Pakistan Daily Economy Update - 26 March

Transcription

1. March 26 , 2021 KCCI - eBulletin IMF approves $ 500Mn for Pak budgetary support After the promulgation of two Presidential Ordinances for withdrawal of corporate income tax exemptions to fetch PKR 70Bn to 140Bn and imposition of 10% power surcharge on consumers, the IMF’s Executive Board completed the 2nd to 5th reviews under the Extended Fund Facility and approved release of $ 500Mn tranche for Pakistan’s budgetary support. The News. SBP amendment bill 2021: Governor to submit annual report before parliament The govt. has proposed through the State Bank of Pakistan amendment bill 2021 strengthening of accountability through parliament as it binds the governor SBP to submit the annual report before the parliament regarding the achievement of the bank’s objectives of maintaining price stability. The Bill explicitly declares that the primary objective of the Bank shall be to achieve and maintain domestic price stability. The inflation control objective is to be pursued for its own sake and supporting general economic policies of the federal govt. with a view to fostering development and fuller utilization of the country’s productive resources has been relegated as a tertiary objective. The News. Proposed law provides blanket indemnity to SBP top guns The proposed SBP (Amendment) Bill 2021, which the govt. claims is aimed at making SBP autonomous, will practically provide immunity to top officials of the SBP as no investigating agency, including the anti-corruption watchdog NAB, can initiate any action against them without obtaining permission from the board of directors of the bank. While the existing rules says every [person in the service] of the Bank shall be deemed to be a ‘public servant’, the proposed bill says no suit, prosecution or any other legal proceeding including for damages shall lie against the bank, board of directors or member thereof, governor, deputy governors, member of any board committee and monetary policy committee, officers and employees of the bank. Currently, the SBP is mandated to carry out quasi-fiscal operations, including rural credit, industrial credit, export credit etc. However, a proposed amendment says that quasifiscal operations taken on behalf of the govt., shall be discontinued. Dawn. FBR reduces penalty rates for late filers FBR has introduced different reduced rates of penalty on filing of income tax returns after due date. The reduced rate of penalty amount would be available to late filers of income tax returns for next three months after the due date. However, full amount of penalty will be applicable in case the return filed four months after the due date. A late filer will be subject to pay 25% of the full penalty amount in case he files the return within one month after the due date. Similarly, the penalty amount will be 75% of the total amount on a person or a company that files income tax return within three months after the due date. The News. Fiscal year 2016: IMF claims data on govt guarantees reported inaccurately IMF has highlighted ‘new information’ that the data on govt. guarantees dating back to FY16 was reported inaccurately and approved disbursement of $ 500Mn to Pakistan subsequent to a staff-level agreement on the second to fifth review under the Extended Fund Facility (EFF) program. The revised data indicates a non-observance of the performance criteria on govt. guarantees at end-September 2019 by a margin of PKR 357Bn (about 0.9% of GDP), which resulted in a non-complying purchase and a breach of obligations under Article VIII, Section 5 of the IMF Articles of Agreement. BR. Tax assessment orders issued against 35 mills The field formations of FBR have issued assessment orders against 30-35 sugar mills, where mostly units failed to submit complete party-wise detail of sugarcane purchases including CNICs of the sellers; understated crushing/sugar production and reconciliation of banks statements to substantiate immunity claimed under Section 111 of the Income Tax Ordinance 2001. BR. Pakistan hires banks for three-tranche dollar bond sale Pakistan has hired a group of banks to arrange investor calls ahead of a triple-tranche sale of US dollar-denominated bonds. Credit Suisse, Deutsche Bank, Emirates NBD Capital, JPMorgan, Standard Chartered and BOC International will hold calls with fixed income investors. A benchmark issuance comprising tenors of five, 10 and 30 years will follow, subject to market conditions. Tranches of benchmark size are usually at least $ 500Mn. Dawn. Low-cost housing markup subsidy increased to PKR 36Bn The govt. has revised up allocation on account of markup subsidy payment for low-cost house financing to PKR 36Bn in addition to make