Pakistan Daily Economy Update - 16 September

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1. September 16 , 2022 KCCI - eBulletin KCCI urges govt. to allow agriculture imports from Wagah border post Chairman BMG Zubair Motiwala and President KCCI Muhammad Idrees have appealed the govt. to immediately allow imports of raw cotton, food items and other essential products from India through Wagah border as Pakistan faces severe shortages of all these products because of the devastation caused by flashfloods. Chairman BMG stressed the govt. has to act promptly and sensibly, in this regard, to avert food crises as according to estimates, 65% of Pakistan’s main food crops including 80% of its wheat, rice and raw cotton etc. have been completely swept away during floods, and more than 3Mn livestock have also died. President KCCI Muhammad Idrees stated that Pakistan heavily relies on the local production of agricultural products but now it was obvious that these have to be imported so it was better to import from India which produces plenty of these agricultural products and also the livestock. BR. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 15-Sep 15-Sep PKR PKR 235.88 240.50 0.67% 0.80% KSE-100 index FIPI 15-Sep 15-Sep Pts. $ Mn 41,772 5.97 -0.57% NM** Crude Oil SBP reserves down $ 176Mn Forex reserves of the SBP fell by $ 176Mn to $ 8.624Bn during the week ended on 9th Sept’22. SBP reported that the country’s total reserves were at $ 14.317Bn while the holdings of the commercial banks were $ 5.693Bn during the week. Dawn. 15-Sep $/bbl 84.69 -4.90% Gold 15-Sep $/oz 1,677.3 -1.86% Gold (10g) Local 15-Sep PKR 133,580 -0.13% Silver 15-Sep $/oz 19.27 -1.53% Oil, food imports rise to $ 5Bn in July-August Pakistan’s oil and eatables imports grew 11.4% in 2MFY23 to $ 5.08Bn from $ 4.56Bn in 2MFY22, according to the PBS. In contrast, textile and clothing exports could only rise by 4.2% YoY to $ 3.05Bn. Oil import bill increased by over 7% to $ 3.30Bn in Jul-Aug’22 from $ 3.08Bn in Jul-Aug’21. The food import bill rose by over 21% to $ 1.78Bn in 2MFY23 from $ 1.47Bn in 2MFY22. Dawn. Cotton(KHI)-40 kg 15-Sep PKR 23,577 -2.22% Kibor-6M 15-Sep % 16.11 0.01% Forex Reserves 12-Aug $ Bn 13.61 WoW 0.38% Jul-Aug 22 $ Bn 5.25 -2.18% Exports* Jul-22 $ Bn 2.22 -4.76% Imports* Jul-22 $ Bn 4.86 -10.48% Trade Balance* Jul-22 $ Bn -2.64 14.77% Jul-22 Jul-Jun 22 $ Bn $ Bn -0.85 1.87 -10.1% 1.13% ‘80% foreign-funded projects of water sector facing delays’ Around 80% of the foreign-funded projects of water sector are facing delays, where the govt. had to pay additional commitment charges of $ 6Mn, and $ 90.2Mn interest. There are 26 federal projects of the water sector with a portfolio of $ 3.3Bn. Of these, $ 1.6Bn remained un-disbursed, whereas, 7 projects worth $ 1.6Bn are rated unsatisfactory and 11 projects of $ 1.11Bn as problematic. BR. Some oil products likely to be dropped from PPRA schedule Govt. is likely to drop some petroleum products from Schedule-1 of PPRA but furnace oil will continue to be retained to avail shorter response time and bid validity. The PPRA Board in its forthcoming meeting, to be held next week, will discuss this issue. BR. Sindh’s wheat support price termed ‘too high’ Members of the NA Standing Committee on Commerce expressed reservation to the Sindh govt.’s announcement of fixing PKR 4,000 rate of 40KG of wheat in the province, saying the rate was too high. It was informed by the Industry Ministry officials that there would be no shortage of urea fertilizer during the upcoming Rabi season. Tribune. Wapda refutes report about Neelum-Jhelum project’s closure Spokesperson of WAPDA, taking strong exception to a news about abandoning of Neelum-Jhelum Hydropower Project in Pakistan by a Chinese firm, has termed it fabricated and misleading, saying that the Chinese Contractor has been continuously working at all sites without any interruption. BR. Academia, industry urged to encourage innovation Federal Minister for Planning, Development and Special Initiatives has said that the govt. has launched an investment fund project at a cost of PKR 10Bn, aimed to encourage innovation in the country, and urged the academia and industry to bring innovation to every field in order to get the desired results. BR. Current value assessed at PKR 1.951Bn: PKR 2Bn previous valuation of SIH was reasonable, CCoP told Ministry of Privatization has informed the Cabinet Committee on Privatization (CCoP) that the fresh value of Services International Hotel (SIH) was assessed at PKR 1.951Bn; therefore, the previous valuation was reasonable. BR. PSX e-IPO system introduced for investors, RDA holders SECP in coordination with PSX has