Pakistan Daily Economy Update - 2 September

Transcription

1. Sep . 2, 2016 KCCI - eBulletin PM will continue to have final say on oil prices Federal cabinet has decided to adhere to the past practice and authorized the prime minister to continue to be the final decision-making authority on changes to the prices and taxes on petroleum products. Chaired by Prime Minister Nawaz Sharif, the cabinet also decided not to change the prices of petroleum products for the month of September 2016. On Aug, 18. 2016. The Supreme Court had ruled that the prime minister could not move any legislation, finance/fiscal bill or approve any budgetary or discretionary expenditure on his own, without taking the cabinet into confidence. Dawn. Free trade: Pakistan, Turkey move closer to inking FTA The long pending Pak-Turkey Free Trade Agreement (FTA) is finally at the brink of conclusion as both countries have agreed to eliminate 85% of tariffs. Both sides have also agreed to address all the remaining issues in the FTA which is to be signed by 2016. The understanding was reached between the two countries during the fourth round of Pakistan-Turkey FTA negotiations, which was held in Islamabad from Aug. 29-31. Both countries also agreed that the elimination of 85% tariffs shall include regulatory duties and additional duties. It is hoped that Pakistan’s exports to Turkey will likely increase by $ 500 to $ 600Mn in a short span after the FTA. Tribune. Return on investment in sukuks: Tax imposed on every person at specified rates Tax Laws Amendment Ordinance 2016 has imposed tax at the specified rates on every person who receives a return on investment in sukuks from a special purpose vehicle. In this regard, a new provision i.e. section 5AA (Tax on return on investments in sukuks) has been introduced in the Income Tax Ordinance. The new section 5AA deals with the tax on return on investments in sukuks and new section 150A is related to the deduction of tax by special purpose vehicle. BR. August 2016: Perishable food items push inflation up by 3.56% According to the PBS, annual inflation fell to 3.56% in Aug, 2016 from 4.12% in the preceding month. The main inflation is measured by Consumer Price Index (CPI) which tracks prices of nearly 500 commodities every month across the country. The index went down by 0.3% in Aug as compared to the increase of 1.3% in the previous month and 0.2% in Aug 2015. On a month-on-month basis, food inflation fell by 0.9% in Aug. due to a 6.5% decline in prices of perishable products. Whereas, average inflation in the first two months – July and August of FY17 stood at 3.84%. The News. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 1-Sep PKR 104.69 -0.10% USD-Open MKT 1-Sep PKR 105.60 -0.19% KSE-100 index FIPI 1-Sep 1-Sep Pts. $ Mn 39,739 -3.98 -0.18% NM** Crude (JU'16) 1-Sep $/bbl 43.53 -5.43% Gold (MY'16) 1-Sep $/oz 1,313.5 0.37% Gold (10g) Local 1-Sep PKR 44,057 -1.68% Silver (MY'16) 1-Sep $/oz 18.88 1.22% Cotton(KHI)-40 kg 1-Sep PKR 7,111 -0.75% Kibor-6M 1-Sep % 6.03% -0.01% Forex Reserves 26-Aug $ Bn 23.04 -0.18% Remittances Jul-16 $ Bn 13.28 -20.14% Exports* Jul-16 $ Bn 1.48 -7.45% Imports* Jul-16 $ Bn 3.56 5.52% Trade Balance* Jul-16 $ Bn -2.08 -17.20% Current Account Avg. CPI-FY17* Jul-16 Jul-Aug 16 $ Mn % -591 3.84 -152.56% WoW YoY Jul-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies SBP governor upbeat about remittances outlook The central bank’s governor is confident that the country will have no problem in meeting foreign payment obligations as more Pakistani workers went abroad during the last fiscal year, hence more remittances are expected this year. “Outlook remains positive as the number of Pakistanis who proceeded abroad increased by 16% in FY16. As of today, external debt servicing obligations for Pakistan are not more than an average of $ 5Bn per year until 2020,” SBP Governor Ashraf Mahmood Wathra said. Dawn. Exempting IPPs from ST: Senate body irked by FBR's reluctance to provide justification FBR reluctance to provide justification for exempting circular debt payment to IPPs from sales tax has infuriated the members of the Finance Standing Committee. The Committee wants to know the name of issuer on whose directives SRO was issued, and what made govt. to give favor to IPPs. In this regard, discussions have been held on circular debt of power sector. The power sector and IPPs were made payment of PKR 480Bn on account of pending circular debt however the entire transaction was carried out in one single day by bypassing Accountant General of Pakistan Revenue and exempting payment from sales tax. BR. CCP initiates inquiry into USC project Competition Commission of Pakistan (CCP) has started an inquiry into the multi-billion rupee automation project of Utility Stores Corporation (USC). In this regard, a non-exhaustive list of concerns was brought to the knowledge of the Minister. The list is based on (i) Request for Proposal (RFP) apparently favors a foreign solution by putting the local bidders at a disadvantage which is a violation of IT Policy and (ii) sub-clause ix of the clause 4.2 (prequalification) unfairly attempts to eliminate local ERP products. BR. SECP presents micro insurance framework to get support of stakeholders The SECP, with the assistance of GIZ Regulatory Framework for Promotion of Pro-Poor Insurance Markets in Asia (RFPI ASIA), has prepared a strategic framework for micro insurance development. The framework has been unveiled before various public and private stakeholders engaged in micro insurance at a Multi Stakeholder Dialogue (MSD). The Nation. Forex reserves ease by $ 43Mn Foreign exchange reserves of the country eased by $ 43Mn to $ 23.03Bn by the week ended Aug 26th, 2016 as against $ 23.08Bn a week ago. During the week ended, the SBP’s reserves decreased by $ 58Mn to $ 18.12Bn as compared to $ 18.18Bn in the previous week. The foreign exchange reserves held by other commercial banks slightly increased to $ 4.90Bn from $ 4.89Bn in the previous week. The News. FBR mulls confiscating airline’s assets for tax recovery FBR is mulling to confiscate an airplane or assets of a private airline for auctioning to recover an outstanding PKR 2.93Bn as unpaid taxes. The sources in the Large Taxpayers Unit (LTU) Karachi said the private airline collected the federal excise duty on the sale of tickets on behalf of the FBR, but failed to deposit the same into the national kitty. The airline did not settle the said amount due to financial crunch therefore, on August 30, the LTU froze the airline’s bank accounts for the recovery. The News. Corporate results: Lucky Cement’s earnings surge to PKR 16.16Bn Lucky Cement’s full-year profits went up 9.3% on account of increase in the turnover. Lucky announced earnings of PKR 16.15Bn (EPS: PKR 45.99) in FY16, up against PKR 14.78Bn (EPS: PKR 42.54) in in FY15. The result also accompanied a final cash dividend of PKR 10 per share. Tribune. 175 165 155 GBP, 1-Sep-16, 138.2 145 135 EUR, 1-Sep-16, 116.8 125 115 105 95 USD, 1-Sep-16, 104.6 85 75 Sep-15 Dec-15 USD GBP Mar-16 EUR Jun-16 Sep-16 Source: KCCI Research ; Oanda.com Quote of the Day “Your reputation is more important than your paycheck, and your integrity is worth more than your career.” Ryan Freitas Chart of the Day 14 YoY Inflation (%) (Jan.'12 - Aug.'16) 12 10 8 6 4 2 0 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Banking channels: Pak-Iran MoU awaits final approval The federal cabinet will give final approval to the MoU regarding resumption of Pak-Iran banking relationship, which will create a business-friendly environment for the two countries, said Commerce Minister Khurram Dastgir Khan. The Economic Coordination Committee of the cabinet has already approved the MoU between central banks of Iran and Pakistan. He said that under the agreement Pakistan and Iran will create a bilateral mechanism, according to which both countries will pay their traders on their own and by the end of Sep. we will have a proper banking relationship. Tribune. General Inflation Core Inflation (NFNE) 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 R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk