Pakistan Daily Economy Update - 20 September

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1. Sep . 20, 2016 KCCI - eBulletin $ 6.64Bn EFF: IMF to take up final review on Sept. 28, 2016 The IMF Executive Board will meet on Sept. 28, 2016 to consider staff level report of the 12th and final review and request for waivers of non-observance of performance criteria. The IMF staff mission and the Pakistani authorities have reached staff-level agreement on the completion of the twelfth and final review under the EFF arrangement. However, the agreement is subject to approval by the IMF Management and the Executive Board. Upon completion of this review, SDR 73Mn (about $ 102Mn) will be made available to Pakistan. The country has already received $ 6.01Bn from the IMF under Sept. 4, 2013 approved $ 6.64Bn EFF. BR. Tax convention with OECD to take effect from fiscal year 2018 The Multilateral Convention on Mutual Administrative Assistance in Tax Matters, signed by Finance Minister Ishaq Dar on Sept. 14, 2016 in Paris, is likely to be effective from FY18. Finance Ministry has informed a recently held Cabinet meeting that Pakistan would be able to exchange information spontaneously without prior request, on request and automatically, including the one on banking details, from 2017-18 on a reciprocal basis with other partner countries which is foreseeably relevant for the administration or enforcement of its tax laws; and that the necessary legal, administrative and IT apparatus was being put in place for effective automatic exchange of information. BR. Pak-China optic fiber: Project to digitalize trade corridor The 820KM long Pak-China optic fiber cable project from Rawalpindi to Khunjerab would be completed at a cost of $ 44Mn by June 2018. The completion of the project under CPEC would convert trade corridor into digital corridor. This project was being completed in collaboration with China’s Huawei and Special Communication Organization (SCO) and it would not only generate revenue but it would also provide a safe route of voice traffic between the two countries. Tribune. Hides worth PKR 8.5Bn collected on Eid The industry has collected a total of about 12Mn hides and skins worth PKR 8.5Bn during three days of Eidul Azha against last year’s collection of approximately PKR 6.5Bn, showing a huge growth in slaughtering of sacrificial animals. The tanneries have observed around 40% increase in hides and skins collection. However, falling prices of raw hides and skins in the world as well as local markets have caused a rise of just 20% in terms of values of total collection of hides and skins. The economic activity of around PKR 160Bn has been generated on Eid, including PKR 150Bn through animal sales, PKR 8.5Bn through purchases of hides and PKR 2Bn through allied industries. About 12Mn animals were slaughtered during the three days of Eid. The average price of the cow hide hovered around PKR 1,600 against PKR 1,800 of last year, goat PKR 250 per skin versus PKR 270 of last year, sheep PKR 120 per skin versus PKR 130 last year, and camel PKR 1,000 per hide against PKR 800 of last year. The Nation. End of Mar.’16: infrastructure finance outstanding reaches PKR 444Bn Infrastructure Project Financing (IPF) portfolio of banks & DFIs has witnessed a substantial growth and total amount outstanding against infrastructure finance reached PKR 444Bn at the end of Mar.’16 compared with PKR 368Bn at the end of Dec.’15. On YoY basis, outstanding amount increased by PKR 132Bn or 42%. Non-Performing Loans (NPLs) continued to show a declining trend and reached PKR 12.3Bn compared to PKR 16.6Bn a year earlier. BR. FBR eyes PKR 654Bn revenue collection in July-Sept The FBR bets on withholding and advance taxes to collect 18% of the total revenue targeted for FY17 during the first quarter of July-September. The FBR estimated PKR 654Bn in the revenue collection during 1QFY17. The whole-year target is PKR 3,621Bn. In the first two months of FY17, the FBR managed to collect PKR 368Bn in taxes and therefore the board requires another PKR 286Bn in September to meet the first quarter target. The News. Ministry, provinces to sort out power issues today Water and Power Minister Khawaja Asif has decided to convene a meeting of provinces to sort out issues