productivity gap between firms, the annual cost of this credit misallocation could have been as high as 1.6% of GDP. Dawn. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (MA'17) Gold (FE'17) Gold (10g) Local Silver (FE'17) Cotton(KHI)-40 kg Kibor-6M 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan 31-Jan PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.84 104.80 48,758 -6.66 52.80 1,211 42,728 17.58 7,218 6.12% Forex Reserves 20-Jan $ Bn 23.25 0.00% -0.19% -0.44% NM** 0.21% 1.17% 0.00% 2.57% 0.00% 0.01% WoW 0.24% YoY -2.27% -3.82% 10.10% -22.20% -92.23% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Dec 16 Remittances $ Bn 9.46 Jul-Dec 16 Exports* $ Bn 9.91 Jul-Dec 16 Imports* $ Bn 24.40 Jul-Dec 16 Trade Balance* $ Bn -14.49 Jul-Dec 16 Current Account $ Mn -3,585 % 3.88 Avg. CPI-FY17* Jul-Dec 16 Jan-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 Jan-16 GBP, 31-Jan-17, 130.9 EUR, 31-Jan-17, 112.3 USD, 31-Jan-17, 104.6 Apr-16 USD GBP Jul-16 EUR Oct-16 Jan-17 Source: KCCI Research ; Oanda.com Quote of the Day Moving quickly: To qualify for $ 300Mn, ECC approves infrastructure finance policy The govt. has approved a new infrastructure finance policy to attract private investment in the public sector, fulfilling one of the remaining conditions of the World Bank (WB) imposed on Pakistan for approval of $ 300Mn loan, loan will help meet the external account financing needs. The Economic Coordination Committee (ECC) of the Cabinet has approved the policy aimed at getting the $ 300Mn loan by Mar’17. Tribune. "'An investment in knowledge pays the best interest." Outstanding bills: Receivables of oil, gas firms swell to PKR 338Bn The Ministry of Petroleum and Natural Resources has sought intervention of Prime Minister Nawaz Sharif to stave off imminent default on the part of oil and gas supplying companies as their receivables from power producers swell to PKR 338Bn. In a summary, the petroleum ministry also asked the premier to direct the Ministry of Water and Power to immediately release the money for clearing the dues of oil and gas supplier. However, Power producers have delayed payments to the oil and gas suppliers. Tribune. Chart of the Day Government to prioritize domestic investors as it resumes privatisation drive The govt. aims to raise $ 350Mn from the sale of a stake in Kot Addu Power Company and will also re-launch a share sale in OGDLC but only to domestic investors. In this regard, Chinese and Iranian companies have shown interest but Pakistani companies like Amerli Steel, Arif Habib Corporation and the Yunus Brothers Group, would be given an equal opportunity to bid. In case of planned sale of a 40% stake in KAPCO, Chinese companies showed by far the most interest during roadshows in Istanbul, Dubai and Beijing in Oct.’16. BR. SME Bank sell-off process finalized Chief Executive Officer of SME Bank Ihsan ul Haq has said that govt. has finalized the privatisation process of Small & Medium Enterprises Bank as it suffered heavy financial losses of PKR 400Mn per year in 2014 and couldn't fulfil the objectives for which it was created. In this regard, Public Accounts Committee (PAC) has also supported the idea of privatizing the SME Bank and directed the authorities concerned to complete the process as early as possible. BR. Corporate results: Fauji Fertilizer posts profit of PKR 11.78Bn, down 30% Fauji Fertilizer Company Limited (FFC) has announced a profit of PKR 11.78Bn (EPS: PKR 9.26) in 6MFY17, down 30% compared with PKR 16.76Bn (EPS: PKR 13.18) in 6MFY16. The company has announced a final cash dividend of PKR 2.75 per share, taking cumulative dividend for the year to PKR 7.90 per share. Tribune. 600 500 400 300 200 100 0 -19.1 -16.8 -12.2 -10.9 -6.8 -5.5 -0.6 0.1 0.1 0.1 0.2 0.4 0.6 0.8 1.6 1.8 3.2 6.5 12.8 13.5 16.3 17.9 20.3 20.7 23.7 35.5 77.4 86.2 134.4 211 CNG sector should deposit GIDC into exchequer: Khaqan Petroleum Minister Shahid Khaqan Abbasi has said that the govt. has no power to waive any tax and the CNG sector will have to pay the amount which it has collected from consumers on account of Gas Infrastructure Development Cess (GIDC). The Minister has further said that PKR 40Bn are pending against the CNG sector including the LPS (Late Payment Surcharge). BR. Repatriation of Profit on Foreign Investment-By Sector 6MFY17 467.4 Rice exporters: Commerce minister promises 50% subsidy for brand promotion Commerce Minister Khurram Dastgir has stated that the govt. is willing to give a 50% subsidy to those rice exporters who are exporting rice under their own brand name. He said that the ministry is working on geographical indication law, which will be implemented soon. Whereas, the rice exporters have demanded the govt. include rice exporters in zero rated sales tax regime on utility bills and withholding tax on supply of electricity. Tribune. Benjamin Franklin -100 -200 Value in USD Mn Source: KCCI Research, SBP 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