Pakistan Daily Economy Update - 13 December

Transcription

1. Dec . 13, 2017 KCCI - eBulletin Irked by PM’s absence, new IMF director cancels visit to Pakistan IMF’s top official for Middle East and Central Asia, Jihad Azour, has postponed his scheduled visit to Pakistan due to non-availability of PM Abbasi, , who is leaving for Turkey to attend an emergency meeting of the Organisation of Islamic Countries. Azour was scheduled to join the post-programme monitoring talks currently going on between the IMF authorities and Pakistani officials to find solutions to the problems of the external sector and chronic circular debt. Reportedly, the IMF is not accepting Pakistan’s projections for current account deficit, external financing requirements and exact financing gap that the country was facing during FY18, terming the projection rosy. According to the IMF the financing gap that the country was facing for FY18 is close to $ 10Bn – significantly higher than roughly $ 6Bn that Pakistan pitched. Tribune. THE RUPEE: PKR extends fall Pakistani rupee fell for a third straight session on Dec. 12, 2017 as the rupee lost 1.8% value against the dollar after the central bank withdrew its support, effectively devaluing the local currency. The greenback went as high as PKR 111.50 during the day in the interbank market and closed at PKR 110.50. It had opened at 105.55 per dollar on Dec. 8, 2017. The rupee, which has mostly traded in a tight range of 104-105 per dollar since Dec.’15, has shed over 5% in the past three sessions. The State Bank of Pakistan's (SBP) withdrawal of support for the rupee is widely seen as a devaluation measure. BR. C/A deficit constitutes major challenge to economy: Bajwa While chairing a session of Pakistan Institute of Development Economics (PIDE) conference, Governor SBP, Tariq Bajwa, has said that current account deficit is a major challenge to the economy. The Governor further said that devaluation of rupee against dollar is owing to the widening current account deficit. He said that he would issue a policy statement on stability of rupee. He also informed that SMEs, agriculture sector and home loans are priority areas of the SBP and that an SME policy will be announced soon. BR. CPEC’s industrial uplift plan to be unveiled next week 7th long-term plan of CPEC will be launched on 18th Dec ‘17, envisaging industrialisation between 2020 and 2025. In this backdrop, Ahsan Iqbal, minister for planning, advised private sector and industrialists to tap technology transfer, which China is relocating to other countries due to high labour cost. We should work for joint ventures with Chinese companies; Pakistan should learn the economic achievements of China where per capita income has shot up to $ 8,000 as compared to Pakistan’s $1,600. This growth can be achieved through political stability and continuation of policy, he said. The News. In CPEC talks, Chinese drive a hard bargain with Pakistan Pakistan appeared to have been pushed hard by the Chinese side to give in more than it secured in return during the recently held 7th JCC meeting of the CPEC. The JCC agreed that Pakistan’s agencies in power sector and Chinese project sponsors should sign the supplemental agreements at the earliest and decided that “Pakistani side will address timely payment of electricity charge in power projects under CPEC as soon as possible”. Dawn. Pakistan’s first tariff-based auction for solar power project announced The Sindh government has announced its intention to launch a tariff-based auction to develop a 50 MW solar power project in the province. This will be the first project to implement the decision of NEPRA (taken on March 3, 2017) to enable tariff-based auctions for solar photovoltaic (PV) power projects, replacing the previous up-front tariff regime. The 50 MW project is for a site on government-owned land north-west of Hyderabad where there is excellent solar resource potential of over 2,200 kWh/m2 per year. This equates to estimated annual production of around 85,000 MWh of clean, domestic power from the sun per year, immune to the price volatility of fossil fuels. Daily Times. Policy framework: CCoE decides to introduce amendments A meeting of the Cabinet Committee on Energy (CCoE) has decided to introduce suitable amendments in the existing policy framework in order to address various issues relating to power tariff. The meeting discussed in detail various policies including power co-generation by sugar industry and the renewable energy policy 2006 as well as reviewed various power sector development projects under implementation to diversify the existing energy mix of the country including wind, solar and hydel power projects. BR. No more long-term power purchase agreements Faced with looming capacity trap, the federal govt. has decided to make a major shift in its energy policy and refuse guaranteed power purchases from future private sector producers. The meeting decided that agreements with the private sector investors by the govt. would be based on “take and pay” where govt. would pay only for the units drawing from the private projects and would not be bound to pay for the capacity availability. This would primarily