Pakistan Daily Economy Update - 23 July

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1. Jul . 23, 2016 KCCI - eBulletin Govt. took massive $ 9.3Bn foreign loans in FY16 The govt., which is continuing to rely on foreign loans to build foreign exchange reserves, took massive loans of $ 9.3Bn in FY16 from the international financial institutions and countries. The heavy borrowing has taken the forex reserves to the highest-ever level of $ 23Bn. The International Monetary Fund (IMF) topped the list of loan providers by disbursing around $ 2Bn during the year 2015-16. The Nation. Non-oil imports up 85% to $ 30Bn in FY16 Non-oil imports jumped 85% to $ 30Bn during FY16, but soft oil prices helped the govt. contain its petroleum products’ imports bill during the period. Imports of petroleum products and crude dropped 35.51% to $ 7.60Bn during FY15, according to the PBS. The decline was much beyond 3.57% fall in imports of agricultural products and chemicals. Whereas, International oil prices sharply dipped up to 50 percent in the last fiscal year, saving three to four billion dollars for the country. The News. Private sector credit off-take doubles After a long spell of downtrend, private sector’s credit off-take more than doubled in 2015-16 compared to the preceding fiscal year, the SBP said on July, 22. 2016. The State Bank earlier reported that banks’ advances to the private sector were diverse and lending to fixed projects was encouraging. According to another SBP report, the government has so far accumulated PKR 79Tn by selling government papers as of May, 31. 2016; out of this amount, banks’ investment amounted to PKR 6.31Tn. Dawn. Trade plan to improve economic ties with Netherlands: envoy Pakistan’s Ambassador to the Netherlands Iffat Imran Gardezi has announced during her visit to the Karachi Chamber of Commerce and Industry (KCCI) to devise a trade plan with a view to promote Pakistani products and services, which would result in improving the existing trade and investment ties between the two countries. The ambassador sought suggestions from the KCCI to improve trade and investment ties between Pakistan and the Netherlands, besides highlighting the available opportunities in some of the most promising sectors of the economy, including the agrarian and textile sectors. The News. Pakistan for boosting trade with Sri Lanka The economies of Pakistan and Sri Lanka do not compete with each other and therefore we can aggressively open up to move from our current ‘few items trade basket’ to a much larger trade scheme, Minister of Commerce Khurram Dastgir said on July, 23. 2016. Dawn. Meeting demand: Food ministry proposes import of black pulses from Australia The Ministry of National Food Security and Research has prepared a summary for consideration of the ECC that recommends import of 25,000 tons of black pulses to meet domestic requirements. The proposal has been given on the suggestion of Punjab that had alerted the federal govt. about possible shortage of the essential commodity by the end of 2016. Tribune. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 22-Jul PKR 104.84 0.00% USD-Open MKT 22-Jul PKR 105.50 0.00% KSE-100 index FIPI 22-Jul 22-Jul Pts. $ Mn 39,152 -16.80 -0.39% NM** Crude (JU'16) 22-Jul $/bbl 44.56 0.00% Gold (MY'16) 22-Jul $/oz 1,331.8 -0.15% Gold (10g) Local 22-Jul PKR 44,228 -2.32% Silver (MY'16) 22-Jul $/oz 19.86 0.00% Cotton(KHI)-40 kg 22-Jul PKR 7,111 -2.21% Kibor-6M 22-Jul % 6.00% 0.00% 8-Jul $ Bn 23.06 -0.10% Remittances Jul-Jun 16 $ Bn 19.90 7.84% Exports* Jul-Jun 16 $ Bn 20.80 -12.11% Imports* Jul-Jun 16 $ Bn 44.76 -2.33% Trade Balance* Jul-Jun 16 $ Bn -23.96 -8.13% Current Account Avg. CPI-FY16* Jul-May 16 Jul-Jun 16 $ Mn % -2,486 2.86 -1.18% WoW Forex Reserves YoY May-16 Discount Rate % 5.75 Sources: KCCI Research, PMEX(At 4:00PM), NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 GBP, 21-Jul-16, 138.5 145 135 EUR, 21-Jul-16, 115.5 125 115 105 95 USD, 21-Jul-16, 104.8 85 75 Jul-15 Oct-15 USD Jan-16 GBP Apr-16 EUR Jul-16 Source: KCCI Research ; Oanda.com Quote of the Day Govt. reneges on promise to end SRO culture The government has issued about 228 Statutory Regulatory Orders (SROs) since it came to power though it promised to end discriminatory tax regime evolved over the years with such orders. Finance Minister told the Senate on July, 22. 2016 that the government is following a policy of bringing transparency in tax laws and has abolished through the Finance Act 2015 the powers of FBR to issue exemptions orders. The report he tabled in the upper house revealed that only 15 out of 228 SROs were issued with the approval of the ECC or for implementation of ECC decisions. The detailed report, however, described another 79 SROs as “procedural”. Dawn. FBR informed of 'anomalies' in zero-rating SRO Representatives of the value-added textile sector have submitted to the FBR a list of anomalies in the recently issued SRO regarding zero rating, and have requested necessary amendments. As per an agreement, it had been decided that the textile manufacturing sector would be zero rated, but the SRO is rather confusing on whether there will be further tax on the unregistered firms or not. Previously, under SRO-509, there was no additional tax on both the registered and unregistered. Similarly, there is a mention of supplies to outside five zero-rated sector at the rate of 17%. This anomaly existed in the previous SRO as well and after a period of about two years a clarification was issued by the FBR, and during that period many cases were registered, which caused harassment of the textile manufacturers. Dawn. Freight charges: Fertilizer import cost to be passed on to farmers Fertilizer importers have contested the govt. decision in the federal budget to provide a 50kg bag of diammonium phosphate (DAP) fertilizer for PKR 2,500 and forced the govt. to pass the freight charge on to the farmers. In this regard, a new formula has emerged between the fertilizer importers and the government after the former refused to bear freight charges on the imported DAP. Tribune. Honda Civic 2016 launched Honda Atlas Cars has launched its new 10th Generation Honda Civic model 2016, in three grades i.e. 1.8 iVTEC for PKR 2.4Mn, 1.8 i-VTEC Oreal for PKR 2.5Mn and 1.8 i-VTEC Turbo worth PKR 3Mn. The launch was very colorful and graceful in the presence of a large number of people from all walks of life at a local hotel on July, 23. 2016. Dawn. "Be faithful in small things because it is in them that your strength lies." Mother Teresa Chart of the Day Cement Export Vs Local Despatches in Pakistan 55 50 45 40 35 30 25 20 15 10 5 44.64 42.37 44.64 45.62 44.64 45.62 33 23.95 22 9.43 2010-2011 8.57 2011-2012 Production Capacity (Mn. Tonnes) 26.14 25.06 8.37 2012-2013 28.21 8.14 2013-2014 7.2 2014-2015 Local Despatches (Mn. Tonnes) (Mn. Tonnes) 5.87 2015-2016 Exports (Mn. Tonnes) Source: KCCI Research,APCMA 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