Pakistan Daily Economy Update - 12 July

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1. Jul . 12, 2016 KCCI - eBulletin Reserves post $ 4.3Bn increase in Fiscal Year 2016 The country's total liquid foreign reserves posted a hefty increase of $ 4.3Bn during FY16 supported by contained oil payments and arrival of inflows from multilateral, bilateral and other official sources. According to SBP, the country's total liquid foreign reserves stood at all high level of $ 23.09Bn as on Jul. 1, 2016 compared with $ 18.71Bn as on Jul. 3, 2015. During the period under review, SBP's foreign exchange reserves surged $ 4.6Bn to reach $ 18.13Bn up from $ 13.53Bn a year back. Similarly, reserves held by banks declined $ 22.3Mn to $ 4.96Bn end of FY16. BR. Govt. announces PKR 3.50/unit cut in power tariff for agriculture The govt. has announced a reduction of PKR 3.50/unit in the electricity tariff for the agriculture sector, which is to remain effective till Jun. 30, 2017, and subject to regular payment of electricity bills by the consumers. Power consumers in the agriculture sector will now be charged PKR 5.35/unit in off peak hours instead of current PKR 8.85/unit. However, there will be no change in the peak hour per unit rate and it will stay at PKR 10.35/unit. The General Sales Tax (GST) will be paid by the respective provincial governments. In case of non-payment of GST by a provincial govt., the consumers of the respective distribution company will be charged for GST in addition to the agreed fixed rates. The Nation. Govt. introduces 2% tax rebate for Shariah-compliant listed firms The federal govt. has introduced 2% tax rebate for Shariah-compliant listed companies through the Finance Act 2016. This tax rebate has been introduced on the suggestion of SECP as part of its reforms being introduced for the elimination of Riba and promotion and development of the Islamic capital market. The tax incentive will attract new listings of companies on the Pakistan Stock Exchange (PSX) and add depth to the market. The News. Seven foreign firms bid for Stage-1 of Dasu Hydropower Project The Water and Power Development Authority (WAPDA) has received total seven bids from international companies for main civil works to be completed under MW-01 (construction of hydraulic diversion structure) and MW-02 (construction of underground power house) of stage-1 of the 5400MW Dasu Hydropower Project (DHP). Four companies from China, Turkey and Vietnam participated in the bidding for MW-01, while three companies from China, Turkey and South Korea participated in the bidding for MW-02. The contracts will be awarded after evaluation of the bids, and after receiving no objection letter from the World Bank. The Nation. IMF projects current account deficit at 1.8% of GDP for FY17 The International Monetary Fund (IMF) foresees the current account deficit widening to $ 5.43Bn in the FY17 from $ 2.88Bn in FY16. The IMF, in its report released after the completion of the 11th review of its $ 6.7Bn extended fund facility (EFF) program, says in percent of GDP the current account deficit (CAD) will ratchet up to 1.8% by the Juneend next year as compared to 1% this year. According to the report, the CAD will go up to 2.3% of GDP, or $ 7.4Bn, in FY18 and $ 8.04Bn in FY19. The News. Imports from India through land drop PKR 9.6Bn in FY16 The country’s imports from India dropped PKR 9.62Bn to PKR 24.55Bn during the last fiscal year. Pakistan mainly imports soybean, raw cotton, fresh tomatoes, onions, buffalo meat, plastic granules and carbon dioxide from India. The major decline was recorded in the imports of soybean as PKR 63Mn was spent on its import in FY16 as against PKR 11.74Bn in FY15. The News. Palm oil imports down 3.04% in 11MFY16 According to the PBS, Palm oil import reduced by 3.04% in 11MFY16, as compared to the corresponding period of last year. About 