Pakistan Daily Economy Update - 2 March

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1. Mar . 2, 2017 KCCI - eBulletin Budget will focus on inclusive growth: Dar Finance Minister Ishaq Dar has said that budget for the upcoming Fiscal Year 2017-18 would focus on inclusive growth and measures for improving ease of doing business and increasing financial inclusion in the country. In this regard, Finance Secretary stated that as directed by the finance minister, all stakeholders including economic experts, chambers of commerce & industries, business community and traders would be taken on board while finalizing the budget. He further said that all budget activities would be undertaken according to the timelines given in the schedule shared with the Finance Ministry. BR. ECO leaders link CPEC to region’s development The 13th Summit of the 10-member Economic Co-operation Organization (ECO) has come up with a unanimous resolve to build and promote multidimensional connectivity for greater regional co-operation. During the summit, ECO leaders also welcomed CPEC as a far-reaching initiative that would act as a catalyst for the development of the entire region. The leaders also agreed to enhance ECO-wide connectivity in terms of transport and transit, telecommunications, cyber, and all forms of energy, as well as people-topeople exchanges. BR. KE deal waiting for government’s nod The govt. is not yet ready to give its final nod to Abraaj Group and China's Shanghai Electric Power (SEP) to acquire 66.4% stake for $ 1.77Bn until PKR 75Bn dues of public sector entities are cleared as concerned Ministries maintain that the deal cannot be approved until final reconciliation of liabilities. In this regard, Sale Purchase Agreement has not been shared with several govt. organizations. KE's management and NTDC team are engaged in reconciliation of claims of around PKR 47-50Bn while SSGC is also reconciling its gas bills' claims with the KE. BR. FBR issues Active Taxpayers List 2016 FBR has issued the first Active Taxpayers List (ATL) for tax year 2016, showing the number of non-filers has increased by 0.2Mn as compared to ATL 2015. The latest ATL contained names of 1.01Mn taxpayers, whereas ATL 2015 issued on 27th Feb’16 has showed the names of 1.2Mn return filers. The News. Revenue receipts: Tax shortfall widens to PKR 154Bn in 8 months The shortfall in tax collection has increased to over PKR 150Bn in 8MFY17 as FBR has so far provisionally collected PKR 1.91Tn in FY17. Tax receipts rose only about 7% in 8MFY17. In absolute terms, the collection was just PKR 108Bn higher than in 8MFY16. In Feb alone, the FBR could collect PKR 222Bn, registering a sluggish growth of 3% or PKR 6.5Bn. Tribune. Govt. to reduce withholding tax on raw material imports The govt. will give a 2.5% concession on withholding tax rate on import of raw materials in order to encourage manufacturing activities in the country. National Assembly Standing Committee on Finance, Revenue and Privatization have agreed to a proposal of the business community to reduce the withholding income tax rate on raw materials imported by commercial importers to 4% from the current 6.5%. The News. 7MFY17: $ 1.2Bn borrowed from commercial banks: EAD data Pakistan has provisionally received $ 4.57Bn i.e. 57% of budgeted estimates of foreign assistance from multilateral and bilateral donors during 7MFY17 against $ 4.28Bn received during the same period of last year. In this regard, Economic Affairs Division (EAD) data revealed that govt. borrowed $ 300Mn from Industrial and Commercial Bank of China Ltd in Jan.’17, bringing the total borrowing from commercial banks to $ 1.2Bn during 7MFY17. Pakistan received $ 857Mn from China, $ 42.8Mn from Japan and $ 131Mn have been received from UK. Similarly, Asian Development Bank (ADB) disbursed $ 709.75Mn, International Development Association (IDA) $ 131.8Mn, IDB $ 212Mn, International Bank for Reconstruction and Development (IBRD) $144.2Mn and $ 0.49Mn have been disbursed by UNHCR during period under review. BR. Work on TAPI pipeline to start in Pakistan today The construction work on the much-vaunted Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline project will kick off on 3rd Mar’17 to start work on route survey and detailed engineering in Pakistan. Tapi Company, established with the task of running the transnational gas pipeline, has awarded project management contract to German firm ILF. Turkmenistan will invest around $ 25Bn to deliver 3.2Bn cubic feet of gas per day (bcfd) to energy-hungry Afghanistan, Pakistan and India. Of the total, $ 15Bn will be poured into developing a gas field whereas $ 10Bn will be injected into laying the pipeline over 1,680 km connecting Afghanistan, Pakistan and India with Turkmenistan. Turkmenistan will invest 85% of the project’s cost. Tribune Govt. to raise PKR 2.1Tn in March-May The government is set to raise PKR 2.1Tn in March-May, as it plans to borrow PKR 1,950Bn and PKR 150Bn by auctioning T-Bills and PIBs, respectively. Despite the government’s claim about better fiscal discipline, the gap between revenues and expenses has been increasing and can be around 4.5-5% of GDP by the end of FY17. Auction results indicate banks were eager to invest in T-Bills as they placed bids worth PKR 483Bn. Dawn. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (AP'17) Gold (MA'17) Gold (10g) Local Silver (MA'17) Cotton(KHI)-40 kg Kibor-6M 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar 1-Mar PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.84 107.30 48,992 -3.97 53.76 1,250 43,842 18.42 7,272 6.12% Forex Reserves 17-Feb $ Bn 21.93 0.00% 0.00% 0.94% NM** -0.41% -0.01% -0.49% 0.58% 0.00% 0.00% WoW 0.48% YoY -1.86% -3.21% 13.65% -28.68% -90.24% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Jan 17 Remittances $ Bn 10.95 Jul-Jan 17 Exports* $ Bn 11.69 Jul-Jan 17 Imports* $ Bn 29.11 Jul-Jan 17 Trade Balance* $ Bn -17.43 Jul-Jan 17 Current Account $ Mn -4,716 % 3.85 Avg. CPI-FY17* Jul-Jan 17 Jan-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 Feb-16 GBP, 1-Mar-17, 129.7 EUR, 1-Mar-17, 110.8 USD, 1-Mar-17, 105.0 May-16 USD Aug-16 GBP Nov-16 Feb-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day "If your actions inspire others to dream more, learn more, do more and become more, you are a leader." John Quincy Adams Chart of the Day Pakistan's Total Debt 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 12,879.6 14,192.6 6,799.0 7,403.6 459.6 Govt. Domestic Debt External Debt 2QFY16 628.1 PSEs Domestic Debt 2QFY17 Source: KCCI Research, SBP Value in PKR Bn 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