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Pakistan Daily Economy Update - 15 October

IM Insights
By IM Insights
5 years ago
Pakistan Daily Economy Update - 15 October


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  1. October .14-15, 2018 KCCI - eBulletin Razak assures of refunds from next month The FBR will start paying refunds to industries from Nov’18, according to Abdul Razak Dawood, Adviser to the PM on Commerce. While speaking to businessmen, Dawood said that Chairman FBR has given him a commitment in this regard. Every sector that he has interacted with has complained of stuck refunds; the idea of first collecting taxes and then refund is absurd and the govt. wants to do away with this practice, he said while adding that refunds of smaller amount would be cleared first. As the country is incurring huge trade deficits vis-à-vis the five trade agreements it has signed, the govt. would revisit all agreements and get favourable terms from partner countries. The News-Sun/Dawn-Sun. Govt to unveil new tariff structure for industries next month The govt. is expected to unveil a new tariff structure for the manufacturing sector by Nov’18 to give it relief from tax burden, Adviser to the PM on Commerce and Textiles Abdul Razak Dawood said. Addressing businessmen at a meeting, Dawood regretted that the current tariff regime marginalised the manufacturing sector, and that it is geared to collect more revenue instead of facilitating the manufacturing sector. In many cases tariffs on raw materials are higher than those on finished products. He said that textile and rice are the two sectors that have the potential to accelerate exports in the short-term. The govt. will first facilitate these sectors to ensure immediate increase in exports as the foreign exchange is badly needed in the country. The govt. would also focus on sunshine sectors, like engineering and IT to increase exports. The News-Sun/Dawn-Sun. Economic Indicators List of Indicators Date / Period Unit Value Change Daily USD-Interbank 12-Oct PKR 131.93 -1.40% USD-Open MKT 12-Oct PKR 132.00 -1.31% KSE-100 index FIPI Pts. $ Mn 37,518 -0.61 -2.29% NM** Crude (NO'18) 12-Oct 12-Oct 12-Oct $/bbl 71.49 0.83% Gold (OC'18) 12-Oct $/oz 1,221.1 -0.63% Gold (10g) Local 12-Oct PKR 51,098 0.00% Silver (OC'18) 12-Oct $/oz 14.62 0.00% Cotton(KHI)-40 kg 12-Oct PKR 9,109 0.00% Kibor-6M 12-Oct % 9.57 0.10% Forex Reserves 5-Oct FY19 $ Bn 14.85 WoW -0.29% 5.42 13.15% 5.39 4.54% 14.26 0.64% Painful decisions ahead, warns Asad on return from Bali Jul-Sep 18 Remittances $ Bn Finance Minister Asad Umar has said the govt. will have to take difficult decisions that would be painful for people but necessary Exports* Jul-Sep 18 $ Bn under international commitments to get out of the current severe economic situation. Speaking at a news conference after his Imports* Jul-Sep 18 $ Bn return from Indonesia where he formally applied for the IMF bailout, the minister rebutted the narrative in the Trump Trade Balance* Jul-Sep 18 $ Bn administration that CPEC was responsible for Pakistan’s debt problems, and the need for IMF bailout, and said talks with Saudi Jul-Aug 18 Current Account $ Bn Arabia for oil supplies on deferred payments are in progress. Pakistan's current fiscal year debt repayments are $ 9Bn while Foreign Direct Inv. $ Bn Jul-Aug 18 there are only $ 300Mn loans repayment to China during the next three years. The minister said the US was a key stakeholder in Jul-18 % the IMF with about 16.5% votes but enjoyed no veto power in its decision making that required majority 51% votes. The LSM Growth* % Jul-Sep 18 minister said there is nothing in the CPEC agreements and loans that should be kept secret. Rather, it should be known to the Avg. CPI % Jul-18 world, placed before parliament and shared with the IMF that how a real friend China extended attractive financing to Pakistan Discount Rate WoW= week for the long term. Mr Umar said the IMF programme is inevitable in the given circumstances and people would have to brave Sources: KCCI Research, PMEX , NCCPL, KSE, ** Not Meaningful on week; the impact of the consequential inflation and squeeze on growth. We can perhaps live without the IMF but this could be more Major Currencies painful, he said. The IMF team will arrive in Pakistan on 7th Nov for the discussion on the new bailout package; however, he did not specify how much the govt. intends to borrow but stated it may be higher as compared to normal special drawing rights 185 (SDR) quota. Dawn-Sun. 175 YoY -8.87 1.60% -2.72 0.29 -9.85% -39.58% 0.50 5.60 7.50 SBP, PBS* GBP, 14-Oct-18, 173.6 165 Whitening of black money: new amnesty scheme on the cards The govt. is planning to launch a scheme for more than 3,500 individuals who had approached the authorities for whitening 155 their black money, worth more than PKR 300Bn, under the amnesty scheme launched by the previous govt., but then failed to 145 submit the required declarations before expiry of the deadline. Tribune-Sun. 135 EUR, 14-Oct-18, 152.6 125 PM meets businesspeople 115 PM Imran Khan held a meeting with leading businessmen and economy experts to discuss the current economic situation and growth of the economy. The participants, while acknowledging huge challenges the govt. has inherited appreciated the 105 measures taken by the govt. to stabilize the economy and restore confidence of the business community. The participants 95 Oct-17 presented various proposals to strengthen local industries and provide them with a level playing field in order to make Pakistani USD products internationally competitive. The meeting also discussed in detail various short, medium and long term measures to promote vital sectors of economy such as agriculture, industry etc., and to plug the holes that are continuously draining the economy. Tribune-Mon. KSA’s investment team arrives by October 18 An investment and business delegation led by senior govt. functionaries from the Kingdom of Saudi Arabia will visit Pakistan by 18th Oct to negotiate on investment opportunities in different sectors. The delegation will discuss increase in trade and investment in areas of petroleum, agriculture, textile and chemicals for enhancing cooperation between the two counties. \ Pakistan had also proposed a FTA to KSA for increasing trade and business relations. BR-Mon. World Bank to finance three hydropower projects in KP The World Bank has agreed to extend its financial support in energy sector of KP by constructing three hydropower projects in districts Upper Dir and Swat. The WB will provide financial support of $ 200Mn for the hree projects i.e. 22 MW Patrak Shringal hydropower project, 47 MW Barikot HPP and 88 MW Gabral Kalam HPP. These projects will in total generate 157 MW electricity and will be completed by year 2025. Nation-Mon. FBR zeroes in on real estate transactions In a move to determine non-filers’ investments in the real estate, the FBR has identified more than 16,000 tax evaders who paid zero taxes despite investing billions in the sector during last two years. More than 80,000 transactions worth approximately PKR 800Bn (as per deputy commissioner rates) have been identified but the market value of these transactions is likely to be much higher than the stated figure. Dawn-Sun. Jan-18 GBP Apr-18 EUR Jul-18 Oct-18 Source: KCCI Research ; Oanda.com Quote of the Day “Fear is the disease. Hustle is the antidote.” Travis Kalanick First unit of Thar coal to contribute 330MW The first unit of Thar coal power plant is likely to contribute 330MW of electricity to the national grid by Dec’ 18, six-month ahead of the given schedule. So far 92% of work on coal mining and 93% work of power plant have been completed. The 270km long transmission line from Thar block II to Matiari has already been completed at a cost of $ 270Mn. Tribune-Mon. Housing plan may take a hit: IMF sees 14% inflation rate by June 2019 The IMF has predicted that standard inflation rate in Pakistan may strike 14% by Jun’ 19. Such inflation rate will lead to higher interest rates to almost 15%, which will affect the economy significantly. It has been observed that such elevated stage of inflation can affect PM Imran Khan's most determined flagship program of constructing 5Mn low-cost housing units. The IMF has also forecasted economic growth rate of below 3% for FY19. BR-Sun. USD, 14-Oct-18, 132.0 Chart of the Day Pakistan Net Investment ($ Mn) 480.60 500 400 288.20 300 200 100 0.10 0 -100 -200 -49.60 -105.70 -129.60 Foreign Portfolio Investment Foreign Direct Investment 2MFY18 Foreign Public Investment 2MFY19 Source: KCCI Research, SBP Disclaimer Uncertainty wipes $ 41Bn off PSX capitalization From an uncertain political climate, Pakistan has transitioned to what can be called a relatively stable environment. However, This report has been prepared by KCCI Research & Development Cell. The this 180-degree shift has come at a hefty cost as the country and its stock market have suffered heavily. The Pakistan Stock information contained herein have been compiled or arrived at based upon Exchange (PSX) has continued to reflect sad stories of economic stress since the political drama took centre stage. Beginning information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. with the Panama Papers leaks, the bourse has suffered a massive reduction of $ 41Bn in market capitalization to $ 58Bn as compared to $ 99Bn on 24th May’ 17 when the benchmark KSE-100 index hit an all-time high at 52,876 points. Tribune-Sun. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The