Pakistan Daily Economy Update - 30 June

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1. Jun . 30, 2017 KCCI - eBulletin Pakistanis’ money in Swiss banks down but still above Indians’ Money kept by Pakistani nationals in Swiss banks fell marginally to CHF 1.4Bn (PKR 1.55Tn) in 2016, even as the same from India fell for 3rd consecutive year to hit a record low. As per the latest data released by Switzerland's central bank SNB (Swiss National Bank), the total funds linked to Pakistan declined by 6% from CHF 1,513Mn a year ago. A number of other major countries also saw their funds falling in Swiss banks amid a global clampdown against the erstwhile banking secrecy walls in the Alpine nation. The News. FBR allows reduction in cigarette prices to check duty evasion FBR has allowed cigarette manufacturers to reduce prices to combat massive duty evasion. A provision has been added to the federal excise laws through the Finance Act, 2017, under which three different tiers of prices have been introduced for duty calculation. The first tier, which attracts higher prices of cigarettes, are permitted to reduce prices, but other tiers are allowed to adjust prices. FBR has constantly been increasing the duty on the sale of cigarettes to discourage the use of tobacco. However, this resulted in counterproductive to reduce the consumption, as production of total number of cigarettes remained stagnant, and on the other hand massive fall in revenue was witnessed during successive years. The News. \ Fertiliser makers for swift execution of subsidy scheme Crude (AU'17) Gold (JY'17) Gold (10g) Local Silver (JY'17) Cotton(KHI)-40 kg Kibor-6M Forex Reserves 23-Jun $ Bn 21.36 0.05% -0.09% 0.82% NM** 0.22% -0.34% 0.00% -1.03% 0.00% 0.00% WoW 4.90% YoY -2.13% -3.13% 20.60% -42.12% -177.56% Jul-May 17 Remittances $ Bn 17.46 Jul-May 17 Exports* $ Bn 18.54 Jul-May 17 Imports* $ Bn 48.54 Jul-May 17 Trade Balance* $ Bn -30.00 Jul-May 17 Current Account $ Mn -8,929 % 4.18 Avg. CPI-FY17* Jul-May 17 May-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 Jun-16 GBP, 29-Jun-17, 135.8 EUR, 29-Jun-17, 119.5 USD, 29-Jun-17, 104.7 Sep-16 USD 17 pro-poor sectors prioritized to eliminate poverty The government, as part of achieving its goal to eliminate poverty by 2030, has prioritized 17 pro-poor sectors through Medium Term Expenditure Framework (MTEF), which provides a link between policy priorities and related budget allocations. During 2015-16, total expenditure on these sectors was 2,694.67Bn, which was 9.3% of GDP. Dawn. SBP to remain closed on Jul. 3, 2017 The State Bank of Pakistan (SBP) will remain closed for public dealings on Jul. 3, 2017 (Monday), which will be observed as Bank Holiday. All banks, Development Finance Institutions (DFIs) and Micro Finance Banks (MFBs) shall, therefore, remain closed for public dealings on the aforesaid date. However, all employees of the banks/DFIs/MFBs will attend the office as usual. The Nation. Foreign reserves reach $ 21.3Bn The total liquid foreign reserves held by the country has increased to $ 21.36Bn as on Jun. 23, 2017 compared with $ 20.36Bn in the preceding week. The reserves held by the State Bank of Pakistan (SBP) increased by $ 955Mn to $ 16.38Bn from 15.42Bn a week earlier. Similarly, net foreign reserves held by the commercial banks also increased to $ 4.98Bn compared with $ 4.94Bn last week. The Nation. Jun-17 "The most common way people give up their power is by thinking they don’t have any." Alice Walker Chart of the Day 105 144 77 76 200 180 160 140 120 100 80 60 40 20 0 Development Loans & Grants to Provinces (FY12 - FY18) 55 52 Pakistan keen to strengthen bilateral ties with UK: Dar Finance Minister Ishaq Dar has said that Pakistan is keen to work with the United Kingdom (UK) for further strengthening bilateral ties and economic cooperation. While talking to Acting British High Commissioner Richard Crowder, Dar appreciated the continued support of the British government, including through DFID, for different initiatives and projects in Pakistan aimed at socio-economic development. The Minister also discussed the current state of bilateral ties between Pakistan and the United Kingdom with the British High Commissioner. The Nation. Mar-17 Source: KCCI Research ; Oanda.com EUR Quote of the Day The government has announced a subsidy on fertilizers in budget FY17, but neither the Ministry of National Food Security and Research nor the Ministry of Finance has issued any notification in this regard. A further delay in the notification from the ministry concerned will result in lapse of a subsidy amount