Pakistan Daily Economy Update - 10 May

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1. May . 10, 2017 KCCI - eBulletin Islamabad, Tehran to trade in euro or yen In order to facilitate trade between Pakistan and Iran, SBP and Bank Markazi Jomhouri Islami Iran (BMJII) have devised a Banking and Payment Arrangement mechanism where euro or JPY will be eligible for settlement. Under this mechanism for import payments by Pakistan, importer's bank in Pakistan will credit the foreign exchange (ie the amount due under L/C) in Nostro account of the SBP for onward payment to the exporter in Iran and inform the same to the SBP. Upon confirmation of funds receipt in Nostro account, SBP will instruct BMJII to pay the exporter's bank for onward payment to exporter in Iran. BR. IMF Regional Outlook: CPEC to boost investment A new IMF report on regional outlook has noted that foreign-financed infrastructure spending is a key driver in propelling growth in oil importing countries, including Pakistan where development of CPEC will boost investment. IMF Regional Outlook report has clubbed Pakistan with MENAP region where regional growth is expected to increase from 3.7% in 2016 to 4% in 2017 and to 4.4% in 2018. The report has further noted that among the regional countries, growth will be particularly robust in Djibouti and in Pakistan, mainly owing to the investment under CPEC. BR. China’s $ 55Bn investment to boost economic development Federal minister for commerce Khurram Dastgir Khan has said that $ 55Bn Chinese investment in CPEC projects has boosted pace of Pakistan’s economic development. During a meeting with his Qatari counterpart, the issues that came up for discussion include; balancing the Pak-Qatar trade, lifting the ban on procuring Pakistani origin rice through the tenders floated by the government of Qatar, facilitating business visas, fulfilling commitment made by the Emir of Qatar to give 100,000 visas to Pakistani workers, and expediting first meeting of Pak-Qatar Joint Business Council. The News. FBR launches digital directory for withholding agents FBR has launched a digital directory across the country for the withholding agents. The directory would serve as a Management Information System (MIS) to monitor real-time tax collection received under various sections of withholding tax. The system has the capability to analyze current withholding data with historical withholding collections. It enables FBR to broaden the withholding tax regime by enforcing the withholding agents to compliance with the tax laws. The Nation. Provincial tax collection grows 23.48% in 9 months Tax collection by all the provinces has posted 23.48% growth to PKR 230.54Bn during 9MFY17 as against PKR 186.7Bn during 9MFY16. Main contributor in the provincial revenue was sales tax on services, which grew 31% during the period under review. The sales tax on service collected by all the provinces stood at PKR 118.74Bn during 9MFY17 as compared to PKR 90.67Bn during 9MFY16. The Punjab Revenue Authority has collected PKR 54.75Bn, depicting 36% growth as compared to the collection of PKR 40.25Bn. Similarly, Sindh has also posted 22% growth, as it collected PKR 53.35Bn in 9MFY17. KP and Balochistan are in their initial stages, but managed to collect PKR 7.79Bn and PKR 2.84Bn, respectively, during 9MFY17. The News. Goods carriers’ strike enters second day A strike by intercity goods carriers entered its second day on 9th May‘17, with five representative bodies of transporters operating in other parts of the country expressing solidarity with them. The transporters went on strike on Monday in protest against the restriction imposed by the SHC on the movement of heavy vehicles in Karachi. Transporters said they could not run their vehicles in Karachi due to the imposition of Section 144 and harassment by the police. Transporters claims that goods carriers had to take longer route which has increased their cost to PKR 35,000 from PKR8,000. Dawn. $ 1.32Bn borrowed from foreign banks In a bid to keep foreign currency reserves at a historic high, federal govt. borrowed $ 1.32Bn from foreign commercial banks during 10MFY17 as compare to budgeted figure of $ 2.01Bn from foreign commercial banks during FY17. The govt. also borrowed $ 300Mn from Industrial and Commercial Bank of China during the period. Moreover, Finance Ministry has finalized arrangements for $ 600Mn commercial loan from two Chinese banks to be utilized for balance of payments and budgetary support and received $ 300Mn in Jan.’17. BR. Moody's says Pakistan's external debt will increase to $ 79Bn Moody’s Investors Service has predicted that Pakistan’s external debt will grow to $ 79Bn by Jun’17, higher than initial estimates suggested, and the country’s weak fiscal strength will weigh in on its ability