impact small renewable sector projects like small hydropower and baggase-based projects and others not considered as ‘base load projects’. Dawn. Suspension of gas supply to push up production cost Textile exporters have resented what they say is an unfair suspension of natural gas supply to the export-focused industry in Punjab, terming \ the move counterproductive. Provision of high-priced RLNG in place of domestically produced natural gas will further add to the production cost and hamper export growth, they say. The industry was earlier using a blend of 28% natural gas and 72% RLNG, but from 7th Dec’17, SNGPL stopped the supply domestic natural gas and shifted the industries entirely on to RLNG. For Punjab industries, the RLNG price is around PKR 1,100 per mmbtu whereas domestically produced natural gas is supplied at PKR 600 per mmbtu excluding the GIDC. Tribune. ETPL, SSGC deny violation of PPRA rules Elengy Terminal Pakistan Limited (ETPL) has denied that under-utilisation of the terminal capacity had resulted in higher charges at $ 1.45 per mmbtu. It clarified that the initial tender for 400 mmcfd of gas provided for a levellised tariff of $ 0.66 per mmbtu. After recent amendment in the LNG supply agreement, the tolling fee for the additional 200 mmcfd will be $ 0.1745 per mmbtu, which will bring down the overall charges for 600 mmcfd to $0.4799 per unit. Furthermore, ETPL denied any violation of PPRA rules, saying it was the only entity at that time running a fully operational LNG terminal in the country and no other parties participated in the bidding process Tribune. SBP sees private credit off-take to boom in Q4 The SBP expects the country’s private sector’s credit off-take to rise in 4QCY17, on growing appetite of low-cost funds in the industrial sector. Seasonal pattern along with robust growth in large scale manufacturing index observed during Jul-Sep 2017 suggests that advances to private sector will rise, the central bank said in the Quarterly Performance Review of the banking sector. Gross advances to private sector decreased by PKR 5.4Bn in 3QCY17, significantly lower than the contraction of PKR 112.2Bn during 3QCY16. The News. Banks asked to cash in on CPEC, growth opportunities SBP has urged banks to calibrate the changing macroeconomic environment in their business models to capitalize the emerging opportunities from CPEC and economic growth. According to SBP's Quarterly Performance Review (QPR), the overall risk profile of the banking sector remains within tolerable bounds during the period under review characterized by high capital adequacy ratio, improving asset quality and favorable liquidity conditions. BR. Banking sector remains sound, stable in Q3CY17 SBP, in its Quarterly Performance Review, has said that banking sector’s asset base has expanded marginally during 3QCY17, though, on YoY basis, the growth has been quite robust (16%). Gross advances (domestic) to private sector have declined by PKR 5.4Bn during 3QCY17; significantly lower than the contraction of PKR 112.2Bn in the same period last year. On the funding side, QoQ growth of 1.1% in borrowings from financial institutions coupled with an increase of 0.3% in deposit base has enabled the banks to finance the growth in assets. The Nation. FBR approves three border complexes FBR has approved in principle the design for establishment of three state-of-the art ‘border complexes’ at Torkham, Chaman and Wagah to reduce dwell time for cross-border movement of goods and services. The deadline for the completion of the projects is Dec.’21. The proposed border complexes, which are part of Integrated Transit Trade Management System, is to facilitate legitimate trade, without compromising security of the global supply chain. With the construction of these complexes, the dwell time of goods at border points will reduce by more than five times. Dawn. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec 12-Dec PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 110.64 111.00 38,525 -8.79 57.25 1,243.9 46,200 15.66 7,180 6.20% 2.05% 2.16% 0.11% NM** -1.33% 0.11% 0.56% 0.01% 1.51% -0.01% WoW -4.85% YoY 1.29% 10.49% 21.12% -28.56% -121.91% 74.44% USD-Interbank USD-Open MKT KSE-100 index FIPI Crude (FE'18) Gold (JA'18) Gold (10g) Local Silver (JA'18) Cotton(KHI)-40 kg Kibor-6M Forex Reserves $ Bn 18.74 30-Nov FY18 Jul-Nov 17 Remittances $ Bn 8.02 Jul-Nov 17 Exports* $ Bn 9.03 Jul-Nov 17 Imports* $ Bn 24.06 Jul-Nov 17 Trade Balance* $ Bn -15.03 Jul-Oct 17 Current Account $ Mn -5,013 Foreign Direct Inv. $ Bn 0.94 Jul-Oct 17 Jul-Sep 17 LSM Growth* % 8.36 % 3.59 Jul-Nov 17 Avg. CPI Discount Rate % 5.75 Sep-17 WoW= week Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 155 GBP, 12-Dec-17, 140.2 145 135 EUR, 12-Dec-17, 127.6 125 115 105 95 Dec-16 USD USD, 12-Dec-17, 108.5 Mar-17 GBP EUR Jun-17 Sep-17 Source: KCCI Research ; Oanda.com Quote of the Day "Faith in your own powers and confidence in your individual methods are essential to success." Roderick Stevens Chart of the Day 112 USD/PKR Rates (Jan.'17-Dec.'17) 111 110 109 108 107 106 105 104 Interbank Open Market Source: KCCI Research, SBP, FMAP 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