Pakistan Daily Economy Update - 24 October

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1. October 22 , 2022 KCCI - eBulletin It’s a huge relief for nation List of FATF on 21st Oct’22 removed Pakistan, by consensus, from its list of countries under “increased monitoring”, also known as ‘grey Indicators list’ after 4-years. The decision was taken in a 2-day FATF plenary and International Co-operation Review Group (ICRG) meetings USD-Interbank held from 20-21st Oct’22 at Paris and the same was announced in a press conference by the FATF’s president, T Raja Kumar. In a USD-Open MKT Source: press release, the FATF welcomed Pakistan’s “significant progress” in improving its anti-money laundering and combating financing KSE-100 index terror (AML/ CFT) regime. BR. Fitch cuts long-term forex IDR to ‘CCC+’ Fitch Ratings has downgraded Pakistan’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to “CCC+” from “B-”. The rating agency stated that the downgrade reflects further deterioration in Pakistan’s external liquidity and funding conditions, and the decline of forex reserves. This is partly a result of widespread floods, which will undermine Pakistan’s efforts to rein in twin fiscal and current account deficits. BR. Q1 services trade deficit declines 26% to $ 647Mn YoY Country’s services trade deficit plunged by 26% during 1QFY23 mainly due to higher exports proceeds and decline in imports. According to SBP, the country recorded a $ 647Mn services trade deficit in 1QFY23 down from $ 877Mn in 1QFY22. Services trade imports declined by 6% to $ 2.342Bn in 1QFY23 compared to $ 2.497Bn in 1QFY22. During the period under review, highest imports because of the transport sector amounted to $ 1.541Bn up from $ 1.128Bn. Travel imports decreased from $ 254Mn to $ 232Mn. Similarly, services sector exports registered a 4.5% growth during 1QFY23, reaching $ 1.7Bn in 1QFY23 compared to $ 1.62Bn in 1QFY22, depicting an increase of $ 75Mn. Major increase in exports was registered in the travel sector from $ 150Mn to $ 254Mn. MoM basis, the services trade recorded a $ 172Mn deficit with $ 566Mn exports and $ 738Mn imports in Sept’22. BR. Q1 govt. external borrowing climbs to $ 2.234Bn Govt. has borrowed $ 2.234Bn from multiple financing sources including $ 1.166Bn from the IMF during 1QFY23 compared to $ 3.204Bn borrowed during 1QFY22. The country received no loans from foreign commercial banks during this time, compared to $ 457.54Mn received during the same period of last year, shows the Economic Affairs Division data. The govt. procured $ 625.85Mn external loans in Sept’22 compared to $ 826.41Mn during Sept’21. The govt. has budgeted foreign assistance of $ 22.8Bn for FY23 including $ 7.5Bn foreign commercial banks, $ 22.655Bn loans, and $ 161.46Mn grants. BR. Failure to issue tax relief orders: FTO unearths hundreds of cases involving LTOs and RTOs FTO has unearthed hundreds of cases involving LTOs and RTOs which failed to issue fresh orders in favor of taxpayers after their illegal assessment orders were cancelled/deleted or annulled by the Commissioner Appeals. In this connection, the FTO Office has completed own motion investigation against the FBR exposing the biggest hurdle in providing tax relief to hundreds of genuine cases of taxpayers. The FTO’s own motion investigation concluded that, “FTO Secretariat has unearthed hundreds of cases wherein unjustified delay beyond the statutory timelines stand established at various LTOs, CTOs and RTOs”. BR. PD forms body to probe appointment of Dy MD, NTDC Power Division has constituted 4-member Inquiry Committee to probe the matter of appointment of Ali Zain Banatwala as Deputy MD (System Operator) NTDC in violation of SECP’s rules/regulation. The Inquiry Committee will comprise Additional Secretary-III, Power Division (Convener), Joint Secretary (Power Finance), Power Division, Managing Director, NTDC and a representative of SECP. Power Division has requested SECP to nominate a senior officer as member of the Inquiry Committee and convey it to Power Division at the earliest. BR. NA informed: 3G and 4G services available to 78% of country’s population NA was informed that 3G and 4G services are available to 78% population while efforts are underway for 5G technology launch in the country. The parliamentary secretary for cabinet, Nadeem Abbas, said that the stakeholders are being consulted for assessing the 5G technology launch in the