Pakistan Daily Economy Update - 18 April

Transcription

1. Apr . 18, 2018 KCCI - eBulletin Defence, debt to eat up half of proposed PKR 5.24Tn budget for 2018-19 The federal cabinet has approved an expansionary fiscal policy that offers little for development but gives away more than half of the estimated budget of PKR 5.24Tn for FY19 to meet the growing needs of defence as well as debt servicing. It approved PKR 1.1Tn for regular defence budget and another PKR 100Bn for Armed Forces Development Programme (AFDP) – a sum of PKR 1.2Tn that is equal to 23% of the proposed total budget. Another amount of PKR 1.61Tn or 30.7% of the proposed budget has been earmarked for debt serving. The debt servicing cost in the outgoing FY18 was PKR 1.36Tn which has now jacked by PKR 243Bn or 17.8% for FY19. The cabinet also approved the Budget Strategy Paper for FY19, authorizing a record budget deficit of PKR 2.03Tn that will be equal to 5.3% of the GDP. It will borrow this amount from domestic and external sources to bridge the budget deficit gap. It also approved PKR 4.435Tn tax collection target for the FBR for next year. The PM also decided to increase the federal development budget to PKR 800Bn against the finance ministry’s proposal of PKR 750Bn. Tribune. Fiscal year 2019 budget: no CSF inflows estimated The federal cabinet has approved proposed broad contours of budget for FY19 with a 5.3% deficit and overall outlay of around PKR 5.5Tn, and has revised downward tax and non-tax revenue projections for FY18. The meeting, headed by PM Abbasi was informed that no inflows have been estimated from Coalition Support Fund (CSF) for FY19. It was also informed that debt servicing may face an upward revision for FY19 because of PKR depreciation of around 11% in FY18. PKR 90Bn are expected from GIDC and provinces’ share was envisaged at PKR 2,550Bn from NFC. However, the numbers are not final and may undergo a revision before the presentation of the budget. BR. Revised tax projection estimated at PKR 3,950Bn The downward revised revenue collection target of the FBR would range around 3,950Bn for outgoing FY18 against the budgetary projection of PKR 4,013Bn, reflecting a shortfall of PKR 63Bn. The FBR has provisionally collected net revenue of over PKR 2,621Bn during 9MFY18 against PKR 2,260Bn collected in 9MFY17, reflecting an increase of around 16%. BR. Nepra to start legal proceedings against KE for extended outages Nepra has decided to initiate legal proceedings against K-Electric (KE), for poor maintenance plan, having failed to use alternate fuel and generating less electricity than its capacity, which has resulted in up to 10 hours extended unscheduled load shedding in Karachi. Besides, NEPRA also sent an advisory to the federal govt. for immediate restoration of 190 MMCFD gas supply of 190 mmcfd to KE by SSGC. Nepra’s committee visited KE and noted that infrastructure for alternate fuel/HSD operation at both gas turbine based power plants at Korangi and Bin Qasim is available. Furthermore, load management carried out by KE was beyond its claims while its network also experienced faults, adding to the unplanned load shedding. The Nation. Karachi’s industries threaten shutdown over power woes All 7 industrial areas associations of Karachi have threatened to shut down factories after 48 hours in protest if 8-10 hours long power load shedding does not come to an end immediately. Due to the power cuts, production has declined 50% and industrialists are not in a position to run their factories further in losses, said M. Jawed Bilwani. Industrialists have categorically communicated their concerns to authorities from federal and provincial governments, but to no avail. Even the Sindh CM had invited KE and SSGC to resolve the gas shortage issue, but the meeting failed to yield positive results. Water supply is also suspended in several areas; law enforcers are not allowing tankers to supply water, while pumping groundwater is also banned, he lamented. The News. External account vulnerabilities: IMF clips growth forecast to 4.7% in 2019 The IMF has warned that external account vulnerabilities threaten to clip Pakistan’s economic growth to 4.7% in FY19 as compared to a robust 5.6% in 2018. The Fund’s downward growth forecast for Pakistan echoed a report by the ADB that expects growth to adjust downward to 5.1% during FY19 as balance-of-payment constraints seem to outweigh improvements to supplyside factors such as better energy supply. The IMF expect CPI inflation at 