Pakistan Daily Economy Update - 3 August

Transcription

1. Aug . 3, 2017 KCCI - eBulletin Rupee dip ‘meant to fix imbalances’ Deputy Governor State Bank of Pakistan Riaz Riazuddin has said that he had decided on his own capacity to depreciate Pakistan rupee by 3.1% against the US dollar on 5th Jul’17 to correct imbalances in the external sector. He also defended his authority to take decisions independently without consulting the Finance Ministry. He is said to have told parliamentarians that growing foreign debt repayments and external sector deficits were main reasons behind the decision to depreciate the rupee. Tribune. FBR chief blames tax reliefs for revenue shortfall FBR Chairman Tariq Pasha has said that that the FBR missed FY17 tax collection target by PKR 259Bn due to PKR 169.7Bn worth of tax concessions given by the government during the year. The FBR took a hit of PKR 111Bn due to the federal government’s decision not to increase prices of petroleum products. During a meeting of Senate’s standing committee on finance, senators questioned the FBR chairman how can growth in revenue collection fall below the nominal GDP growth rate in spite of imposing additional taxes; any growth rate which is below the nominal GDP growth indicates huge slippages in revenue collection and administrative weaknesses. Tribune. Let Ogra fix POL prices or abolish it: MPs The Senate’s Finance Standing Committee has expressed displeasure on the bureaucracy’s move to enhance General Sales Tax (GST) on High-Speed Diesel (HSD) and petrol without getting approval from the Prime Minister and federal cabinet. The FBR has increased the GST rate on HSD and petrol to 40% and 23.5% respectively to generate windfall revenues for the govt. by not passing on the benefit of a fall in international oil prices to consumers. One of the committee member said that OGRA should determine oil prices in the country and that govt. should abolish OGRA if govt. fixes petroleum products prices. The Nation. Investor appetite tempts firms to issue PKR 8.5Bn worth of IPOs Growing appetite of investors is piquing interest of companies to vie for bigger pie of funds from equity market as two consumer goods firms are ready for public offerings for more than PKR 8Bn at Pakistan Stock Exchange (PSX). Edible oil maker Dalda Foods Limited has planned to issue 82.5Mn shares at a floor price of PKR 85/share through the book building process in order to fund its expansion. Besides, AGP Pharma will be issuing 35Mn shares constituting 12.5% of paid-up capital at a floor price of PKR 40/share to broaden the company’s shareholder base. Both the IPOs are expected in the next couple of months after the approval to prospectuses. The News. Pakistan, Thailand: FTA discussions to enter crucial stage The 8th round of talks between Pakistan and Thailand will be held in Islamabad from 21st – 23rd Aug’17 in an attempt to reach a final decision on formalising a Free Trade Agreement (FTA). Both sides have exchanged offer lists of products to be included in the agreement including automobile and textile products, and talks are now being held to thrash out the agreement’s text, tariff reduction modalities and request and offer lists from both sides. Thailand has comparative advantage in around 1,000 commodities and Pakistan in 684 products. The FTA is expected to be signed on 25th Sep’17. Tribune. Implementation of textile policy priority of govt. An official of the Textile Ministry has said that govt. is working to implement the textile policy 2014-15 on priority in its true spirit and for maximum benefit of the industrial sector. Textile Ministry through implementation of the policy will provide incentives worth PKR 162Bn for the modernization and development of textile sector. As per the Textile Ministry, the textile sector will get PKR 162Bn out of the PKR 180Bn "Trade Enhancement Package" announced by Prime Minister Muhammad Nawaz Sharif where package is for a duration of 18 months starting from Jan.’17 to Jun.’18. The Nation. Commerce ministry exploring int'l markets to increase exports Commerce Ministry is exploring new potential in international markets to enhance the country’s exports. Under the Strategic Trade Policy Framework (STPF), diversification of export markets has been envisaged through adoption of an outreach strategy for Africa, Commonwealth of Independent States (CIS) and Latin America. The Ministry’s official has said that negotiations are underway for Free Trade Agreements (FTAs) with Turkey, Thailand and Iran, which would be finalized in coming months. The Nation. Finance division calculates external public debt at $ 58.4Bn Finance division has measured the external public