2,520,323 metric tons of palm oil, valuing $ 1.54Bn was imported to fulfil the domestic requirements. Palm oil import in the country was recorded at 2,118,533 tons, worth $ 1.59Bn in 11MFY15. The News. Power distribution firms barred from recovering PKR 145Bn from consumers The National Electric Power Regulatory Authority (Nepra) on July. 11, 2016 disallowed recovery of PKR 145Bn from electricity consumers on account of past-year system losses and inefficiencies of distribution companies. In a series of a total 20 tariff determinations, the power regulator did not find any legal, financial or procedural ground to allow recovery of about PKR 103Bn sought by the distribution companies on account of “prior year adjustments” in consumer-end tariff and PKR 42Bn demanded by the federal government to charge higher transmission and distribution losses to consumers. Dawn. SBP injects PKR 1.78Tn into system SBP has injected over PKR 1.78Tn at 5.77% rate of return as banks are facing some liquidity shortage due to massive cash withdrawal on Eid. In order to cover the widening liquidity gap. The SBP conducted Open Market Operation (OMO) and received offers amounting to PKR 1.79Tn ranging from 5.90% to 5.74%. BR. Economic Indicators Date / Period Unit Value USD-Interbank List of Indicators 11-Jul PKR 104.85 Change Daily 0.24% USD-Open MKT 11-Jul PKR 104.30 -0.77% KSE-100 index FIPI 11-Jul 11-Jul Pts. $ Mn 38,368 2.10 1.55% NM** Crude (JU'16) 11-Jul $/bbl 45.97 -2.63% Gold (MY'16) 11-Jul $/oz 1,355.9 -0.73% Gold (10g) Local 11-Jul PKR 43,671 -5.62% Silver (MY'16) 11-Jul $/oz 20.32 -0.44% Cotton(KHI)-40 kg 11-Jul PKR 6,307 -3.30% Kibor-6M 11-Jul % 6.06% 0.00% 1-Jul $ Bn 23.08 6.08% Remittances Jul-May 16 $ Bn 17.84 5.58% Exports* Jul-May 16 $ Bn 19.15 -12.39% Imports* Jul-May 16 $ Bn 40.32 -2.74% Trade Balance* Jul-May 16 $ Bn -21.17 -7.28% Current Account Avg. CPI-FY16* Jul-Apr 16 Jul-Jun 16 $ Mn % -1,519 2.86 17.71% WoW Forex Reserves YoY May-16 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 GBP, 11-Jul-16, 135.9 EUR, 11-Jul-16, 115.9 145 135 125 115 105 95 USD, 11-Jul-16, 104.9 85 75 Jul-15 Oct-15 USD Jan-16 GBP Apr-16 EUR Jul-16 Source: KCCI Research ; Oanda.com Quote of the Day It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction. Warren Buffett Chart of the Day Pakistan's Foreign Exchange Reserves ($ Bn) 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 11.0196 6.4356 23.08 15.2886 12.4252 11.3987 3.2315 18.699 14.1411 13.1224 12.5976 12.3893 10.7697 18.2438 16.7504 15.6472 IT sector all set to grow after extension in tax relief 1.9736 With the development of information technology (IT) parks in different cities along with the govt. policies to give 2.2892 tax exemption to export of IT services for next three years, the IT sector is all set to grow and prosper in future 0.0 2.5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 22.5 25.0 provided that stakeholders throw their weight behind vision of policymakers. The government in the recent budget Source: KCCI Research, SBP awarded three years extension of income tax to IT companies active in the exports of services to different countries Disclaimer whereas it also waived off GST on basic equipment such as laptops and computers that will provide support to This report has been prepared by KCCI Research & Development Cell. The companies for expansion and growth. Daily Times. information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such PTCL, IBM partners to offer Cloud Services across Pakistan information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is PTCL has signed agreement with IBM Italia SpA (Pakistan), for launching Public Cloud Services in Pakistan. The IBM stated to enrich the readers' understanding of the news item. The turnkey solution will be hosted at PTCL's Data Centers in Lahore and Karachi for corporate customers. Daily Times.