country. BR. ADB board approves $ 1.5Bn financing Date / Period Unit Value Change Daily 21-Oct PKR PKR 220.84 223.80 -0.05% -0.23% FIPI 21-Oct 21-Oct Pts. $ Mn 42,213 0.84 0.18% NM** Crude Oil 21-Oct $/bbl 84.51 -0.12% Gold 21-Oct $/oz 1,636.8 0.00% Gold (10g) Local 21-Oct PKR 125,600 -0.37% Silver 21-Oct $/oz 18.69 0.00% Cotton(KHI)-40 kg 21-Oct PKR 0 -100.00% Kibor-6M 21-Oct % 15.83 0.03% Forex Reserves 14-Oct $ Bn 13.25 WoW 0.04% Remittances Jul-Sep 22 $ Bn 7.68 43.23% Exports* Jul-Sep 22 $ Bn 7.13 2.27% Imports* Jul-Sep 22 $ Bn 16.33 -12.33% Trade Balance* Jul-Sep 22 $ Bn -9.21 21.05% Current Account Foreign Direct Inv. Jul-Sep 22 Jul-Sep 22 $ Bn $ Bn -2.21 0.25 35.09% -42.29% 21-Oct YoY Jul-Aug 22 LSM Growth* % -0.40 % 25.11 Jul-Sep 22 Avg. CPI Discount Rate % 15.00 Oct-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* **Not Meaningful; WoW= week on week; YoY=Year on Year; Green=Improvem Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Oct-21 GBP, 22-Oct-… EUR, 22-Oct-22, 218.7 USD, 22-Oct-… USD Jan-22 GBP Apr-22 EUR Jul-22 Source: KCCI Research Quote of the Day “He who conquers himself is the mightiest warrior.” \ ADB has approved $ 1.5Bn in financing to help the govt. of Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions. BR. GSK suspends manufacturing of Panadol, says it’s losing money GlaxoSmithKline Consumer Healthcare Pakistan Ltd has suspended the manufacturing of Panadol, saying it has become unsustainable to produce the over-the-counter medicine on negative margins. Dawn. Only 93 of 154 installed traffic signals functioning in Karachi According to a recent report prepared by the Traffic Engineering Bureau (TEB), the city has a total number of 94 installed traffic signals in areas under the jurisdiction of the KDA, but 61 of them are ‘non-functional’. The report also unveiled that the city with a population of over 20Mn and with the number of registered vehicles well over 7Mn has a total of 154 installed traffic signals but only 93 of them are functioning on its road network spread over thousands of kilometers. Dawn. Surplus power generation capacity to cost citizens dear by 2030 Consumers will have to pay for the surplus power generation capacity regardless of the use, an amount that is set to rise from PKR 900Bn now to PKR 1.6Tn by 2030, according to the report titled “Pakistan Electricity Outlook 2022”, compiled by the Energy Institute of LUMS. The report reveals that the period of the expensive capacity surplus will sustain over the modelled period, ranging from over 15% in summer to over 40% in winter over peak demand despite an optimistic growth in projected demand. Dawn. FBR working to simplify tax system FBR is working to simplify the tax system and minimize direct interaction with tax collectors in order to facilitate taxpayers. The statement was given by Regional Tax Office (Islamabad) Chief Commissioner Inland Revenue Ayesha Khalid. Tribune. Govt. plans to promote e-vehicles, says PM PM Shehbaz Sharif has said the govt. was planning to promote the use of electric vehicles in the country and would establish a network of the related charging infrastructure. In this regard, the PM directed the departments concerned to present him a comprehensive plan at the earliest. He also asked the Ministry of Trade and Industries, Ministry of Power and Energy and the Board of Investment to extend every possible facility to investors interested in the sector of electric vehicles. BR. Confucius Repatriation of Profit on Foreign Investment ($ Mn) 396.4 372.8 26.6 28.2 1.6 Jul-Aug'23 Jul-Aug'22 23.6 Repatriation on Foreign Direct Investment Repatriation on Foreign Private Investment Total Jul-Aug'22 Jul-Aug'23 Source: KCCI Research, SBP Note **Green-colored change in indicators depicts Improvement, whereas Red demonstrates Deterioration **If any member is facing any issues pertaining to PakistanSPI inflation up 0.35pc WoW SPI based inflation for the week ended on 20th Oct’22, recorded an increase of 0.35% due to an increase in the prices of food items Afghanistan investment and trade policies or has project proposals including salt powder (4.84%), bananas (3.79%), tomatoes (2.63%), powdered milk (2.22%), tea Lipton (1.24%), milk fresh (1.23%), is requested to share the information at secretary@kcci.com.pk for cooked beef (1.21%) and rice irri-6/9 (1.02) and non-food items long cloth (2.21%) and firewood (1.57%), the PBS said. BR. forwarding to the Board of Investment.