Pakistan Daily Economy Update - 14 October

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1. Oct . 14, 2016 KCCI - eBulletin Shifting of SBP departments to Lahore: government doing an injustice to us: KCCI KCCI President Shamim Firpo has urged the govt. to stop doing injustices with business and industrial community of Karachi and refrain from taking such anti-business steps which will surely prove to be detrimental and counterproductive for the economy keeping in view the enormous role and substantial contribution being made by Karachi in the overall economic development of Pakistan. While expressing deep concerns over the federal government's decision to shift four departments of SBP from Karachi to Lahore, he said that this is not a fair step for the business and industrial community and for Sindh as it will deprive Sindh and keep it on the backseat which will not be acceptable to the business and industrial community of Karachi. BR. Economic Indicators Date / Period Unit Value USD-Interbank 13-Oct PKR 104.69 0.05% USD-Open MKT 13-Oct PKR 105.30 -0.47% KSE-100 index FIPI 13-Oct 13-Oct Pts. $ Mn 41,412 -1.88 0.02% NM** PKR 40Bn allocated to western route projects The govt. has allocated PKR 40Bn for 12 western route projects under CPEC that would be completed by 2018. Among others, PKR 12Bn have been allocated for Burhan-Hakla on M-I to Dera Ismail Khan Motorway, PKR 5Bn for Gwadar-Turbat-Hoshab Section of Gwadar-Ratodero Road M-8, PKR 4Bn for widening and improvement of N-85, PKR 3.3Bn for Zhob Mughal Kot, PKR 1.1Bn for rehabilitation of DI Khan Mughal Kot and PKR 1.8Bn have been allocated for land acquisition. BR. Crude (NO'16) 13-Oct $/bbl 50.84 -1.63% Gold (MY'16) 13-Oct $/oz 1,257.2 -0.21% Gold (10g) Local 13-Oct PKR 43,628 1.17% Silver (MY'16) 13-Oct $/oz 17.47 -1.00% Cotton(KHI)-40 kg 13-Oct PKR 6,495 0.00% At 65% of GDP, public debt remains high The 12th and final review under the IMF $ 6.64Bn Extended Fund Facility has acknowledged that total public debt remains high at about 65% of GDP, increasing by 2.5% of GDP over the program period (430% of revenue) which is well above the emerging market average. The Fund further stated that fiscal consolidation is needed to reduce fiscal vulnerabilities with tax to GDP ratio below comparator emerging economies. Exports declined from 0.4% growth in FY13 to negative 8.6% in FY16 while real effective exchange rate (2000=100) was 100.7 in FY13 rising to 118.34 in FY16. BR. Kibor-6M 13-Oct % 6.06% 0.01% 7-Oct $ Bn 23.49 -0.50% Remittances Jul-Aug 16 $ Bn 3.09 -3.17% Exports* Jul-Aug 16 $ Bn 3.14 -8.19% Number of taxpayers rises to 1.1Mn: FBR FBR, owing to the broad range of measures, has been able to raise the number of filers of income tax returns to 1.1Mn. Rehmatullah Wazir, Member Inland Revenue Policy said, measures are being taken to raise the cost of doing business for non-filers to compel them to become part of the tax system. The FBR had adopted a broad range of measures and taken steps in recent months to broaden the tax base and increase the tax net. Daily Times. Imports* Jul-Aug 16 $ Bn 7.88 10.21% Trade Balance* Jul-Aug 16 $ Bn -4.74 -27.06% Current Account Avg. CPI-FY17* Jul-Aug 16 Jul-Sep 16 $ Mn % -1,316 3.88 -91.84% Remittances fall 9.3% in Sep’16 Overseas Pakistani workers remitted $ 1.60Bn during Sep’16, down 9.3% compared to $ 1.77Bn in the same month of Sep’16, according to the SBP. Moreover, remittances dropped to $ 4.69Bn in 3MFY17, down 5.3% compared with $ 4.96Bn during the same period of 3MFY16. Tribune. US to support Pakistan’s economy US has expressed its commitment for Pakistan’s economic growth through enhancing partnership with the country. The US Consul General Grace Shelton during a meeting with the management of the Pakistan Stock Exchange (PSX) has said that her govt. is continuously partnering in trade and investment in energy in Pakistan with increasing business to business ties. The News. 12th Review: IMF stresses restructuring of PSEs The IMF has emphasized the need for efforts to restructure or divest Public Sector Entities (PSEs) as a number of them remain lossmaking, absorbing scarce fiscal resources and imposing fiscal risks while operating inefficiently. The IMF review observed that PSEs accumulative losses as a percentage to GDP increased