Pakistan Daily Economy Update - 28 December

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1. December 28 , 2022 KCCI - eBulletin HS Code Chapters 84, 85 and certain items of Chapter 87: SBP withdraws curbs on import permission List of SBP on 27th Dec’22 announced withdrawal of restrictions on prior permission before initiating any import transaction pertaining Indicators to HS Code Chapters 84, 85 and certain items of Chapter 87 with effect from 2nd Jan’23. These chapters include power generating USD-Interbank machinery, electrical machinery, mobile phone (CKD) and motor cars (CKD). SBP has also asked banks to prioritize/facilitate USD-Open MKT Source: imports related to essential items, energy, agriculture inputs, imports by export-oriented industry, and imports on deferred KSE-100 index payment basis. BR. KE consumers get PKR 7.43/unit relief Nepra on 27th Dec’22 decided to reduce FCA for the KE consumers by PKR 7.43/unit for 1- month, but increased its base tariff for 3-months by PKR 3.30/unit to reduce govt. subsidy. On the other hand, Nepra allowed an increase of PKR 0.19/per unit for the consumers of ex-Wapda Discos under monthly FCA and notified PKR 3.60/unit discount for farmers in their current base rate of PKR 16.80/kWh applicable from 25th Jul’22, under the govt.’s Kissan package. Dawn. Non-FBR personnel collect PKR 734Bn in taxes Withholding agents, who are mostly private persons, have become bigger tax collectors than privileged taxmen, and have pooled PKR 734Bn or two-thirds of the total income tax PKR 1.1Tn, during 5MFY23. The maximum amount of income tax collected was from the contractors, consultants, importers, saving account holders, salaried persons and the industrial and commercial electricity consumers, showed details compiled by the FBR. There was also a surprising increase of 3,100% in income tax collection on outbound money transactions conducted through debit and credit cards. The govt. charges up to 2% tax if an overseas purchase is made through plastic cards. Tribune. Interbank, open market exchange rates: Uncertainty, USD smuggling widening the gap: experts Economists have attributed the widening gap between interbank and open market exchange rate to the prevailing political uncertainty as well as unchecked dollar smuggling to Afghanistan. Former finance minister Dr. Hafeez Pasha and former finance ministry adviser Dr. Ashfaque Hassan Khan concurred that the broadening gap between interbank and open market rate is putting additional burden on forex reserves. Pasha urged the govt. to review its trade agreement with Afghanistan as PKR was being used to purchase dollars; and emphasized that IMF program should be brought back on track at the earliest, otherwise multilateral and bilateral lenders will stop providing critical funds and disable the govt. from launching/issuing bonds in the global market. BR. Power transmission program: ADB approves $ 0.2Mn technical aid to support Tranche-4 of MFF ADB has approved technical assistance of $ 0.2Mn to support the implementation of Tranche 4 of the multi-tranche financing facility (MFF) for the 2nd Power Transmission Enhancement Investment Program in Pakistan. Official documents revealed that specifically, it would help address the limited participation of women in technical and leadership positions in the NDTC by promoting a workplace environment with equal opportunities for recruitment, skills development, and professional advancement of female personnel. It will also integrate community-based skills development for women as part of the NDTC’s genderresponsive sustainable business practice. BR. Pakistan lacks infrastructure to import Russian gas The import of gas from Russia is still a distant dream for Pakistan despite the two countries’ willingness to play ball. Analysts say the renewed discussion around gas imports from Russia won’t amount to much for two reasons. One, lack of infrastructure to handle gas imports; and two, inadequate capacity in the existing pipeline system to transport gas from one point to another. Dawn. Gold outplays all other assets in 2022 Gold outperformed all major investment avenues by a significant margin in 2022, a research note issued by Topline Securities showed on 27th Dec’22. It was followed by 1-year (dollar-based) Naya Pakistan Certificates and the US$ as the best-performing assets in 2022. These three asset classes provided returns that were higher than the estimated average inflation of around 20% in \ 2022. Gold posted a gain of 41% as its rate rose from PKR 108,200/10gms to PKR 152,700. Its rate increased 11% in 2021. Dawn. Lenders, bureaucrats blamed for power crisis