debt at $ 58.4Bn as of Mar‘17, rejecting a misreported figure of $ 79.2Bn in media as a ‘mere projection, saying it includes private sector external debt and liabilities. Media reports had reported that the present government added $ 35Bn to external debt of the country during the last four-year period but finance division said that this is grossly wrong and misleading and there is only nominal increase in external public debt as of end-March 2017, totaling $ 10.3Bn averaging $ 2.57Bn per annum. The News. \ Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (AU'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug 2-Aug PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 105.40 107.30 46,949 -1.48 49.55 1,267.9 43,628 16.56 6,805 6.15% Forex Reserves 21-Jul $ Bn 20.40 0.00% -0.09% 0.89% NM** 1.58% -0.22% 0.00% -0.84% 0.00% 0.00% WoW -2.06% YoY -3.08% -1.63% 18.67% -36.32% -148.57% 4.58% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Jun 17 Remittances $ Bn 19.30 Jul-Jun 17 Exports* $ Bn 20.45 Jul-Jun 17 Imports* $ Bn 53.03 Jul-Jun 17 Trade Balance* $ Bn -32.58 Jul-Jun 17 Current Account $ Mn -12,098 Foreign Direct Inv. $ Bn 2.41 Jul-Jun 17 Jul-May 17 LSM Growth* % 5.69 % 2.91 Jul-17 Avg. CPI-FY17* Discount Rate % 5.75 Jul-17 WoW= week Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 145 135 125 Govt to borrow PKR 3.75Tn in 3 months SBP has reported that the government will borrow PKR 3.75Tn from the banking system during Aug-Oct 2017. The government will borrow PKR 3.45Tn through market treasury bills (MTBs) and PKR 300Bn through Pakistan Investment Bonds (PIBs) in the three-month period. The government, which depends largely on domestic and foreign borrowing, will raise PKR 304.6Bn in addition to the maturing amount of about PKR 3.39Tn during this period. Dawn. Parameters of renewable, hydropower generation costs to be revised Nepra has decided to change key parameters of renewable and hydropower generation costs for tariff calculations in view of conducive market conditions and financing costs favorable to consumers. The regulator has sought formal comments from the power sector stakeholders on proposed changes to the existing tariff structure before reaching a final conclusion and its formal notification. Dawn. India cuts rates by 25 basis points India’s central bank cut interest rates for the first time in almost a year amid sluggish growth and record-low inflation in the world’s fastest growing economy. The Reserve Bank of India announced the benchmark repo rate – the level at which it lends to commercial banks – would be cut by 25 basis points to 6%, a near seven-year low. India’s Finance Minister had called for a reduction in the key policy rate in June after retail inflation fell sharply from 2.18% to 1.54%. Tribune. EUR, 2-Aug-17, 124.8 115 105 USD, 2-Aug-17, 105.4 95 Aug-16 USD Nov-16 GBP EUR Feb-17 May-17 Aug-17 Source: KCCI Research ; Oanda.com Quote of the Day "I have never been hurt by what I have not said." Power sector’s circular debt crosses PKR 850Bn mark Pakistan’s power sector circular debt has reportedly crossed PKR 850Bn of which a debt of PKR 401Bn exist among different companies whereas an amount of PKR 450Bn has been parked in the books of Power Holding Pakistan (Private) Ltd. In this regard, Economic Coordination Committee (ECC) has given approval to reschedule power sector loans of PKR 193Bn parked in PHPL books as power distribution companies have expressed their inability to retire these loans due to financial constraints. The IMF, in its Article IV Consultation, report had observed that progress in electricity sector reforms has been mixed, with a renewed build-up in circular debt and financial losses of ailing Public Sector Enterprises (PSEs). BR. Steel melters paying sales tax via electricity bills allowed adjustment Steel melters paying sales tax through electricity bills would be eligible to adjust their paid sales tax at import stage as per the procedure issued by FBR. The FBR has said that the adjustment would be applicable only to such steel melting units, which were paying sales tax through their electricity bills. However, the FBR said the steel mills operated by sugar mills or other persons using self-generated electricity and steel melting and re-rolling units which have opted to pay sales tax on ad valorem basis would not be entitled to such adjustment. The News. GBP, 2-Aug-17, 139.3 Calvin Coolidge Chart of the Day 25 Central Government Debt (PKR Tn) 20.81 20 15.74 15 10 9.97 11.93 16.75 18.68 13.51 5 0 May'11 May'12 Value in $ Mn May'13 May'14 May'15 May'16 May'17 Source: KCCI Research, SBP Source: KCCI Research, SBP 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