Pakistan Daily Economy Update - 15 June

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1. Jun . 15, 2016 KCCI - eBulletin PKR 505Bn KPK budget unveiled Khyber Pakhtunkhwa (KPK) Finance Minister has unveiled a tax-free and balanced budget of PKR 505Bn for FY17 including a development outlay of PKR 161Bn, a slight re-adjustment in provincial taxes and a 10% increase in the salaries and pensions of the govt. employees. The expenditures in KPK budget have been increased by 10% to PKR 298Bn where health sector has been allocated PKR 17.4Bn, followed by elementary and secondary education with PKR 16.9Bn. It is aimed at generating 36,232 new jobs in different sectors of the province. The KP govt. has decided to allocate PKR 33Bn to the local govt., adding the province will generate PKR 15Bn from its own resources under sales tax on services sector, PKR 40Bn under tax and non-tax heads, PKR 18Bn from annual net hydel power income, and PKR 15Bn from net hydel profit arrears where province will generate PKR 3.5Bn from its own power generation. BR. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 14-Jun PKR 104.67 0.06% USD-Open MKT 14-Jun PKR 104.90 0.77% KSE-100 index FIPI 14-Jun 14-Jun Pts. $ Mn 37,518 -0.48 1.45% NM** Crude (JU'16) 14-Jun $/bbl 48.49 -1.44% Gold (MY'16) 14-Jun $/oz 1,287.6 0.19% 14-Jun PKR 42,000 1.24% 14-Jun $/oz 17.41 -0.14% 14-Jun PKR 6,039 0.00% 14-Jun % 6.13% 0.01% 3-Jun $ Bn 21.26 -1.57% 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-May 16 $ Mn % -1,519 2.82 17.71% NA body backs 10.5% duty on soft drinks Gold (10g) Local The National Assembly standing committee on finance has recommended that 10.5% excise duty on carbonated soft drinks be Silver (MY'16) maintained, while import of urea be opened for private sector to provide relief to farmers. Dawn. Cotton(KHI)-40 kg Kibor-6M Pakistan upgraded to emerging markets status In a positive development, MSCI said its Pakistan Index will be reclassified to the Emerging Markets status, coinciding with the May 2017 Semi-Annual Index Review. MSCI is a leading provider of international investment decision support tools. Its decision is to Forex Reserves upgrade the country from the Frontier Markets status is expected to generate inflows of global portfolio investment amounting to $475Mn by the middle of 2017, according to EFG Hermes, an Egypt-based investment bank. Tribune. Cut in provinces share under NFC Award ruled out As FBR is in a position to achieve its tax collection target of PKR 3.10Tn set for FY16, federal govt. has decided not to cut the provinces’ shares in the National Finance Commission (NFC) Award during outgoing FY16. The govt. would transfer entire budgeted amount of PKR 1.85Tn to the provinces by the end of Jun.’16 as per the said formula; Punjab (51.74%), Sindh (24.55%), KPK (14.62%) and Balochistan (9.09%). Following the formula, Punjab province would receive PKR 896.5Bn, Sindh PKR 483Bn, KP PKR 301.26Bn (including 1% additional due to war on terror) while Balochistan would get PKR 171.2Bn during outgoing FY16. The Nation. WoW YoY May-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* WoW= week on week; YoY=Year on Year Govt. pays off $ 4.3Bn in foreign debt repayments in July-March ** Not Meaningful Pakistan coughed up more than $ 4Bn in repayment on account of foreign debts during the 9MFY16. According to the SBP, the country’s external debt servicing dropped 18.74% to $ 4.308Bn during 9MFY16 compared with $ 5.302Bn in 9MFY15. However, the country’s outstanding stock of external debt and liabilities (EDL) rose to $ 69.55Bn till March 31, up 11% when compared with the EDL 175 of $ 62.73Bn in the corresponding period of the last year. The EDL-to-GDP ratio also increased to 24.6% from 23.3% a year ago. The 165 News. Major Currencies GBP, 14-Jun-16, 146.9 155 Govt. urged to immediately start work on Diamer-Bhasha Dam The Institute for Policy Reforms (IPR) has urged the govt. to start work on Diamer-Bhasha Dam forthwith, as water challenge faced by Pakistan is bigger than that of the power sector. IPR has said that Pakistan should highlight its priority to international donors, adding that Pakistan must request Chinese assistance for the project. Bhasha will add 6.4MAF to gross storage, this is 35 to 40% of the total existing capacity. The project will add 4,500MW of hydropower generation capacity. The News. 145 Balochistan likely to unveil PKR 277Bn budget The total outlay of Baluchistan’s annual budget for FY17 will be around PKR 277.56Bn with a development allocation of PKR 60Bn. The govt. plans to spend PKR 40Bn on the education sector and PKR 18Bn on health. Whereas, non-development expenditure is expected to be around PKR 183.97Bn in FY17 against PKR 168.54Bn of the outgoing year, registering an increase of PKR 830Mn. The budget will be a deficit budget and the deficit will be that of around PKR 25.17Bn. Tribune. 