Pakistan Daily Economy Update - 10 August

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1. August 10 , 2022 KCCI - eBulletin SBP, govt. did not directly intervene to bring dollar down, says finance minister Finance Minister Miftah Ismail clarified on 6th Aug’22 that neither the SBP nor had he “directly intervened” to bring US$’s value down, stating that it was influenced by market factors. Addressing the Karachi Chamber of Commerce and Industry (KCCI), the finance minister also doubled down on the govt.’s decision to curtail imports for the next three months, stating that it was a necessity. However, the minister said authorities were working on identifying items used by exporters for manufacturing products and their import would not be stopped. He assured that the govt. had not stopped payments on LCs that had been opened in the past and would not do so in the future either. Dawn-Sun. 2 Islamic savings schemes launched Central Directorate of National Savings will launch two Shariah-compliant schemes — Sarwa Islamic Savings Account (SISA) and Sarwa Islamic Term Account (SITA) — from Sept’22. While SISA will have no tenor and will remain valid for principal payment and profit payment thereof, SITA will comprise four different tenors — one, three, five and 10 years. Dawn-Sun. Banks to issue e-PRC SBP on 6th Aug’22 said that a customer will receive an electronic Proceeds Realization Certificate (e-PRC) instantly after credit of funds to the account from abroad in PKR. The banks will also issue a statement of PRC (S-PRC) electronically to their customers, mentioning all remittances received by them from abroad during the year. Dawn-Sun. Trade deficit with neighbors widens in FY22 Pakistan’s exports to nine regional countries rose 16.97% while imports grew by nearly 28.84% in FY22 as compared to FY21, the latest data released by SBP showed. The country’s exports to Afghanistan, China, Bangladesh, Sri Lanka, India, Iran, Nepal, Bhutan and the Maldives account for a small amount of $ 4.590Bn — just 14.43% of Pakistan’s total global exports of $ 31.79Bn in FY22. On the other hand, imports from these countries edged up to $17.814Bn in FY22 against $ 13.826Bn over FY21, an increase of 28.84%. Dawn-Tue. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 5-Aug 9-Aug PKR PKR 224.04 218.75 -0.94% 0.00% KSE-100 index FIPI 5-Aug 5-Aug Pts. $ Mn 42,096 0.46 1.62% NM** Crude Oil 9-Aug $/bbl 90.47 -0.32% Gold 9-Aug $/oz 1,805.2 -0.30% Gold (10g) Local 9-Aug PKR 128,520 0.00% Silver 9-Aug $/oz 20.50 -0.57% Cotton(KHI)-40 kg 5-Aug PKR 18,219 -2.86% Kibor-6M 5-Aug % 15.89 -0.01% Forex Reserves 29-Jul $ Bn 14.21 WoW -1.42% Jul-Jun 22 $ Bn 31.24 6.36% YoY Remittances Exports* Jul-22 $ Bn 2.22 -4.76% IFC doubles trade financing in Pakistan International Finance Corporation of the World Bank invested and mobilized about $ 680Mn in Pakistan in short- and long-term financing in FY22 which included a record $ 485Mn in commitments through IFC’s Global Trade Finance Program to enable the import of essential goods and services, more than double the amount of FY21, the IFC says. Dawn-Sun. Imports* Jul-22 $ Bn 4.86 -10.48% Jul-22 $ Bn -2.64 14.77% Jul-Jun 22 Jul-Jun 22 $ Bn $ Bn -17.41 1.87 -839.8% 1.13% ADB to provide $ 200Mn for resource mobilization program ADB will provide a loan of $ 200Mn to Pakistan, under ‘Improved Domestic Resource Mobilization Reform Program’, to help the govt. address major binding constraints in mobilizing larger resources to enhance productive investment through mobilization and utilization of domestic savings and FDI. Dawn-Mon. Jul-May 22 LSM Growth* % 7.10 % 24.93 Jul-22 Avg. CPI Discount Rate % 15.00 Jul-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year EU sees little cooperation between govt. and parliament The duration of the new ‘Multi-Annual Indicative Program (MIP) is of 7 years, from 2021-2027, and will be implemented in two phases with a mid-term review of progress taking place in 2024. An initial grant of € 265Mn has been specified by EU for this reason. Dawn-Tue. ECC approves PKR 5Bn TSG for NDMA A special meeting of the ECC of the Cabinet, approved PKR 5Bn Technical Supplementary Grant (TSG) for NDMA rescue, relief, and compensation for death and injuries of the victims of the floods-2022. BR-Sun SBP allows NRPs to contribute to pension funds SBP has allowed Non-Resident Pakistanis (NRP) to contribute in pension funds, authorized by the SECP under Voluntary Pension Funds Rules 2005 (VPS Rules). BRTue Govt. asked to begin gas reforms, set up transmission firm Ogra has asked the govt. to immediately create a National Gas Transmission Company (NGTC) classified as a “strategic asset” to begin with gas sector reforms. Ogra has also sought the federal govt.’s policy guidelines regarding the extension