Pakistan Daily Economy Update - 28 June

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1. June 28 , 2022 KCCI - eBulletin Karachi Chamber Of Commerce And Industry Endorses Govt.'s Economic Policies President KCCI Muhammad Idrees has reaffirmed his support for the govt.'s policies to deal with present economic situation. He said that there was no doubt that PM Shehbaz Sharif and Minister for Finance Miftah Ismail had to take unpopular decisions but these efforts were needed in the larger interest of the economy. He assured that the business and industrial community stands with the govt. and was ready to play its role in the face of tough times. He was of the view that the govt.'s efforts combined with the resilient nature of the people of the country would soon yield results. Urdupoint. PM approves import of coal from Afghanistan in rupees PM Shehbaz Sharif has approved import of super-critical quality coal from Afghanistan in Pakistani Rupees instead of dollars, saying the move will help the country save precious foreign exchange. Coal imported from Afghanistan in rupee terms will not only generate cheap electricity but also help save the country's precious foreign exchange. The PM was informed that import of coal from Afghanistan, initially required only for Sahiwal and Hub power plants, would save more than $ 2.2Bn annually in the import bill. Tribune. PM forewarns of ‘very tough’ IMF conditionalities PM Shehbaz Sharif has said that the agreement with the IMF was about to reach containing very tough conditionalities. Calling it a revolutionary step, he said imposing a direct tax on the rich class would bring in PKR 200Bn to the national kitty. Similarly, he said the govt. also averted the crisis of edible oil by timely importing the commodity from Indonesia. He said that the govt. was also strategizing to enhance indigenous production of edible oil to save $ 4Bn. Similarly, the enhancement of cotton and wheat production was also on our agenda to support and stabilize the national economy. BR. Economic advisory body comprises PM, the Pashas, others PM Shehbaz Sharif has approved the re-composition of 18-member Economic Advisory Council (EAC) to review and formulate economic policies. As per the notification of the Finance Division, the EAC would be headed by the Prime Minister while its members included Shahid Khaqan Abbasi, Ahsan Iqbal, Miftah Ismail, Maryum Aurangzeb, Dr Aisha Ghous Pasha, Musaddiq Masood Malik, Dr S Akbar Khan, Dr Muhammad Nadeem Javed, Samina Khalil, Dr Masood Ahmad, Dr Ijaz Nabi, Dr Hafeez Pasha, Dr Ali Cheema, Dr Syed Muhammad Hassan Shah, Dr Akbar Hussain Shah, Dr S Manzoor Ahmad, Khurram Hussain and Sakib Sherani. BR. Bank timings For facilitating the collection of govt. receipts, duties and taxes, SBP has announced that field offices of SBP Banking Services Corporation and authorized branches of National Bank of Pakistan will observe extended banking hours till 08:00pm and 12:00am on 29th Jun’22 and 30th Jun’22 respectively. Dawn. Sindh PA passes budget after midnight The Sindh Assembly quickly has passed the PKR 1.713Tn tax-free budget for FY23. The budget was passed in 10-minute proceedings after the house hurriedly approved all 78 demands for grants on supplementary expenditure for FY22 moved by the chief minister, who also holds the portfolio of finance. Dawn. Salaried individuals: Expert urges govt to revisit hike in tax liabilities Economic and financial analyst, Ateeq Ur Rehman has urged the govt. to revisit its decision about huge increase in tax liabilities of salaried individuals. This is very important to note that the salaried class is a major contributor in the tax net of the country. The collection target has been set as PKR 7,470Bn with an additional tax increase of PKR 466Bn in corporate revenue impact of around PKR 35Bn calculated from the salaried class only, following the withdrawal of tax relief of PKR 47Bn. The salaried class is already in the burden of ballooning inflation and towering electricity charges etc. BR. $ 108Mn debt suspension signed with France Pakistan has signed a debt relief agreement with France for suspension of $ 107Mn loan under the G-20 Debt Service Suspension Initiative (DSSI) framework allowed to the poor nations to absorb Covid-19 shock. This amount, initially repayable between Jul-Dec’21 will now be repaid over a period of six years, including one-year grace period in semi-annual installments. Dawn. \ Import expensive fuel or brave long outages: Nepra chief While finalizing an unprecedented PKR 7.90 per unit additional Fuel Cost Adjustment (FCA) for distribution companies (Discos) for Jul’22. Nepra has noted that