Pakistan Daily Economy Update - 16 June

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1. Jun . 16, 2017 KCCI - eBulletin PKR 328Bn Balochistan budget unveiled Adviser to Baluchistan’s CM on Finance Sardar Aslam Bezinjo has unveiled budget with a total outlay of PKR 328Bn for the upcoming FY18. The budget envisages development program of PKR 86Bn, including PKR 6.01Bn under Foreign Project Assistance (FPA) with PKR 242.49Bn for non-development expenditures and PKR 242Bn for current expenditures. The total estimated receipts are PKR 276.37Bn of which PKR 12.4Bn will be the province’s own income and PKR 229.97Bn federal transfers, including PKR 17.28Bn direct transfers. The deficit amounting to over PKR 50Bn would be met from the grants promised by the federal govt. An amount of PKR 45Bn has been allocated for the education sector and PKR 18Bn for the health sector. The Nation. Banks demand government to abolish super tax Banks have demanded the government to abolish the super tax or bring the rate for the banking sector at par with others in corporate sector after the approval of Finance Bill 2017. Bankers said that through Finance Bill 2017 the tax was extended to the third consecutive year, leading to a cumulative tax burden of 39% on banks which is excessive and also inequitable. The News. US investors disappointed by federal budget American investors have expressed concerns over the lack of initiatives in the 2017-18 budget to broaden the tax net and simplify procedural requirements for existing taxpayers. In order to spur investment in plant and machinery, American investors were looking for some taxation relief measures, such as the reduction of turnover tax from 1% to 0.5%. However, this was enhanced to 1.25% while there was no reduction in the duty on basic raw material. Dawn. AJK unveils record deficit budget Govt. in Azad Jammu and Kashmir (AJK) has unveiled PKR 94.41Bn budget for FY18, with a record deficit of PKR 13Bn. The budget proposes PKR 23.28Bn, including foreign aid of PKR 1.8Bn, for development works almost 25% of the (total budget) and PKR 71.13Bn for recurring expenditures. Dawn. Govt to revise trade policy Commerce ministry has decided to revise the Strategic Trade Policy Framework (STPF) as exports continue to fall. The 3 year STPF was approved by the government last year. The framework aimed to expand exports to $ 35Bn by 2018, improve export competitiveness, shift the economy from factor-driven to innovation-driven and increase the share in the regional trade. The government will now initiate consultations with 12 large export associations next week, while an inter-ministerial meeting will be held after Eidul Fitr on the issue. Dawn. Ministry devises strategy to revive exports in FY18 In a meeting of top officials of the Commerce Ministry, it has been decided to revive TDAP, strictly monitor the performance of the trade officers working abroad, work aggressively on concluding FTAs and revising Preferential Trade Agreements (PTAs) to explore new export markets to enhance exports in the upcoming financial year 2017-18. During a meeting, Commerce Secretary briefed the minister that work on E-commerce framework and law for geographical indication is on fast track and is most likely to be completed by the end of this year. The Nation. Sindh relying on own resources for development works: CM Sindh CM Mr. Shah has said that Sindh is the only province relying on its own resources for development works as it generates 24% revenue from its own resources. He said that last year PKR 8Bn was given to the KMC for development works in the city. The provincial government had spent PKR 7Bn on the Karachi’s development. CM said the mayor had asked for PKR 9Bn for new schemes and he has assured him of 100% funding to complete the ongoing schemes. Dawn. Power generation, transmission & distribution: Senate body seeks Centre’s opinion Senate’s Water and Power Standing Committee has sought the federal govt's opinion on whether provincial govts are 'independent' in matters relating to electricity generation, transmission, distribution, and fixing tariffs under Article 157 of the Constitution. Earlier in the Senate’s meeting, Senator Taj Haider disclosed that Sindh has set up a transmission company for laying its own transmission line and to set tariff, adding that the provincial govt also intends to set up its own electricity distribution system under article 157 of the Constitution. Provinces are already allowed to establish generation plants. BR. \ Rising external debt payments: FX reserves decline over $ 1.6Bn in two weeks Rising external debt payments has swallowed over $ 1.6Bn from