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Pakistan Daily Economy Update - 26 March

IM Insights
By IM Insights
6 years ago
Pakistan Daily Economy Update - 26 March

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  1. Mar . 25 - 26, 2018 KCCI - eBulletin Balance of payments worsens: Pakistan could knock at IMF’s doors in April The govt. has reportedly accepted the IMF’s precondition to let the rupee depreciate by over 4% to qualify for any fresh bailout package that is needed to avoid a default-like situation. Notwithstanding Adviser on Finance Miftah Ismail’s statement that the govt. is not seeking any IMF assistance, the Washington-based lender is said to have been obliged to steer through highly difficult FY18 and FY19. The govt. is expected to take up the issue of new IMF financing in Apr’18 during World Bank-IMF spring meetings in Washington. Although Ismail does not see any further downward readjustment of the currency in the near future, those are in the know of things maintain that lobbyists at home and abroad are working to persuade the authorities to go for another depreciation before Jun’18. Tribune-Mon. Proposed second phase of CPFTA: Commerce Division, FBR lock horns Commerce Division and FBR are said to have locked horns on the proposed 2nd phase of China Pakistan Free Trade Agreement (CPFTA), which the business community claims has destroyed the local industry. Commerce Division has already started consultative process with the local industry afresh on the instructions of PM Abbasi who is expected to visit China next month. It has been reported that FBR is blaming Commerce Division for not taking business community on board. However, Commerce Ministry has termed it factually incorrect, adding that it is heavily engaged in consultation with the local industry. BR - Mon. PM advises industrial sector to upgrade technology PM Abbasi has advised the industrial sector to upgrade its technology in order to improve its competitiveness in local as well as international markets. Talking to businessmen at a meeting, he said new technology is substantially increasing industrial efficiencies. Abbasi said the govt. is addressing the issue of high cost of doing business by improving governance and expanding tax base. There are several ways of reducing costs of inputs. Tax reduction is one way; duties cannot substantially be reduced or abolished until the tax net is enlarged, but the govt. will facilitate manufacturers to the maximum level. The News-Sun. Strong economy vital to stability: PM Talking to the members of the business community of Karachi, PM Abbasi urged them to play their role in raising exports and streamlining industrial growth. The PM added that a strong economy is crucial for national stability. He assured them that they would always be kept on board in matters related to the economic development. The PM added that industrialists and investors, who prior to 2013, were contemplating to move their businesses abroad are today more than confident to focus more on their own city and country as compared to any other part of the world. The Nation – Mon. Govt agrees to stop cotton imports during crop picking The govt. has agreed to put a halt to cotton imports during crop harvest in an effort to ensure that farmers get an attractive price and are encouraged to plant more in the next season, as cotton production has dropped sharply over the past four years. Earlier, on the persistent demand from textile millers, the govt. had allowed duty-free import of cotton, but that hurt the interest of Pakistan’s growers and benefitted Indian farmers who have been exporting a significant quantity of cotton in times of need. Tribune-Sun. Power generation goes up by 9% in Feb.’18 According to Nepra, power generation went up by 9% on annual basis to 6,979 gigawatt hours (GwH) in Feb.’18 where average utilization of the industry clocked in at 33%, remaining stagnant on a YoY basis while declining by \ 5% on a monthly basis. On cumulative basis, 8MFY18 generation clocked in at 76,811GwH vis-à-vis 68,116GwH in 8MFY17, depicting a growth of 13% YoY, and taking average load factor to 49% (up 4% YoY). Although fuel mix of the industry was skewed towards thermal plants with 76% share versus 72% in Feb’17, the contribution from furnace oil has been reported at 8% compared to 26% in Feb.’17. The Nation – Sun. RD on POL products: ECC tells Ogra to recover PKR 482Mn net claims from consumers The Economic Coordination Committee (ECC) has directed Ogra to recover PKR 482Mn (PSO PKR 356.91Mn and Shell PKR 125.22Mn) net claims from consumers on behalf of OMCs within three months effective Jul. 1, 2018. In this regard, FBR had imposed Regulatory Duty (RD) at 2.5% on imported HSD (diesel) and 2% on MS (petrol) and petroleum crude oil through a notification dated Apr. 30, 2015. BR - Sun. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 22-Mar 115.40 114.50 0.34% 0.00% Crude (MY'18) 22-Mar 22-Mar 22-Mar 23-Mar PKR PKR Pts. $ Mn $/bbl 45,030 9.77 65.91 0.86% NM** 2.55% Gold (AP'18) Gold (10g) Local 23-Mar 22-Mar $/oz PKR 1,348.0 49,285 1.46% 0.26% Silver (AP'18) Cotton(KHI)-40 kg 23-Mar 22-Mar $/oz PKR 16.53 8,145 1.14% 1.33% Kibor-6M 22-Mar % 6.53 $ Bn 18.08 0.01% WoW -0.88% Remittances 16-Mar FY18 Jul-Feb 18 $ Bn 12.83 YoY 3.41% Exports* Imports* Jul-Feb 18 Jul-Feb 18 $ Bn $ Bn 14.85 39.13 11.66% 17.19% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Feb 18 Trade Balance* $ Bn -24.28 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 1.94 Jul-Feb 18 Jul-Jan 18 LSM Growth* % 6.33 % 3.84 Jul-Feb 18 Avg. CPI Discount Rate % 6.00 Jan-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 175 GBP, 25-Mar-18, 163.0 165 155 145 EUR, 25-Mar-18, 142.6 135 125 115 USD, 25-Mar-18, 115.4 105 95 Mar-17 USD Jun-17 GBP US adds seven Pakistani companies to export control list The US Department of Commerce (DoC) has added seven Pakistani companies to a list of foreign entities that are subject to stringent export control measures. The companies include Akhtar & Munir, Proficient Engineers, Pervaiz Commercial Trading Co, Engineering and Commercial Services, Marine Systems Pvt Ltd, Mushko Electronics Pvt Ltd and Solutions Engineering Pvt Ltd. These companies are among 23 additions to the Entity List of the Export Administration Regulations (EAR) which is managed by the DoC’s Bureau of Industry and Security. The list identifies entities that are believed to be involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the US. Tribune-Sun. EUR Sep-17 Dec-17 Source: KCCI Research ; Oanda.com Quote of the Day "Value is not made of money but a tender balance of expectation and longing." Barbara Kingsolver Chart of the Day WORLD'S TOP 10 LEAST EXPENSIVE CITIES 134 132 129 130 128 Edible oil sector: FBR reviewing removal of major anomaly in AIT collection FBR is reviewing a budget proposal to remove a major anomaly in the edible oil sector by converting the collection of Advance Income Tax (AIT) from ''minimum mode'' into ''final mode'' on the import of edible oil by industrial undertakings. The change in the regime would not have revenue impact, but it will streamline the tax payment process for the documented industry. Currently, import of edible oil is subjected to AIT at rate of 5.5% in minimum mode vide section 148(8) of Income Tax Ordinance, 2001. BR - Mon. -20.85% -50.03% 15.64% 126 126 124 127 130 131 132 133 127 124 124 122 120 118 * Rankings out of 133 cities Source: KCCI Research, Economist Intelligence Unit 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