95 Tariff determinations: Discos causing 'tactical' delay, over-charging consumers Power Distribution Companies (Discos) are reportedly overcharging billions of rupees from consumers due to "tactical" delay in implementation of tariff determinations of FY15 and by not notifying tariffs determined by Nepra for FY16. Nepra had determined average tariff for 2013-14 at PKR 13.81/unit which is still being charged from consumers despite the fact that tariff for 2014-15 was determined at PKR 12.25/unit. This implies that Discos are overcharging consumers by PKR 1.56/unit on 80Bn units per annum by not implementing the tariffs of 2014-15. The total overcharged amount is around PKR 2Bn per annum if compared with determined tariff of 2014-15. BR. 135 115 105 Handing over of HMC to SPD/PAEC approved by ECC A meeting of the Economic Co-ordination Committee (ECC) has approved handing over of Heavy Mechanical Complex (HMC) to Strategic Plans Division (SPD)/PAEC. While giving approval, the ECC stated that the said transfer would take place by ensuring the due process and that the rights of HMC's employees would be fully protected. BR. SECP amends NBFC rules and regulations SECP has approved draft amendments in Non-Banking Finance Companies (Establishment & Regulation) Rules 2003, and Non-Banking Finance Companies & Notified Entities Regulations 2008 for smooth transition of Micro Finance Institutions (MFIs) into Non-Bank Microfinance Companies (NBMFCs). The major amendments include relaxation in cross directorship requirement for NBMFCs for specified periods of time. It also requires insertion of experience and knowledge in professions such as economics, social sector, development sector, and microfinance sector for persons to become directors of NBMFCs in the fit and proper criteria. The News. USD, 14-Jun-16, 103.7 85 75 Jun-15 Sep-15 USD Dec-15 GBP EUR Mar-16 Jun-16 Source: KCCI Research ; Oanda.com Quote of the Day " Among those whom we have created there are people who guide with truth and do justice thereby." Qur’an 7:181 NEPRA revises upfront tariff for solar, wind power projects The National Electric Power Regulatory Authority (NEPRA) has decided to initiate suo moto proceedings to determine a new tariff for generation of electricity from solar photovoltaic (PV) power projects and generation of electricity from wind power projects. In this regard, the authority has notified holding of suo moto proceedings publicly for development of new tariff for solar PV power projects and wind power projects. Daily Times. FBR to nab tax-evading cigarette makers FBR is in the process of plugging loopholes in checking tax evasion by un-registered tobacco units following increase in the sales of tobacco to tax-evading cigarette manufacturers, causing huge loss to the national kitty. The coordination between FBR and Pakistan Tobacco Board (PTB) would help in checking tax evasion at the first stage of purchase of tobacco by unregistered manufacturing units. The Nation. EUR, 14-Jun-16, 116.7 125 Chart of the Day Pakistan's Import of Core Oil Products (Mn Tons) 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Diesel Furnace Oil Crude Petrol Source: KCCI Research ; OCAC Disclaimer 75 oil and gas fields discovered by exploration companies Many oil and gas exploration companies operating in different parts of the country made as many as 75 discoveries as a result of 281 This report has been prepared by KCCI Research & Development Cell. The drills conducted in the last three years. "Following the discoveries, 580Mn cubic feet per day (MMCFD) gas and 25,000 barrels per day information contained herein have been compiled or arrived at based upon (BPD) Crude Oil production has been added to the system, while the highest crude oil production - 100,000 BPD was achieved on information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. December 7, 2014," according to Ministry of Petroleum and Natural Resources. Daily Times. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The