adopted a disclosure-based regime and has introduced PSX e-IPO system for IPO investors including individual investors, corporate investors, and Roshan Digital Account holders. BR. Most budget figures to undergo fluctuations: MoEA Most of the budget figures for the FY23, including GDP growth rate, debt-to-GDP ratio and the budget deficit would fluctuate massively on account of unabated depreciation of PKR against USD followed by heavy rains and floods, devastating all sectors including agriculture and infrastructure across the county, as stated by senior officials of the Ministry of Economic Affair. Further, due to lowering of ratings by different rating agencies, the market is not ready to respond positively. Rather, the govt. needs to focus on multilateral and bilateral sources for more inflows, the official added. BR. Floods to weigh on agri production: Fitch Fitch Solutions has stated the severe floods in Pakistan to weigh on agricultural production and exacerbate the country’s external imbalances, and \ revised real GDP growth forecast for FY23 down to 0.2% from 0.6% previously. Fitch Solutions also stated that a reduction in crop production will also likely lead to higher inflation, which could in turn prompt SBP to tighten monetary policy even more aggressively. BR. Recovery of CVT on foreign assets: SHC asks tax authorities to comply with relevant laws Sindh High Court has asked tax authorities to take into account the compliance of the law and the relevant provision, prescribed by the FBR before proceeding for recovery of CVT amount on foreign assets. BR. Federal govt. to announce wheat MSP next month Federal Govt. is to announce Minimum Support Price (MSP) of wheat in the first week of Oct’22, after taking provincial govts on-board. BR. Essential commodities: Stakeholders told to avoid speculative trading Federal Minister for Planning, Development and Special Initiatives, while chairing a National Price Monitoring Committee (NPMC), directed the concerned stakeholders to ensure the distribution of essential commodities among the masses after the recent floods, as there should be no speculations to disturb the market. BR. YoY Remittances Current Account Foreign Direct Inv. Jul-Jun 22 LSM Growth* % 11.70 % 24.93 Jul-22 Avg. CPI Discount Rate % 15.00 Jul-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Sep-21 GBP, 16-Sep-… EUR, 16-Sep-22, 239.2 USD, 16-Sep-22, 240.5 USD PM Relief Fund generates PKR 3.3Bn, Senate panel told Briefing the Senate Standing Committee on Climate Change, NDMA officials said that recent devastating floods have killed at least 1,412 people and 141,771 cattle, besides damaging 5.321Mn homes so far, and PKR 3.3Bn had been collected through the PM’s Relief Fund. Tribune. KE begins collecting utility charges for KMC through power bills KE has started charging its 3.2Mn consumers, a controversial tax on behalf of the Sindh govt. under the head of Municipal Utility Charges and Taxes (MUCT). Dawn. Sindh to seek help of experts from Punjab to curb dengue Sindh govt. has decided to seek assistance of dengue experts from Punjab to train doctors and other staff of the provincial health department as the cases of dengue and malaria have started spreading rapidly across the province, especially in the city, during monsoon rains. Dawn. PIA reduces fares for flights to, from China PIA has reduced its fares by 10% for Islamabad to China. The airline has also announced 22% discount for students getting tickets from PIA offices, and would now be able to carry 80kg of luggage instead of 40 kg. BR. Mar-22 EUR Jun-22 Source: KCCI Research Quote of the Day “If you are working on something that you really care about, you don’t have to be pushed. The vision pulls you.” Steve Jobs Grosss External Debt Position by Sector (As of 30th Jun'22) ($ Bn) Monetary Authorities Pakistan asked to seek ‘climate compensation’ A scientific study by an international meteorological expert group — World Weather Attribution (WWA) — has found compelling evidence of climate change exacerbating recent devastating floods and heatwave earlier this year and has asked Pakistan to seek compensation from developed nations for loss and damage support along with immediate push to reduce carbon emissions. Dawn. Paracetamol production set to resume The pharmaceutical industry has agreed to partially resume the production of paracetamol after the manufacturers of the local active pharmaceutical ingredients (API) decided to reduce the cost of raw materials by 10%. Dawn. Dec-21 GBP TOTAL $ 130.192 General Government 66% (86.13) Banks Other Sectors DI: Intercompany Lending Source: KCCI Research, SBP Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.