other changes in the scheme. The end user subsidized markup rate under tier 1 (housing units of up to 5 marla and covered area \ of 850 sq. feet) has been lowered to 3% for first five years and 5% for the next 5 years. Earlier these were 5% and 7% respectively. The News. Mini budget comes with two ordinances Two ordinances were promulgated to comply with the conditions of IMF. The first ordinance is about withdrawal of corporate tax exemptions of PKR 140Bn, while the second ordinance is about giving autonomy to Nepra regarding increase in power tariff which will bring additional burden of more than PKR 700Bn on the power consumers. The govt. has introduced over 75 amendments to tax laws, which will be applicable immediately. People hiding their income will face fine worth 50% of their due tax. Shop owners will be fined PKR 5,000 for not displaying tax numbers. There will be PKR 5,000 fine for those not filing tax returns or wealth statements. Businesses will have to display their NTN or Business Cards, or face fines. The govt. has withdrawn tax exemption for fresh graduates and investment companies. It has imposed income tax on textbook boards and private power companies too. The News. Govt moves to resolve issues creating hurdles in selling KE’s shares to Shanghai Electric The privatization ministry is likely to seek the cabinet approval for the grant of National Security Certificate and resolution of KE’s payables and receivables issues, which will pave the way for the sale of 66.4% shares of the KE to Shanghai Electric. The Nation. Global car production plunged in 2020, say automakers Global production of automobiles tumbled by 16% in 2020 to a level last seen in 2010 as the industry was pummeled by the coronavirus pandemic. The president of the International Organization of Motor Vehicle Manufacturers (OICA), Fu Bingfeng, said that with a drop to less than 78Mn units sold, the auto sector faced “its worst crisis ever. In Europe, the drop in output was 21%, North America fell by 20% and South America by 30%. In Asia however, which accounts for half of all vehicles produced worldwide, the decline was more modest, at 10%. Fu said that the 2020 results wipes off all growth made over the last 10 years. Dawn. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 25-Mar 25-Mar PKR PKR 155.01 154.80 -0.25% -0.34% KSE-100 index FIPI 25-Mar 25-Mar Pts. $ Mn 45,726 -0.12 0.40% NM** Crude (AP'19) 25-Mar $/bbl 59.23 -1.55% Gold (MA'19) 25-Mar $/oz 1,725.6 -0.56% Gold (10g) Local 25-Mar PKR 86,300 -0.12% Silver (MA'19) 25-Mar $/oz 25.07 0.00% Cotton(KHI)-40 kg 25-Mar PKR 13,075 0.00% Kibor-6M 25-Mar % 7.87 0.10% Forex Reserves 19-Mar $ Bn 20.43 WoW 1.37% Remittances Jul-Feb 21 $ Bn 18.74 24.09% Exports* Jul-Feb 21 $ Bn 16.30 4.29% Imports* Jul-Feb 21 $ Bn 33.84 7.49% Trade Balance* Jul-Feb 21 $ Bn -17.54 -10.64% Current Account Foreign Direct Inv. Jul-Feb 21 Jul-Feb 21 $ Bn $ Bn 0.88 1.30 132.14% -29.88% YoY Jul-Jan 21 LSM Growth* % 7.85 % 8.25 Jul-Feb 21 Avg. CPI Discount Rate % 7.00 Jul-20 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 235 225 GBP, 24-Mar-21, 213.5 215 205 195 185 EUR, 24-Mar-21, 183.5 175 165 155 145 USD Mar-20 GBP Jun-20 EUR Sep-20 USD, 24-Mar-21, Source: KCCI Research ; Oanda.com 155.3 Dec-20 Mar-21 Quote of the Day “Opportunities don’t happen. You create them.” Chris Grosser World Happines Index 2021 Finland (1st) Denmark (2nd) Canada (14th) UK (17th) USA (19th) UAE (25th) Saudi Arabia (26th) Thailand (54th) Indonesia (82nd) Turkey (104th) Pakistan (105th) Sri Lanka (129th) India (139th) Afghanistan… 0 2.523 2 7.842 7.62 7.103 7.064 6.951 6.561 6.494 5.985 5.345 4.948 4.934 4.325 3.819 4 6 8 Govt. to retain control of SOEs Source: KCCI Research, World Happiness Report 2021 The federal govt. will have strong footprints in State-Owned Enterprises (SOEs) even after approval of a new Act of parliament, which is Business Opportunity contrary to the objectives of ensuring efficient and financially viable public sector firms by ending political interference. The draft of State-owned Enterprises (Governance and Management) Act 2021 suggests that the govt. still does not want these entities to be truly Members who are interested to do business with companies in free subject to meaningful autonomy. Tribune. Brazil can find opportunities in the following two links: Foreign exchange: SBP reserves rise $ 275Mn to $ 13.3Bn On 19th Mar’21, the forex reserves held by the SBP were recorded at $ 13.3Bn, up $ 275Mn (2.11%) compared with $ 13.02Bn in the English: https://bit.ly/3sLyDeI previous week. Reserves held by commercial banks amounted to $ 7.14Bn while overall liquid foreign currency reserves held by the country stood at $ 20.43Bn. Tribune. Urdu: https://bit.ly/3sKSM4G 10