of transmission and distribution networks in new towns and villages. Dawn-Tue. Advance tax on immovable property: FBR withdraws holding period exemption FBR has withdrawn the holding period exemption for the collection of advance tax on sale or transfer of immovable property. Sub-section (3) of section 236C of the Income Tax Ordinance, 2001 has been omitted. BR-Tue Miftah directs immediate meeting to consider SOEs declaring 'healthy dividends' Finance Minister has directed that a meeting be held immediately to consider the matter of state-owned enterprises (SOEs) declaring healthy dividends as it would “result in income and taxation revenue for the govt.”, according to a statement by the PSX. BR-Tue Rate of return on saving certificates revised Central Directorate of National Savings (CDNS) has revised the rate of return on Savings Accounts by 125 bps to 13.50%, by 24 bps to 12.60% on Regular Income Certificates (RIC). Whereas, the rate of profit on Behbood Savings Certificates (BSC), Pensioners Benefit Account (PBA), Special Savings Certificates (SSC), and Defense Saving Certificates (CDS) remained unchanged. Tribune-Sun. Trade Balance* Current Account Foreign Direct Inv. Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Aug-21 GBP, 9-Aug-… EUR, 9-Aug-22, 224.9 USD, 9-Aug-22, 218.8 USD Nov-21 GBP Feb-22 EUR May-22 Aug-22 Source: KCCI Research Quote of the Day “The journey of a thousand miles begins with a single step. ” \ Power shortfall again hits 6,439 MWs The electricity shortfall across the country has again reached 6,439 MW, causing power outages of 6-8 in cities and 10-12 hours in rural areas. Tribune-Mon. Lao Tzu ADB declares 23% locomotives defective ADB has given suggestions for improving the railway sector of Central Asian countries, including Pakistan, as the condition of 23% of railway locomotives and 24% of wagons in Pakistan has been declared as poor. Tribune-Tue. IMPORTS OF MINERALS, FUEL LUBRICANTS AND RELATED MATERIAL FROM FY17 TO 3MFY22 (PKR BN) Securities deals: Insurance cos to unveil policy to check ‘insider trading’ SECP on 5th Aug’22 issued S.R.O.1013(I)/2022 to order every insurance company to issue employee’s trading policy governing trading or investment in securities by its employees, their spouse and dependent children for checking ‘insider. BR-Sun FBR revises customs values on import of stationery items Directorate General of Customs Valuation Karachi has revised customs values on the import of stationery items from China, Vietnam, Europe, Japan, USA and Canada for accurate assessment of duties and taxes. In this connection, the FBR directorate has issued a new valuation ruling. BR-Sun PD organizations required to follow PPRA rule-47 Transparency International-Pakistan (TIP) has urged the Power Division to direct all its attached organizations to follow PPRA rule-47 and provide its procurement documents to PPRA for evaluation. BR-Mon. 3MFY22 FY21 Inter-governmental commercial transactions law: Govt. deletes some proposed clauses The govt. has deleted some clauses proposed in Inter-Governmental Commercial Transactions Act, 2022, after reservations expressed by some of the cabinet members. The govt. intends to sell some public sector entities to friendly countries as Privatization Commission has failed to sell-off/ materialize any key transaction. BR-Mon. FY20 Unit-linked funds of insurance sector: SECP defines investment avenues SECP has issued SRO 1014(I)/2022, to amend the Unit-Linked Product and Fund Rules, 2015, and has defined investment avenues for the unit-linked funds of the insurance sector for making investment in securities including government securities and Sukuks.. BR-Mon. FY18 Bids for restoring Gwadar Port’s operational depth to be opened on 16th To restore Gwadar Port’s operational depth, more than 6 companies including Chinese enterprises have come forward as their final applications have been submitted for the official bidding to be opened on 16thAug’22. BR-Mon. Onward payment to PSO, PPL: DG (Gas) writes to PD for payment of TDS to KE The Director General (Gas) Petroleum Division has approached the Power Division for early release of Tariff Differential Subsidy (TDS) to KE for onward payment to PSO and PPL against supply of RLNG. BR-Tue Disposal of confiscated vehicles: FTO directs FBR to approach ECC FTO has directed FBR to approach the ECC of the Cabinet for the disposal of confiscated vehicles with tempered chassis numbers to the registered philanthropic organizations for carrying out philanthropic activities. This has been recommended in the FTO’s special report to the Board on the stuck-up auction-able goods/ vehicles pending with the FBR. BR-Tue 942.1114 FY19 FY17 4906.506 1851.5249 2176.5093 1754.6751 1237.0437 Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.