Pakistan Daily Economy Update - 19 May

Transcription

1. May 19 , 2016 KCCI - eBulletin Laws regulating inflow, outflow of foreign exchange: Dar, others review proposals Finance Minister Ishaq Dar has chaired a high-level meeting for reviewing proposals and recommendations on bringing about improvement and changes in the laws regulating the inflow and outflow of foreign exchange in the country, as well as disclosure of assets held abroad by Pakistanis. In this regard; State Bank of Pakistan (SBP), Securities and Exchange Commission of Pakistan(SECP), and Federal Board of Revenue(FBR), submitted their separate reports, in the context of Finance Minister's instructions given earlier on evolving a methodology to plug loopholes in the system that allow tax evasion and illegal transfer of foreign exchange from the country. BR. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 18-May PKR 104.75 0.00% USD-Open MKT 18-May PKR 105.10 0.10% KSE-100 index FIPI 18-May 18-May Pts. $ Mn 36,318 -0.75 0.50% NM** Crude (JU'16) 18-May $/bbl 48.84 -0.67% Exchange companies: Govt. likely to double WHT on cash withdrawals The govt. may double withholding tax on cash withdrawal from banks by currency exchange companies, as infighting among top bureaucrats of FBR intensifies over inclusion of tax proposals of their own liking in the upcoming budget. The FBR has proposed an increase in withholding tax, which is collected as advance income tax, from 0.15% to 0.3% in a bid to receive additional revenue of PKR 3Bn in FY17. Tribune. Gold (MY'16) 18-May $/oz 1,259.0 -1.65% Gold (10g) Local 18-May PKR 42,342 -0.30% Silver (MY'16) 18-May $/oz 16.90 -2.10% Cotton(KHI)-40 kg 18-May PKR 6,093 1.52% Kibor-6M 18-May % 6.41% 0.01% Development budget: differences over outlay delay finalization The govt. is likely to delay Annual Plan Co-ordination Committee (APCC) meeting till May 27, 2016, earlier scheduled for May 23, 2016 to finalize development outlay and approve macroeconomic framework for FY17 due to differences between Finance Division and Planning Commission on the size of development budget. Planning, Development and Reforms Ministry has recommended PKR 900Bn to PKR 925Bn for federal PSDP for upcoming FY17. However Finance Ministry's initial suggestion for development spending; was PKR 655Bn as local component and a PKR 130Bn as foreign exchange component (FEC). BR. Forex Reserves 6-May $ Bn 20.83 0.22% Remittances Jul-Apr 16 $ Bn 16.03 5.18% Exports* Jul-Apr 16 $ Bn 17.32 -12.99% Imports* Jul-Apr 16 $ Bn 36.34 -3.70% Trade Balance* Jul-Apr 16 $ Bn -19.02 -6.68% Current Account Avg. CPI-FY16* Jul-Mar 16 Jul-Apr 16 $ Mn % -1,606 2.79 18.52% Budget 2016-17: rate of FED on above 2700cc cars may be doubled The govt. is likely to double the rate of Federal Excise Duty (FED) on vehicles import above 2700cc in the upcoming budget (2016-17) to generate extra revenue from owners of luxury vehicles. The govt. had imposed 10% excise duty on motor vehicles with cylinder capacity of 1800cc or above. Under the present law, imported vehicles exceeding 1800cc are subjected to 10%. The FED which may be enhanced to 20% on vehicles exceeding 2700cc. BR. Government likely to miss growth target The govt. is expected to miss 5.5% budgeted growth target for ongoing FY16 as a result of lower than anticipated production of cotton crop while meeting budgeted 4.3% budget deficit target would also be a challenge if inflows on various accounts fail to materialize. In this regard, Finance Ministry would slash development spending to come close to meeting budgeted fiscal deficit target; however prospect of generating budgeted PKR 50Bn on account of privatisation proceeds and PKR 65Bn from 3G auction are bleak. Finance Minister Ishaq Dar has been pressurizing Information Technology Ministry to auction 3G before the end of FY16 which is now scheduled for Jun. 20, 2016. BR. Prime Minister to lay ground for $ 44Mn optic fiber link Prime Minister Nawaz Sharif is scheduled to perform the groundbreaking of Pakistan-China Optical Fiber Cable Project, which is part of the China Pakistan Economic Corridor (CPEC). The $ 44Mn fiber optic cable to be laid between Pakistan and China will become another high-speed international connection to cater to the rapidly growing Internet traffic needs of Pakistan. In this regard, China has already released $ 11.24Mn for establishment of cross-border optic fiber cable. BR. Senate body for immediate ban on cotton imports through Wagah Senate Standing Committee on National Food Security and Research has urged the govt. to impose ban on cotton imports from India via Wagah Border, as it was detrimental to the interest of cotton growers of the country. The committee expressed concern that if the imports of cotton lint continued, it would affect the cotton production in the country, adding that last year cotton production declined 30%, so if appropriate measures are not taken, the position would deteriorate and affect the production. Tribune. Italian companies keen to expand civil, military ties Italy’s Industrial Federation for Airspace, Defence and Security Chairman Guido Crosetto has said that the Italian companies with higher technological value are keen to expand and deepen civil and military cooperation between Pakistan and Italy. During a meeting with Minister for Commerce Engineer Khurram Dastgir Khan, he said that the Italian companies were not only interested in investments in Pakistan but would also facilitate the complete transfer of technology in the field of aerospace and security. Tribune. Govt rejects all bids for PIBs The government has rejected all the bids received for Pakistan Investment Bonds (PIBs) in the latest auction, amid expectations of higher returns by banks. Banks were seeking higher yields as their earnings have fallen amid the sustained low interest-rate environment. In the remaining two months of FY16, a maturity of about PKR 1.4Tn is scheduled and the government needs to pay back this huge amount. It shows the government would be needing massive liquidity in the coming days. The government is under pressure due to the opposition’s criticism on massive borrowings, both domestic and foreign. Half-yearly results showed that the huge costly borrowing through PIBs has significantly increased the size of domestic debt servicing. Dawn. Two more PSX members surrender memberships In order to avoid tough regulations, two more members of Pakistan Stock Exchange have surrendered their memberships to PSX, bringing the total of surrenders to four so far. The Managing Director of PSX has confirmed receipt of four applications surrendering the membership, while 15 more surrenders are expected in the coming days. The condition of declaring the brokerage house a public company if its revenues surpass PKR 100Mn is the most difficult one, from the point of view of members. The News. WoW YoY Apr-16 Discount Rate % 6.00 Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 GBP, 18-May-16, 151.9 155 145 EUR, 18-May-16, 118.2 135 125 115 105 95 USD, 18-May-16, 104.8 85 75 May-15 Aug-15 USD Nov-15 GBP EUR Feb-16 May-16 Source: KCCI Research ; Oanda.com Quote of the Day "I have always believed that when you have a voice, you have an obligation to use that voice to empower others." Diane von Furstenberg Chart of the Day Sector-Wise Repatriation of Profits from Pakistan on FDI (9MFY16) Financial Business Power Communications Oil & Gas Explorations Food Petroleum Refining Chemicals Beverages Transport Equipment Cement Transport Others Pharmaceuticals Products Tobacco & Cigarettes Food Packaging Value in $ Mn 196.17 149.79 116.96 89.19 82.56 49.50 46.05 45.17 43.15 38.86 35.50 31.54 13.69 12.71 12.20 0 50 100 150 200 250 Source: KCCI Research, SBP 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