Pakistan Daily Economy Update - 11 August

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1. August 11 , 2022 KCCI - eBulletin PKR 467Bn raised through treasury bills auction The govt. kept borrowing costly money to meet its expenses and raised PKR 467Bn through the auction of market treasury bills on 10th Aug’22. SBP reported that the cut-off yields were kept unchanged but the amount raised was less than the PKR 550Bn target. The govt. raised the highest amount of PKR 339.1Bn for 3-month T-bills at 15.75% while for the 6-month benchmark papers it generated just PKR 10Bn at 15.80%. However, for 12-month T-bills, it picked PKR 64.7Bn at 15.94%. The govt. also raised PKR 52.74Bn as non-competitive bids making the total amount raised through the auction at PKR 467Bn. Dawn. PSX rolls out property sector PSX has formally launched the “property” sector for non-real estate investment trust (REIT) listed companies. The latest addition increases the number of sectors on the PSX to 36. The three companies that have been placed in the property sector include Javedan Corporation Ltd, which was previously reported in the cement sector. The other two companies are Pace Pakistan Ltd and TPL Properties Ltd, which were both previously reported in the miscellaneous sector. Dawn. Foreign donor-assisted projects: MoF revises accounting procedure for revolving fund accounts According to Finance Ministry, for a foreign donor-assisted project, a Revolving Fund Account (RFA) in respect of donor financing under loan/credit grant shall be established at a branch of NBP separately from the account to be established for the govt.’s share of project financing (counterpart funds), if any required. Such accounts shall be in the nature of Assignment Accounts. The Revolving Fund Account shall be part of Federal Consolidated Fund at Federal Govt.’s level and part of respective Provincial Govt.’s Consolidated Fund at Provincial levels. Several instructions in this regards have also been announced. BR. PTCL trials one terabit per second internet speed PTCL has conducted the country’s first trial of one-terabit — 1Tn bits of binary data — transport capacity/wavelength. The trial was conducted in collaboration with Nokia in a live network environment, where PTCL Metro Transport Network was upgraded to 1TB/channel, extending its capacity to extreme speeds of 32 TB/fiber. Dawn. Govt. notifies PKR 3.5 per unit hike in base tariff Power Minister Khurram Dastgir Khan said the govt. had notified PKR 3.50/unit increase in national base electricity tariff and promised to investigate complaints of overbilling on account of monthly fuel cost adjustments (FCAs) in the current bills. He also said the govt. had removed recovery of taxes from traders through electricity bills that would also provide relief in higher tariffs and bills to some extent. Dawn. 3.3Mn Asaan Mobile Accounts opened SBP has termed the results of soft launch of the Asaan Mobile Account (AMA) very encouraging as more than 3.3Mn accounts have been opened on the AMA platform. Since its launch in mid-Dec’21, 6.1Mn financial transactions worth PKR 40.5Bn and over 18.2Mn non-financial transactions have been conducted. SBP also announced collaboration with the PTA and UK’s Foreign, Commonwealth and Development Office, to launch a mass media campaign for the AMA – a flagship initiative under the National Financial Inclusion Strategy – to mark its formal launch. Tribune. Foreign investors get immunity The cabinet has turned down a proposal of issuing binding instructions regarding commercial transactions with foreign countries and agreed to give immunity to foreign investors by placing a bar on court jurisdictions under the Inter-Govt.al Commercial Transactions Act 2022. Tribune. Govt. fails to consult private sector on PTA The govt. of Pakistan is expected to sign a PTA with Turkey on 12th Aug’22, according to which, Pakistan has agreed to give duty exemptions to Turkey on almost 220 products whereas Turkey has given exemption on around 120 products. However, business community says that Pakistani authorities finalizing PTA with Turkey without consulting the private sector can be detrimental for the local market. Tribune. Presidential Ordinance almost ready: New tax rates under FTS to be notified on Oct 1 The upcoming Presidential Ordinance will notify new tax rates for trades under the fixed tax scheme (FTS) from 1st Oct’22, and old tax rates (prior to budget FY23) will continue during Jul-Sept’22. BR. PM presents solar solution to costly fuel problem PM Shehbaz Sharif has directed the authorities to