related to power Discos, Nepra and IPPs. The provinces have a large number of complaints against the Discos for forced load shedding, low voltages, inflated bills and obsolete distribution system etc. However, KPK, Sindh and Balochistan are facing more load shedding hours than Punjab due to low recovery as the govt. has linked electricity supply to recovery of bills. KPK maintains that it is not being provided its due share of 13.5% of total electricity generation due to which the entire province is affected. BR. Govt. borrows PKR 704Bn from SBP The govt. has borrowed PKR 704Bn from the central bank between July 1 and August 26 and repaid PKR 136Bn in loans during the same period. Public sector borrowing from the SBP continues to rise as the incumbent govt. is dependent on the SBP’s lending to reduce the budget deficits. The govt.is also exploring possibilities of financing its deficit through the use of non-banking sources, such as Eurobonds and Sukuks floating in the international market. The News. Demand for heavy commercial vehicles rising After a robust performance in FY16, the heavy commercial vehicle segment maintained growth in the first two months of this fiscal year. Hinopak remained the market leader with over 50% market share. It sold 503 units in July-August as compared to 275 in the same period of last year, an increase of 82.9%. It was followed by Isuzu, which sold 368 units in JulyAugust, up 164.7% from 139 units sold in the same period a year ago. Nissan truck sales rose 21.7% year-on-year to 168 units while Master sold 149 trucks, up 14.6% from 130 units sold in the same period a year ago. Dawn. Solar scale-up in Pakistan hits roadblock after payments cut An effort to boost large-scale solar energy production in Pakistan has hit a roadblock after the government slashed the rate it pays for solar electricity, frustrating investors. The Punjab government set up the 100-megawatt Quaid-i-Azam Solar Park in the Cholistan desert in March 2015 as a pilot project to lure foreign investment for an additional 900MW of power. Zonergy Limited, a Chinese-owned firm, then agreed to invest $ 1.5Bn to produce the power, with a promise to complete the work by June 2016. But last December, the National Electric Power Regulatory Authority (Nepra) reduced the amount the country pays to buy solar electricity from 14.5 cents to 9.25 cents per kilowatt-hour, citing falling costs for solar panels and other equipment. Dawn. Innovation vital to promote meat exports Minister for National Food Security and Research said innovation was vital to promote meat exports. Addressing a seminar on “use of innovative technologies for promoting meat exports”, he said measures would be taken to facilitate the local meat industry to enhance meat exports from the country as the local meat industry was facing many challenges including quality, competitiveness and standards in local as well as international markets. Dawn. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 19-Sep PKR 104.60 -0.02% USD-Open MKT 19-Sep PKR 105.20 0.10% KSE-100 index FIPI 19-Sep 19-Sep Pts. $ Mn 40,415 -10.63 0.13% NM** Crude (JU'16) 19-Sep $/bbl 43.81 -0.02% Gold (MY'16) 19-Sep $/oz 1,312.7 0.28% Gold (10g) Local 19-Sep PKR 43,800 -2.32% Silver (MY'16) 19-Sep $/oz 19.18 2.47% Cotton(KHI)-40 kg 19-Sep PKR 6,522 0.83% Kibor-6M 19-Sep % 6.06% 0.01% 9-Sep $ Bn 22.86 -0.54% Remittances Jul-Aug 16 $ Bn 3.09 -3.17% Exports* Jul-Aug 16 $ Bn 3.14 -8.19% Imports* Jul-Aug 16 $ Bn 7.88 10.21% Trade Balance* Jul-Aug 16 $ Bn -4.74 -27.06% Current Account Avg. CPI-FY17* Jul-16 Jul-Aug 16 $ Mn % -591 3.84 -152.56% WoW Forex Reserves 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 175 165 155 GBP, 19-Sep-16, 136.4 EUR, 19-Sep-16, 116.8 145 135 125 115 105 95 USD, 19-Sep-16, 104.6 85 75 Sep-15 Dec-15 USD GBP Mar-16 Jun-16 Sep-16 Source: KCCI Research ; Oanda.com EUR Quote of the Day "An explanation of cause is not a justification by reason." C. S. Lewis Chart of the Day Remittances Received from Top 10 Countries by Pakistan (2MFY17) Saudi Arabia 886.0 U.A.E. 694.9 USA 393.4 U.K. 336.3 Kuwait 134.2 Oman 129.8 Qatar 65.1 Behrain 63.1 Australia 32.4 Canada 29.8 0 200 400 600 800 1,000 Source: KCCI Research, SBP Value in $ Mn 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