Pakistan was left with no choice but to face load shedding or generate electricity using expensive fuel oil. The increase in FCA would be about PKR 7.90 per unit for ex-Wapda Discos with a financial impact of PKR 113Bn. This tariff is not applicable to KE consumers directly, although a part of it subsequently becomes part of KE’s tariff adjustments on account of its import from the national grid. Dawn. List of Indicators PKR PKR 207.94 207.25 0.23% -0.36% KSE-100 index FIPI 27-Jun 27-Jun Pts. $ Mn 41,879 0.46 2.01% NM** Crude Oil 27-Jun $/bbl 110.30 3.01% Gold 27-Jun $/oz 1,824.8 -0.30% Gold (10g) Local 27-Jun PKR 122,260 1.35% Silver 27-Jun $/oz 21.19 0.29% Cotton(KHI)-40 kg 27-Jun PKR 20,148 -3.59% Kibor-6M 27-Jun % 15.32 -0.03% Forex Reserves 17-Jun $ Bn 14.21 WoW -4.90% Remittances Jul-May 22 $ Bn 28.41 6.26% Exports* Jul-May 22 $ Bn 28.85 27.78% Imports* Jul-May 22 $ Bn 72.18 44.28% Trade Balance* Jul-May 22 $ Bn -43.33 -57.85% Current Account Foreign Direct Inv. Jul-Apr 22 Jul-May 22 $ Bn $ Bn -13.78 1.60 -2437.6% -4.91% YoY Jul-Mar 22 LSM Growth* % 9.40 % 11.29 Jul-May 22 Avg. CPI Discount Rate % 13.75 May-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Jun-21 GBP, 27-Jun-22, 253.0 EUR, 27-Jun-22, 216.0 USD, 27-Jun-22, 207.3 Sep-21 GBP USD Dec-21 EUR Mar-22 Jun-22 Source: KCCI Research Quote of the Day “Keep your face always toward the sunshine, and shadows will fall behind you.” Walt Whitman Repatriation of Profit/Dividend on Foreign Investment - $ Mn 1,800 1,600 To strike staff-level pact with IMF, PKR 10/litre petroleum levy on the cards In order to strike a staff-level agreement with the IMF, the govt. is considering slapping PKR 10 per litre petroleum levy on POL [petrol, oil, lubricants] products with effect from 1st Jul’22. However, there is no possibility of imposition of General Sales Tax (GST) on POL products, and it will be kept at zero for the time being. The Ministry of Finance proposed an increased limit of petroleum levy to the tune of PKR 50 per litre, but it cannot collect the maximum limit at a time when the prices of petroleum products are witnessing an unprecedented hike in recent weeks. The POL prices had gone up by over PKR 100 per litre since 27th May’22. The News. 800 Bykea raises $ 10Mn Pakistani ride-sharing and delivery startup Bykea raised $ 10Mn from its existing backers to tap rising demand for online services in the South Asian country. With 1.7Mn active monthly users and more than 60,000 driver partners, Bykea offers services in Karachi, Lahore and Islamabad. The News. Change Daily 27-Jun 1,400 PKR 10Bn fresh bonds issued by CDNS from July15-25 Central Directorate of National Savings (CDNS) has issued PKR 10Bn bonds from 15th-25th Jul’22, bringing the total target of PKR 1,110Bn for FY22. The CDNA had collected PKR 1,100Bn by this time last year. The News. Value 27-Jun Mask-wearing also made mandatory in public transport The National Command and Operation Centre (NCOC) has declared mask-wearing mandatory on trains and in public transport as over 300 cases of Covid-19 were reported for the fourth consecutive day. Dawn. SBP revises currency-wise reporting format SBP has revised the format for currency-wise reporting of FE-25 Deposits. All banks are reporting FE-25 Deposits and its Utilization data to Statistics and Data Warehouse Department (SDWD) of SBP on monthly basis. SBP has asked the reporting institutions must develop a mechanism/ layer to check and verify, before submissions on due dates to SDWD, that all data are prepared according to the relevant guidelines issued from time to time. BR. Unit USD-Interbank USD-Open MKT Profit repatriation rises to $ 1.6Bn The total profits and dividend outflows increased to $ 1.6Bn during 11MFY22, reflecting that foreign investment in Pakistan yields good profits despite political and economic uncertainties. The latest data issued by SBP shows the high economic growth of about 5.87% in FY22 (estimated) provided good profits to foreign investors. In 11MFY21 total profit outflow was $ 1.496Bn. Dawn. Clearance of goods stuck at ports on the cards The govt. has decided in principle to allow clearance of goods stuck at ports. The Ministry of Commerce has been directed to submit a summary to the federal cabinet for consideration. On 19th May’22, the govt. imposed a ban for a period of two months on the imports of 800 items in 33 categories. Dawn. Date / Period 1,496.3 1,600.5 1,382.1 1,447.2 1,200 1,000 600 400 114.2 153.3 200 0 Total 11M-FY21 11M-FY22 Repatriation on Foreign Direct Investment Repatriation on Foreign Portfolio Investment Source: KCCI Research; SBP Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.