complete comprehensive planning for the completion of low-cost solar power projects on a \ priority basis as an alternative to expensive imported fuel. The meeting was briefed that solarization projects of 14000 MW will be launched in the next few months out of which projects of 9000 MW will be completed on a priority basis. BR. Move aims at keeping uniform rate across country: Nepra approves PKR 0.57/unit hike in KE tariff Nepra has approved an increase of PKR 0.57/unit in KE tariff aimed at maintaining a uniform tariff across the country. The Authority further observed that despite the proposed increase of PKR.0.5715/kWh for all categories of the consumers except lifeline, the federal govt. would be picking up subsidy of PKR.3.98/kWh. BR. New PPA: PD not willing to commit over 1,000MW to KE The Power Division is reportedly unwilling to commit more than 1,000 MW of electricity to KE from the National Grid in the new Power Purchase Agreement (PPA), saying any additional supply over and above committed quantity would be based on pro-rata basis and quota of Discos. Both sides, i.e., KE and the Power Division have jointly identified issues requiring resolution, which include execution of Power Purchase Agency Agreement (PPAA), Interconnection Agreement (ICA) and Tariff Differential Subsidy (TDS) Agreement, among several others. BR. Miftah agrees to rationalize taxesp Finance Minister Miftah Ismail has agreed, in principle, to change some of the existing rules and rationalize taxes on stocks to encourage individuals and institutions to invest in productive sectors and document the economy at PSX. The minister had also agreed to encourage SOEs to pay maximum dividend to shareholders, encouraging state-run institutions to invest in stock market and remove discrepancies in the capital gains tax (CGT) on stocks and real estate. Meeting participants stressed that payout ratio of SOEs should be raised to 50%. Tribune. Senate body seeks briefing on gems, jewelry industry The Senate Sub-Committee on Commerce directed FBR to brief the committee over taxation rules application on the gems and jewelry industry. The committee reviewed the existing policies and discussed various issues especially the policy on the import of gold into Pakistan, which is governed under the Entrustment and Self-Consignment Schemes. The ministry recommended that imports of gold be curtailed until the dollar stabilizes. Dawn. ICI sells partial stake in NutriCo. For $ 45Mn ICI Pakistan Ltd, which will soon be formally renamed Lucky Core Industries Ltd, has approved the sale of 26.5% shares in its subsidiary NutriCo Morinaga to a Japanese investor at an aggregate price of $ 45Mn or $2.07/share. Japan’s Morinaga Milk Industry Company Ltd will thus acquire a total shareholding of 33.3% in the local company from its existing shareholders, including ICI Pakistan Ltd that controls a 51% stake. Dawn. National Assembly informed: Govt. plans to get eight A330 aircraft on lease Federal Minister for Railways and Aviation Khawaja Saad Rafique said that the govt. has planned to get eight A330 aircraft on lease and is making efforts for the restoration of various international routes of the PIA. BR. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 10-Aug 10-Aug PKR PKR 221.91 219.00 -0.95% 0.11% KSE-100 index FIPI 10-Aug 10-Aug Pts. $ Mn 42,495 -1.62 0.95% NM** Crude Oil 10-Aug $/bbl 91.93 1.61% Gold 10-Aug $/oz 1,813.7 0.47% Gold (10g) Local 10-Aug PKR 128,520 0.00% Silver 10-Aug $/oz 20.74 1.20% Cotton(KHI)-40 kg 10-Aug PKR 18,219 0.00% Kibor-6M 10-Aug % 15.92 0.03% Forex Reserves 29-Jul $ Bn 14.21 WoW -1.42% Jul-Jun 22 $ Bn 31.24 6.36% Exports* Jul-22 $ Bn 2.22 -4.76% 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% YoY Remittances Trade Balance* Current Account Foreign Direct Inv. 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 Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Aug-21 GBP, 10-Aug-… EUR, 10-Aug-22, 221.5 USD, 10-Aug-22, 219.0 USD Nov-21 GBP Feb-22 EUR May-22 Aug-22 Source: KCCI Research Quote of the Day “We cannot solve problems with the kind of thinking we employed when we came up with them.” Albert Einstein Year-on-Year CPI Inflation (Jul'22 over Jul'21) General 24.93% Transport 64.73% Food & Non-alcoholic Bev 28.77% Restaurants & Hotels 24.97% Alcoholic Bev / Tobacco 22.48% Housing/Water/Elec./Fuels 21.78% Household Maintenance 19.69% Miscellaneous 17.14% Recreation & Culture 15.41% Clothing & Footwear 14.57% Health 11.22% Education Communication 9.79% 1.16% Source: KCCI Research; PBS 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.