to afford the ever growing debt burden. In its latest report, Moody’s Investors Service – the international credit rating agency – said that Pakistan’s challenges include a relatively high general govt. debt burden, weak physical and social infrastructure, a fragile external payments position and high political risk. Tribune. Controversial amendments to Nepra law: Centre, provinces reach agreement The federal govt. and provinces have reached an agreement on controversial amendments in the Nepra Act called 'Generation, Transmission and Distribution of Electricity Act, 1997 (Act XL of 1997)'. The key differences between the Ministry of Water and Power and provinces, especially Sindh and KPK, were about clauses 14, 21 and 31 of the Nepra Act. The national grid company shall not exclusively be considered the only company to provide transmission service in the service territory. In pursuance of Article 157 of the Constitution and Section 7(4) of this Act, a provision shall be made to allow Provincial Transmission and Dispatch Company to share the service territory with national grid company in the respective provincial territories. BR. Water Accord of 1991: Sindh, KP term ‘Three-Tier Formula’ contrary to spirit In a meeting of the of National Assembly's Water and Power subcommittee, Sindh and KPK have termed the "Three-Tier Formula" of water distribution between provinces contrary to the spirit of Water Accord of 1991. In this regard, Chairman Indus River System Authority (Irsa) who also represents Sindh in Irsa revealed that Irsa is distributing water amongst provinces in accordance with Three Tier formula since 2003 instead of Water Accord of 1991. The Chairman further said that presently water is being supplied to Sindh in accordance with indent. BR. AEDB approves solar projects adding 556.52MW to national grid The Alternative Energy Development Board (AEDB) has issued 7 Letters of Support (LoS) and 17 Letters of Intent (LoI) for various solar power projects, which will generate cumulative electricity of 556.52MW. Seven project are in the process of achieving financial closing and would add 72.52MW electricity to the system by Dec’17 and Mar’18. The projects included Access Electric Pvt Ltd, BukhshSolar (Pvt) Ltd and Safe Solar Power Pvt Ltd (10 MW each), Access Solar Pvt Ltd (11.52 MW), Blue Star Hydel Pvt Ltd (1 MW), Harappa Solar Pvt Ltd (18 MW) and AJ Power Pvt Ltd (12 MW). Tribune. Thar coalfields Block-1 tariff revised 9.2% up Thar Coal Energy Board (TCEB) has revised up the feasibility stage coal tariff for Sino-Sindh Resources Pvt Ltd (SSRL) by 9.2% to $ 44.36/ton for their 7.8Mn tons per annum (mtpa) capacity mine at Block-1 of Thar coalfields. However, the determined tariff is less than the price of $ 47.27/ton, which SSRL had proposed in its petition. The determined coal price is acceptable to the company and it has expedited its efforts to achieve the financial close before 30th Jun’17. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (JU'17) Gold (JU'17) Gold (10g) Local Silver (JU'17) Cotton(KHI)-40 kg Kibor-6M 9-May 9-May 9-May 9-May 9-May 9-May 9-May 9-May 9-May 9-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.85 105.85 51,073 1.20 46.30 1,220 42,771 16.13 7,180 6.17% Forex Reserves 21-Apr $ Bn 21.15 0.00% -0.24% 0.27% NM** -0.32% -0.49% -0.20% -0.52% 0.00% 0.01% WoW -1.94% YoY -2.29% -3.06% 18.67% -38.80% -160.74% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Mar 17 Remittances $ Bn 14.06 Jul-Mar 17 Exports* $ Bn 15.12 Jul-Mar 17 Imports* $ Bn 38.50 Jul-Mar 17 Trade Balance* $ Bn -23.39 Jul-Mar 17 Current Account $ Mn -6,130 % 4.01 Avg. CPI-FY17* Jul-Mar 17 Mar-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 May-16 USD GBP, 9-May-17, 135.8 EUR, 9-May-17, 114.4 USD, 9-May-17, 104.9 Aug-16 GBP Nov-16 EUR Feb-17 May-17 Source: KCCI Research ; Oanda.com Quote of the Day “Creativity is the root of entrepreneurship.” Karndee Leopairote Chart of the Day KSE-100 Index 51,500 51,000 50,500 50,000 49,500 49,000 48,500 48,000 47,500 47,000 46,500 2-Jan-17 2-Feb-17 2-Mar-17 2-Apr-17 2-May-17 Source: KCCI Research, SCS Trade Disclaimer This report has been prepared by KCCI Research & Development Cell. The information ATM network grows in July-Dec 2016 contained herein have been compiled or arrived at based upon information obtained from The network of automated teller machines (ATMs) grew to 12,352 in 2HCY16 from 11,381 during 1HCY16, showing that for every 100,000 sources believed to be reliable and in good faith. Such information has not been adults in Pakistan, there are nine ATMs. A total of 32 banks provided cash withdrawal services through ATMs during the period under independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' review. The News. understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk