Pakistan Daily Economy Update 20 May

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1. May . 20, 2017 KCCI - eBulletin PKR 2.13Tn PSDP approved by NEC: Ahsan Planning Minister Ahsan Iqbal has said that National Economic Council (NEC) has approved PKR 2.13Tn Public Sector Development Program (PSDP) and growth target of 6% for the upcoming FY18. The Minister dismissed the impression that smaller provinces have reservations over non-accommodation of their projects in the federal PSDP. The minister further said that economic indicators are moving in positive direction and a positive performance of agriculture sector has led to a 5.28% growth in the current FY17. BR. Ministry of planning’s proposed 3.1% CAD rejected Finance ministry has termed current account deficit (CAD) projection of 3.1% of GDP ($ 10.4Bn) for FY18, set by the planning ministry for FY18, as ‘too high’, saying such a forecast might affect the country’s foreign ratings. The ministry of planning, in a subsequent summary forwarded to the National Economic Council (NEC), revised down current account deficit to 2.7% of GDP, or $ 9.1Bn for FY18. CAD widened more than two times to $ 7.24Bn in 10MFY17 mainly due to subdued exports and growing imports. The News. Tax Year 2015 audit: FBR not to disclose risk parameters FBR has categorically said that as per subsection (IA) of the section 214C of the Income Tax Ordinance, 2001, it would not disclose risk parameters used for selection of income tax cases for audit for the Tax Year (TY) 2015. In a clarification, the FBR has also stated that the cases selected for audit for the TY14 can again be selected for TY15 as there is no bar in Audit Policy, 2016. BR. FBR to allow WHT adjustment on cash withdrawals FBR has agreed to allow adjustment of withholding tax on cash withdrawals by branchless banking (BB) agents in budget FY18. The issue of adjusting withholding tax was discussed during the 5th meeting of National Financial Inclusion Strategy (NFIS) Steering Committee where its chairman advised SBP and the FBR to ensure that the tax proposal on cash withdrawals by BB Agents is included in Finance Bill 2017-18. BB agents conduct banking transactions on behalf of their customers and such transactions are being settled on a daily basis, which attract withholding tax when withdrawals exceed PKR 50,000 limit. BR. SBP may leave policy rate unchanged SBP may leave the benchmark interest rate unchanged during its bi-monthly monetary policy meeting scheduled for today (20th May’17) as weak current account position needs a buttress to keep growth stable. Current account deficit sharply swelled over 200% to $ 7.2Bn for the 10-month period of FY17. The SBP kept the policy rate on hold at 5.75% in the last monetary policy announcement in Mar’17. The News. Implementation of reclassified Pakistan-inclusive EM Index announced The MSCI Inc. has announced the implementation of their reclassified Pakistan-inclusive EM Index. The start date of this implementation has been set for Jun. 01, 2017. Based on T+2 settlement cycle, it is expected that the related orders will be coming to the market on or before May 30, 2017. In anticipation of substantial volumes and in light of certain classes of investors to enter the market at the closing price, the PSX management has announced the introduction of a Post-Close Session, which shall be effective shortly. BR. SBP unveils updated version of forex manual In order to facilitate the stakeholders including Authorised Dealers (banks), exporters, importers, travel agents, carriers, etc, the SBP has issued updated Foreign Exchange Manual as several changes/amendments in the foreign exchange regulations have been made since the issuance of the manual in 2016. BR. 380MW 2nd gas plant at Haveli starts test run The Second gas turbine at Haveli Bahadur Shah operated by National Power Parks Management Company Private Limited (NPPMCL) has started test operation to produce 380MW. The 1st gas turbine has already begun supplying 380MW to the grid as per demand. After preliminary tests, the 2nd gas turbine will also start power generation commercially. The Nation. Alternate energy sector attracts $ 368Mn Pakistan’s renewable energy sector has attracted another potential investment of $ 368Mn as 5 intending power producers have approached Nepra seeking generation licenses for a cumulative generation of 266.5MW. Gul Ahmed Electric Limited and Metro Wind Power Limited have proposed to setup wind farms in Sindh of 50MW and 60MW, respectively with an estimated investment of $ 90Mn and $ 110Mn. At present, a total of 309MW of wind power projects are in their operations phase. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (JU'17) Gold (JU'17) Gold (10g) Local Silver (JU'17) Cotton(KHI)-40 kg Kibor-6M 19-May 19-May 19-May 19-May 18-May 18-May 19-May 18-May 19-May 19-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.86 106.10 50,742 -3.96 49.62 1,247.6 43,071 16.54 7,288 6.15% Forex Reserves 12-May $ Bn 20.68 0.00% 0.19% -0.42% NM** 0.57% -0.97% -0.40% -1.80% -0.72% 0.01% WoW -0.54% YoY -2.79% -2.29% 19.88% -40.12% -204.75% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Apr 17 Remittances $ Bn 15.60 Jul-Apr 17 Exports* $ Bn 16.92 Jul-Apr 17 Imports* $ Bn 43.47 Jul-Apr 17 Trade Balance* $ Bn -26.56 Jul-Apr 17 Current Account $ Mn -7,247 % 4.09 Avg. CPI-FY17* Jul-Apr 17 Mar-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 May-16 GBP, 18-May-17, 135.7 EUR, 18-May-17, 116.4 USD, 18-May-17, 104.6 Aug-16 USD GBP Vaibhav Shah Budget Vs Deficit 8,000 4,384 1,238 1,349 1,457 1,389 1,834 2,000 1,370 3,000 5,796 4,000 5,388 5,000 4,816 6,000 5,026 7,000 3,936 Stocks finish weekend session with extended loss Stocks fell further for the 4th day on the PSX with the KSE-100 index losing another 214.57 points (0.42%) on 19th May’17 to close at 50,742.03. It spiraled downward by 2,105 points since its intra-day all-time high of 52,847 points on May 16. Dawn. Chart of the Day 1,194 Banks’ refinancing spreads raised SBP has increased the spread of banks and DFIs on the refinance facility for the modernization of SMEs and the Financing Facility for Storage of Agricultural Produce (FFSAP). Rates of service charges for banks/DFIs and rates for end-users for loans up to 10 years will be 4% and 6%, respectively, effective 1st Jun‘17. Dawn. May-17 "Whenever you see a successful person, you only see the public glories, never the private sacrifices to reach them." 3,447 Govt soon to supply RLNG to commercial consumers Govt. will soon start offering re-gasified liquefied natural gas (RLNG) connections to commercial consumers for the first time as locally-produced gas is not available for them in the Punjab. Commercial consumers include cafes, bakeries, milk shops, tea stalls, canteens, barber shops, laundries, hotels, malls, cinemas, clubs, theatres, private offices and corporate firms. The News. Feb-17 Source: KCCI Research ; Oanda.com Quote of the Day Experts call for upgrading power distribution system As the country is all set to generate surplus electricity in the coming few years’, experts who spoke at the 9th Annual Power Generation Conference-2017, said that the major challenge now is to revamp and upgrade the overloaded distribution system so that end domestic consumers in the country could have access to reliable and efficient power supply. Daily Times. Pakistan eyes 100,000T mango exports Pakistan is launching its mango exports today with hopes of meeting the target of 100,000 tons set for this season. Because of prolonged winter and heavy winds in Punjab, out of a total production of 18Mn tons, around 6Mn tons is likely to suffer this year. Last year, mango exports crossed a target of 100,000 tons to reach 128,000 tons, bringing home $ 68Mn in foreign exchange. The News. Nov-16 EUR 1,000 - FY11 Value in PKR Bn FY12 FY13 FY14 Budgetary Expenditures FY15 FY16 9MFY17 Budget Deficit Source: KCCI Research, PBS Disclaimer This report has been prepared by KCCI Research & Development Cell. The information TPP trade deal members seek to move ahead without US contained herein have been compiled or arrived at based upon information obtained from Remaining members of the Trans Pacific Partnership (TPP) free trade agreement are working on a statement to reaffirm their sources believed to be reliable and in good faith. Such information has not been commitment to it, despite the withdrawal of the United States. Talks are happening on the sidelines of an Asia-Pacific Economic independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' Cooperation (APEC) meeting, the biggest trade gathering since Trump upended the world order with his "America First" policy. understanding of the news item. The R&D Dept. bears no responsibility for its correctness or Japan is leading the countries that still want to persist with the much more comprehensive TPP agreement. Daily Times. accuracy. Contact: res@kcci.com.pk