the country's foreign exchange reserves in two weeks as reserves further declined by over $ 358Mn to $ 20.16Bn as on Jun. 9, 2017 compared to $ 20.52Bn on Jun. 2, 2017. A decline has been registered in the reserves held by the SBP by $ 410Mn to $ 15.30Bn compared to $ 15.71Bn a week earlier. Contrarily, with an increase of $ 52.4Mn, reserves held by the banks surged to $ 4.86Bn on Jun. 9, 2017 compared to $ 4.81Bn a week earlier. BR. Economic Indicators List of Indicators Laying new pipeline: ECC likely to allow gas utilities to borrow PKR 175Bn The ECC is likely to allow public gas utilities to borrow PKR 175Bn from commercial banks for laying a new LNG pipeline from Karachi to Lahore that will transmit 1.2Bn cubic feet of imported gas per day (bcfd). The Ministry of Petroleum and Natural Resources is seeking allocation of PKR175Bn for the collection of Gas Infrastructure Development Cess (GIDC); but as the PKR 183Bn GIDC so far collected by the govt. has been spent on bridging the fiscal deficit and financing other infrastructure projects, the gas companies are compelled to make commercial borrowing for the new pipeline. Tribune. Thousands of tons of sugar stuck at Chaman Owing to the Commerce Ministry’s non-issuance of notification for extending deadline of sugar exports, hundreds of trucks loaded with sugar destined for Afghanistan are stuck at Chaman border. The Economic Co-ordination Committee (ECC) in its meeting held on June 7, 2017, considered and approved the proposal of Ministry of Commerce for extending the deadline for export of sugar from May 31, 2017 till Jul. 31, 2017. BR. Pakistan to join top global economies of G20 by 2030: Dar Speaking at a contract signing ceremony of "Broadband for Sustainable Development Projects and National Incubation Centres", Finance Minister Ishaq Dar has said that Pakistan would be part of elite club of leading world economies G20 by 2030 according to predictions of international financial institutions. The Minister said that Pakistan has signed agreements with Organization of Economic Cooperation and Development (OECD) in 2016, changed its laws and made its financial systems compatible with global standards to stop tax evasion. The Nation. Unit Value Change Daily 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun 15-Jun PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.88 106.00 47,443 -9.70 44.62 1,254.6 42,985 16.73 7,180 6.15% 9-Jun $ Bn 20.16 0.00% 0.00% -0.35% NM** -0.69% -0.56% -0.10% -0.89% -0.75% 0.00% WoW -1.75% YoY -2.13% -3.13% 20.60% -42.12% -204.75% Crude (AU'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves Jul-May 17 Remittances $ Bn 17.46 Jul-May 17 Exports* $ Bn 18.54 Jul-May 17 Imports* $ Bn 48.54 Jul-May 17 Trade Balance* $ Bn -30.00 Jul-Apr 17 Current Account $ Mn -7,247 % 4.18 Avg. CPI-FY17* Jul-May 17 May-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 Jun-16 GBP, 15-Jun-17, 133.6 EUR, 15-Jun-17, 117.2 USD, 15-Jun-17, 104.8 Sep-16 USD GBP Dec-16 Mar-17 Jun-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "I attribute my success to this: I never gave or took any excuse." ADB approves $ 300Mn for power sector reforms The Asian Development Bank (ADB) has approved a $ 300Mn loan for Pakistan’s power sector, which will immediately serve the short-term purpose of supporting the sliding foreign currency reserves. This is the third sub-programme of the Sustainable Energy Sector Reforms Programme, consisting of five annual sub-programmes that began in April 2014. The ADB has so far given $ 1.1Bn while the World Bank has also given $ 1.1Bn in two tranches. A $100-Mn loan offered by the French Development Agency (AFD) is also pegged with the ADB’s $3 00Mn energy sector loan. Tribune. Exploring Options: Delegation to visit US business expo The US Commercial Service (USCS) will be leading a delegation of Pakistani companies from Karachi, Islamabad and Mirpur to the International Franchise Expo (IFE) running from 15-17th Jun’17, in New York. The largest event of its kind, IFE will have 400 exhibitors, including leading US franchise companies. Delegations from more than 200 Pakistani companies participated in key US trade shows in 2016 as well. Tribune. Date / Period USD-Interbank USD-Open MKT KSE-100 index FIPI Florence Nightingale Chart of the Day BUDGETED FISCAL DEFICIT VS. REVISED FISCAL DEFICIT (FY11-FY18) 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -4.0% -4.7% -6.0% -7.0% -8.0% -9.0% -7.4% FY12 -4.3%-4.3% -4.9% -5.0% -5.8% -6.3% -3.8% -4.1% -4.2% -8.8% FY13 FY14 FY15 Budgeted Fiscal Deficit FY16 FY17 FY18 Revised Fiscal Deficit Source: KCCI Research, MoF 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