5.2% in FY19 as compared to 5% in 2018 and 4.1% in 2017. The News. Tax amnesty based on proposals of body set up by SC The amnesty scheme recently announced by the govt. is based on the recommendations given by the high-level committee \ constituted by the Chief Justice of Pakistan and comprising top officials of various departments and ministries. In its report submitted before the Supreme Court in the suo motu case on the subject, the committee unanimously concluded that the present environment is most conducive for a voluntary disclosure scheme to Pakistani citizens to declare and repatriate their assets held abroad. The committee also recommended that the measures to trace foreign assets of Pakistani should be widely publicized to convince citizens that if foreign assets are not declared through this one-time window opportunity, there is high probability that those assets will be traced, exposing such persons to huge penalties and prosecution. The News. Higher electricity demand: ECC eases rule for oil imports to keep power plants running In a bid to keep furnace oil-fired power plants running in summer, PM Abbasi has relaxed the condition of international competitive bidding for the import of oil by PSO, to keep adequate fuel stocks in coming months. The emergency situation arose due to an abrupt decision of the PM to immediately stop the import of expensive furnace oil in Dec’17. However, the ECC of the cabinet allowed PSO to import 420,000 tons of furnace oil through gallop tenders while exempting it from PPRA Rules. The ECC meeting also approved the tariff for a 427km oil pipeline to be built from Punjab to KP. Tribune. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 17-Apr 115.61 116.75 0.00% 0.09% Crude (JU'18) 17-Apr 17-Apr 17-Apr 17-Apr PKR PKR Pts. $ Mn $/bbl 45,802 0.79 66.66 0.26% NM** 0.54% Gold (MY'18) Gold (10g) Local 17-Apr 17-Apr $/oz PKR 1,347.2 51,042 0.14% 0.42% Silver (MY'18) Cotton(KHI)-40 kg 17-Apr 17-Apr $/oz PKR 16.78 8,145 0.68% 1.33% Kibor-6M 17-Apr % 6.50 $ Bn 17.64 0.00% WoW -0.88% Remittances 6-Apr FY18 Jul-Mar 18 $ Bn 14.61 YoY 3.55% Exports* Imports* Jul-Mar 18 Jul-Mar 18 $ Bn $ Bn 17.08 44.38 13.08% 15.57% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Mar 18 Trade Balance* $ Bn -27.30 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 2.09 Jul-Mar 18 Jul-Feb 18 LSM Growth* % 6.24 % 3.20 Jul-Mar 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; -17.18% -50.03% 4.44% Major Currencies 175 GBP, 17-Apr-18, 165.6 165 155 145 EUR, 17-Apr-18, 143.1 135 125 115 USD, 17-Apr-18, 115.7 105 95 Apr-17 USD Jul-17 GBP EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "I find that the harder I work,the more luck I seem to have" Thomas Jefferson Chart of the Day CAR SALES IN PAKISTAN 100,000 91,053 90,000 80,000 70,755 70,000 60,000 40,694 50,000 Foreign investors ask govt. to withdraw super tax, cut sales tax to 3% Overseas investors have recommended the govt. to withdraw super tax and reduce the sales tax rates at 13% in the upcoming budget FY19. They have suggested govt. to reduce corporate tax rate to 25% in line with the regional practice where the rate is 22%. Similarly, they have recommended implementation of uniform sales tax rates all over Pakistan, initially reducing it to 13% as in Sindh and then to 10% in line with the average rates in the region. The Nation. 40,000 PKR 474Bn approved for Bhasha dam Ecnec has approved PKR 474Bn for the construction of Diamer-Bhasha Dam to help the country tackle two major issues; water shortage and power generation. The govt. will provide partial funding from the budget while WAPDA will arrange for commercial financing. Dawn. 0 30,000 38,244 32,074 28,120 20,000 10,000 Honda 9MFY17 Suzuki 9MFY18 Toyota Source: KCCI Research, PAMA Disclaimer Foreign investment dips 47% in March Foreign Direct Investment (FDI) took a nose dive in Marc’18 as it fell by 47% to $ 153Mn in against $ 324Mn in Mar’17, reported This report has been prepared by KCCI Research & Development Cell. The information contained the SBP. For 9MFY18, FDI fell by 4.4% to $ 2,094Mn. Chinese share in the inflows stood at $ 1.34Bn (64%) while other notable 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. contributions were from UK ($ 220Mn), Malaysia ($ 122Mn), US ($ 174 Mn) and Switzerland ($ 65Mn). On the contrary, outflow of portfolio investment vastly reduced to just $ 93Mn in 9MFY18 compared to an outflow of $ 346Mn during 9MFY17. Dawn. 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