from 1.7% (FY13) to 2.3% (FY16), however annual losses of PSEs declined from 0.4% (FY14) to 0.2% (FY16). BR. Forex reserves drop to $ 23.4Bn Pakistan’s foreign exchange reserves dropped to $ 120Mn to $ 23.49Bn during the week ended Oct 7, 2016. The foreign exchange reserves held by SBP saw a decrease of $ 81Mn to stand at $ 18.41Bn from $ 18.49Bn a week ago. The SBP made payments of $ 76Mn on account of external debt servicing. The forex reserves of commercial banks fell to $ 5.08Bn against $ 5.12Bn in the preceding week. The News. Federal, provincial governments: IMF for rebalancing revenue, expenditure responsibilities The IMF has recommended rebalancing revenue and expenditure responsibilities between federal and provincial govts and bring underdeveloped tax bases which are under the purview of provincial governments like agriculture, services and property more effectively into the tax base. This would entail modernizing agriculture taxation by introducing a presumptive income tax, improving property tax collection by developing electronic fiscal cadasters and strengthening property valuation at the provincial level, and improve sales tax collection on services. The report said that tax revenue grew by more than 20% and the FBR met the indicative target (IT) on tax collections with a small margin. BR. Steps to ease start of new businesses commended The IMF has commended govt. on implementation of key short-term measures to ease the start of new businesses. IMF in the final review of the $ 6.64Bn Extended Fund Facility observed that after Pakistan slipped in the 2016 Doing Business ranking, a new comprehensive country-wide strategy to improve the business climate was developed in early 2016 and is now being implemented. Furthermore, import tariff slabs have been reduced to simplify the trade regime. It was also stated that sustained efforts will be needed to improve the business climate, which will be important to promote competitiveness and attract private investment. BR. Japanese corporations should join CPEC projects: Ahsan Federal Minister for Planning, Development and Reforms Ahsan Iqbal invited Japan to take advantage of CPEC and encourage Japanese corporations to take part in projects of transport infrastructure and power generation on Independent Power Producers model. Dawn. OGDC touches new crude production record Oil and Gas Development Company (OGDC) has broken its own crude production record by churning out 48,767 barrels of oil a day in on 12, Oct 2016. The company had drilled 53,000 meters in Jun’15, which jumped up to 95,000 meters in Jun’16. According to the company, the number of wells drilled till Jun’16 was 26. Tribune. Auto sales hit bump, fall 13% in July-Sept Auto sales fell by 13% in 1QFY17 after the govt.-backed Apna Rozgar taxi scheme concluded. Industry data had showed said local car assemblers (including LCVs, vans and jeeps) sold 47,645 units in July-Sep 2016 period. Sales of cars remained down 6.68% in 3MFY17 to 41,405 against 44,372 during the 3MFY16. A total of 14,088 cars were sold in Sept’16, down 7.34% against 15,204 cars in Sep’15. Tribune. PTCL earns PKR 876.37Mn profit in July-Sept Pakistan Telecommunication Company Limited (PTCL) has earned a profit of PKR 876.37Mn (EPS: PKR 0.17) for 1QFY17 as compared to a loss of PKR 371.07Mn (LPS: PKR 0.07) in 1QFY16. The company’s revenue rose 2% to PKR 29.82Bn during the period. The News. List of Indicators Change Daily WoW Forex Reserves YoY Sep-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 175 165 155 145 GBP, 12-Oct-16, EUR, 128.1 12-Oct-16, 115.5 135 125 115 105 95 USD, 12-Oct-16, 104.7 85 75 Oct-15 Jan-16 USD Apr-16 GBP Jul-16 Oct-16 Source: KCCI Research ; Oanda.com EUR Quote of the Day “Don’t say you don’t have enough time. You have exactly the same number of hours per day that were given to Helen Keller, Pasteur, Michaelangelo, Mother Teresea, Leonardo da Vinci, Thomas Jefferson, and Albert Einstein.” H. Jackson Brown Jr. Chart of the Day Remittances Received by Pakistan (1QFY08 - 1QFY17) 1QFY17 4.70 1QFY16 4.97 1QFY15 4.78 1QFY14 3.93 1QFY13 3.60 1QFY12 3.30 1QFY11 2.65 1QFY10 2.33 1QFY09 1.88 1QFY08 1.50 1QFY07 0.00 1.23 1.00 2.00 3.00 4.00 5.00 6.00 Source: KCCI Research, SBP Value in $ Bn 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