Power sector default now stands at PKR 2.5Tn in addition to PKR 2.6Tn of circular debt despite over PKR 3.4Tn of subsidies paid since 2007 and total power sector losses of PKR 5.7Tn, a direct outcome of bad policies pursued by successive govts on the advice of the WB, ADB and USAID. The poor governance structure controlled by the federal bureaucracy without taming the IPPs has been equally responsible for aggravating the power sector crisis. Moreover, the sovereign guarantees provided by the govt. to borrow from commercial banks to finance the power sector deficit had crossed PKR 2.055Tn in Sept’21 while crowding out the private sector borrowing. Concluding this based on a fresh study, in the recently launched book titled, “Power Sector: An Enigma with No Easy Solution” Pide and the govt. differed publicly on the proposed induction of 10,000MW of renewable energy (RE) plants and proposed advanced metering infrastructure (AMIs) through the private sector. Dawn. Help sought against encroachments KDA has sought the assistance of police and Rangers to avoid untoward incidents and control law and order situation during removal of encroachments from amenity plots in the city as per the directions of the Supreme Court and Sindh High Court. Dawn. Connectivity to boost trade with Central Asia Pakistan has offered connectivity to Central Asia through roads and railways, and hoped that the connectivity projects in the region will not only bring the trade communities together but also usher in a new era of peace and prosperity for the two countries as well as the region. Meanwhile, Pakistan and Uzbekistan have signed an agreement to improve mechanisms of pest control measures and further strengthen cooperation in the field of plant quarantine. Under the agreement signed on 27th Dec’22, the Ministry of National Food Security and Research will work with the Agency of the Plant Protection and Quarantine of Uzbekistan to create an enabling environment for enhancing the trade volume of plants and plant products. Dawn. Date / Period Unit Value Change Daily 27-Dec PKR PKR 226.15 234.90 0.15% -0.04% FIPI 27-Dec 27-Dec Pts. $ Mn 39,803 -1.97 -0.88% NM** Crude Oil 27-Dec $/bbl 79.77 -1.48% Gold 27-Dec $/oz 1,823.1 0.74% Gold (10g) Local 27-Dec PKR 157,150 2.48% Silver 27-Dec $/oz 24.22 0.67% Cotton(KHI)-40 kg 27-Dec PKR 17,879 0.00% Kibor-6M 27-Dec % 17.05 -0.01% Forex Reserves 16-Dec $ Bn 6.12 WoW -8.71% Remittances Jul-Nov 22 $ Bn 12.01 -6.94% Exports* Jul-Nov 22 $ Bn 11.93 -3.34% Imports* Jul-Nov 22 $ Bn 26.34 -20.03% Trade Balance* Jul-Nov 22 $ Bn -14.41 30.03% Current Account Foreign Direct Inv. Jul-Nov 22 Jul-Nov 22 $ Bn $ Bn -3.10 0.43 56.28% -46.04% 27-Dec YoY Jul-Oct 22 LSM Growth* % 2.89 % 25.14 Jul-Nov 22 Avg. CPI Discount Rate % 16.00 Nov-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* **Not Meaningful; WoW= week on week; YoY=Year on Year; Major Currencies 315 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Dec-21 GBP, 27-Dec-22, 299.0 EUR, 27-Dec-22, 261.8 USD, 27-Dec-22, 233.8 USD Mar-22 GBP Jun-22 EUR Sep-22 Dec-22 Source: KCCI Research Quote of the Day “Try not to become a man of success, but rather become a man of value.” Albert Einstein Trade Statistics for 5MFY23 ($ Bn) Nov'22 -2.791 Oct'22 -2.327 Sept'22 -2.901 Aug'22 -3.589 Jul'22 -2.739 Exports 2.391 2.384 2.446 2.482 2.254 Imports 5.182 4.711 5.347 6.071 4.993 Trade Balance Source: KCCI Research, PBS Registration of SSMCs under rules: Despite reminders, major social media platforms not responding positively: PTA Note PTA has blamed major social media platforms i.e. Facebook, Twitter, and YouTube for not responding positively to register themselves under “Registration of Significant Social Media Companies under Rules, 2021”. Official documents revealed that under the said rules, so far five significant media platforms have completed the registration process and now registered as **Green-colored change in indicators depicts Improvement, whereas Significant Social Media Companies (SSMC) in Pakistan. The registered SSMC included Joyo Technology Pakistan (Pvt.) Ltd. Red demonstrates Deterioration (Snackvidoe), Bigo Service Pakistan (Pvt.) Ltd. (BIGO Live, Likee), Micro World Limited (YoHo, MICO). However, all major social **ACSMA LLC - A Russian Developer & Producer of unique medical media platforms Facebook, Twitter, YouTube etc have not responded positively to the repeated direction of the authority w.r.t. devices for diagnostics and treatment, is looking for partners in registration under Rules 2021. BR. Pakistan. If any company is interested in cooperation, they may contact rustrade_isb@yahoo.com or secretary@kcci.com.pk.