of PKR 156Mn. Fertiliser prices in Pakistan are the highest in the region despite the subsidy. Dawn. China says fourth Pakistan nuclear reactor connected to grid China National Nuclear Corp has put its fourth reactor in Pakistan’s Chashma project into operation and expected commercial to begin by the end of Aug.’17. The fourth unit has installed capacity of 340,000 KWs, bringing the total size of Chashma project to 1.3Mn KWs. China has also agreed to invest $ 6.5Bn to build a reactor in Karachi that will mark the overseas debut of China's home-grown third-generation reactor design known as the Hualong One. BR. Dec-16 GBP 187 Eid Sales fall short of expectations despite better security situation Contrary to expectations traders say that this year’s Eid sales in Karachi remained much lower compared to 2016, despite satisfactory security situation in the country. Moreover, there has been no significant change in inflation numbers this year that might affect purchasing power of the people. Traders expected sales to cross PKR 50Bn this year but were largely disappointed by the low turnout. Tribune. Change Daily 104.90 105.90 46,712 46,712 44.91 1,245.9 43,114 16.62 7,073 6.14% 94 94 Top census official says provisional results by next month The chief census commissioner has assured Finance Minister Mr. Dar that provisional results from the Population and Housing Census 2017 will be available by the end of Jul‘17. Dawn. Value PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 90 KCCI seeks cut in sales tax on mobile phones President Karachi Chamber of Commerce & Industry (KCCI) Shamim Ahmed Firpo has requested Finance Minister Ishaq Dar to reduce sales tax on Feature Phones (Category-A) to PKR 150 per phone which has been raised to PKR 650 in federal budget FY18 as compared to PKR 300 of federal budget FY17 along with an additional regulatory duty of PKR 250. The President KCCI said that the total taxes and duties have been raised by around 112% on an imported phone of PKR 800 only which is a sheer injustice not only to the concerned traders but also to the poor and down trodden segment of society. He further said that this step will prove counterproductive as it will discourage legal imports and encourage smuggling The Nation. Unit 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 29-Jun 152 Pakistan borrows another $ 700Mn to ease pressure off reserves Pakistan has obtained another $ 700Mn loan from a European commercial bank for 10 years in a bid to take pressure off its foreign currency reserves, increasing its borrowings to around $9Bn in FY17 (the highest-ever in a single year in Pakistan’s history). The fresh loan has been obtained at an interest rate of 4.47%, which is significantly lower than the return the country paid in the past on borrowings through Sukuk and Eurobonds. The loan has been obtained on a policy-based guarantee provided by the World Bank, which will charge 0.5% fee per annum. Tribune. Date / Period 80 Ministry decides to hire ‘experts’ to arrest export slide Commerce Ministry has reportedly decided to hire around 21 consultants and researchers from private sector for foreign trade wings, domestic commerce, legal side and administration wing from private sector for which PKR 50Mn has been approved from Export Development Fund (EDF). As Commerce Ministry is at a critical stage of negotiating two important FTAs vis-à-vis Thailand and Turkey which are likely to be concluded this year while reviews of Pak-China, Pak-Malaysia PTA are on-going, the prospective research analysts/consultants and legal advisors shall perform the research and provide analytical support in identifying market potential with regard to bilateral, regional and global trade trends. BR. List of Indicators USD-Interbank USD-Open MKT KSE-100 index FIPI 78 Ogra proposes cut in petrol, HSD prices Ogra has recommended cut in petrol and high-speed diesel (HSD) prices by PKR 3.30/litre and PKR 2.70/litre, respectively, but suggested increase in the rate of kerosene oil by PKR 11/litre and that of Light Diesel Oil (LDO) by PKR 7/litre. In case, govt. approves the Ogra summary, petrol price will go down to PKR 69.50/litre from the current PKR 72.80 and diesel to PKR 78.70 from the current PKR 81.40/litre. However, price of kerosene oil will rise to PKR 55/litre from the existing PKR 44/litre and that of LDO to PKR 51 from the existing PKR 44/litre. The Nation. Economic Indicators 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Budgeted (PKR Bn) Revised (PKR Bn) Source: KCCI Research, MoF 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