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Pakistan Daily Economy Update - 30 October

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5 years ago
Pakistan Daily Economy Update - 30 October

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  1. October 30 , 2019 KCCI - eBulletin After talks failure, traders down shutters across country The trader community observed a shutter down strike throughout the country on Tuesday (29th Oct’19) to protest measures in the budget designed to document their transactions, with wide swathes of urban markets heeding the strike call. In Karachi, the majority of markets observed the strike as the hub of wholesale and retail trade all along M.A. Jinnah road remained shut. During the day, talks between the govt. and the trader community broke down, ending hopes of an early end to the strike. After the inconclusive talks, Adviser Finance Dr Shaikh criticized traders for not paying their taxes, pointing out that out of 3.5Mn traders, only 392,000 are in the tax net. The markets are also expected to largely remain closed today (30th Oct’19) too. Dawn. No additional burden on existing taxpayers: Hafeez The govt. has said that it is trying to absolve existing taxpayers from any additional burden as a visiting staff mission of IMF planned to brief a joint session of standing committees of both parliament houses about the status of its $ 6Bn support package on 6th Nov’19. He said the IMF delegation is currently reviewing quarterly economic performance and had expressed confidence over govt.’s economic policies, including increase in revenues and reduced expenditures. Dawn. Govt urged to declare ‘cotton emergency’ The Karachi Cotton Association (KCA) has urged the govt. to declare an emergency for arresting rapidly falling cotton production. It also sought a ban on cultivation of paddy and sugarcane as well as setting up of sugar mills in areas already earmarked for cotton crop. Cotton production figures went from 15Mn bales to 10.20Mn bales for current cotton season 2019-20 and the govt. needs to immediately launch an action plan for bringing in more area under cotton crop cultivation. Dawn. Govt moving in right direction: IMF The IMF has said that the govt. is moving in right direction as it reduced the fiscal deficit and also volatility in exchange rate in last few months. The IMF has appreciated the positive results being produced by the policies and strategies put in place by the govt. to remove imbalances in the economy. The Nation. Economic Indicators List of Indicators Date / Period Pakistan asks IMF to ease curbs on financial system Pakistan has asked the IMF to ease restrictions on the creation of domestic money for smooth working of the country’s financial system and offset the impact of relatively low foreign inflows. SBP raised the issue of relaxing the condition of net domestic assets of the central bank. Pakistan has met the net domestic asset target for 1QFY20 but future targets are stringent that may create liquidity problems in the banking system. Under the IMF program, the federal govt. is not allowed to directly borrow from the SBP and its financing needs are met by commercial banks. Tribune. Change Daily PKR PKR 155.78 155.83 -0.04% -0.05% 33,798 -0.06 -0.19% NM** 29-Oct KSE-100 index FIPI Pts. $ Mn Crude (AP'19) 29-Oct 29-Oct 29-Oct $/bbl 55.52 -0.54% Gold (MA'19) 29-Oct $/oz 1,490.7 -0.01% Gold (10g) Local 29-Oct PKR 75,446 0.00% Silver (MA'19) 29-Oct $/oz 17.82 0.21% Cotton(KHI)-40 kg 29-Oct PKR 9,324 0.00% Kibor-6M 29-Oct % 13.34 0.00% Forex Reserves 18-Oct FY20 $ Bn 15.19 WoW 0.29% Remittances Jul-Sep 19 $ Bn 5.48 -1.43% Exports* Jul-Sep 19 $ Bn 5.52 2.75% Imports* Jul-Sep 19 $ Bn 11.25 -20.59% Trade Balance* Jul-Sep 19 $ Bn -5.73 34.85% -1.55 0.54 63.89% -3.09% 29-Oct YoY Jul-Sep 19 $ Bn $ Bn Jul-Sep 19 Jul-Aug 19 LSM Growth* % % Jul-Sep 19 Avg. CPI Discount Rate % Jul-19 WoW= week, NCCPL, KSE, Sources: KCCI Research, PMEX ** Not Meaningful on week; Current Account Foreign Direct Inv. -6.04 10.08 13.25 SBP, PBS* Major Currencies GBP, 29-Oct-19, 200.1 185 175 165 155 145 135 125 115 105 95 Oct-18 USD EUR, 29-Oct-19, 172.7 USD, 29-Oct-19, 155.6 Jan-19 GBP Apr-19 Jul-19 Oct-19 Source: KCCI Research ; Oanda.com EUR Quote of the Day “Good design is good business.” KCCI chief asks TIOs to undertake extensive market studies KCCI president Agha Shahab Ahmed Khan, speaking at a meeting with the recently appointed Trade & Investment Officers (TIOs) \ during their visit to KCCI, stressed the need to carry out extensive and high-quality studies by TIOs which must gauge the overall size of the markets, demands and potential for Pakistani products. He also said that there is a dire need to establish Promo Councils in order to effectively promote exports. KCCI ex-president and Chairman BMG, Siraj Kassam Teli, advised the newly appointed TIOs to carry out extensive study of their designated countries to gauge its specific needs and what Pakistani products can be promoted and marketed there. BMG Chairman also advised the TIOs to maintain excellent liaison with KCCI Research Department, which can be approached anytime to seek assistance. The KCCI Research website can also be browsed for access to precise and very useful trade-related information. He also urged TIOs to share trade related queries with KCCI so that the same could be disseminated amongst exporters. BR. Thomas Watson Jr Chart of the Day Growth in Quantum Fabric Exports to Major Destinations during FY19 PM Imran directs authorities to finalize tariff policy PM Imran Khan has directed relevant authorities to finalize the national tariff policy within a week after consultation with all stakeholders. Trade Secretary Ahmed Nawaz gave a briefing on ‘Look Africa’ policy. He said Pakistan will export a new spectrum of goods to African countries in place of conventional goods. He said dispute of outstanding payments with Russian traders has been resolved after which Pakistan will boost business activities with Russia. The secretary, however, noted that Pakistani products could not compete in the international market if import duties on raw materials were not withdrawn. Tribune. 140 SBP criticizes provinces for low revenue generation The SBP has blamed a lack of institutional capacity in the provincial govts for lower revenue collection that contributed less to taxto-GDP ratio and fiscal consolidation efforts. An important agenda on fiscal reforms should be the capacity building of the provincial authorities, which are responsible for mobilizing revenue via agriculture income tax, sales tax on services and property taxes. The SBP, in its annual report on the state of economy said that 9 years after the 18th amendment, the provinces still seem to lack the capacity to adequately assume these responsibilities. The News. 40 CM Murad grants DMCs PKR 88Mn to carry out cleanliness work In a bid to make the month-long Clean My Karachi campaign drive sustainable, Sindh CM Murad Ali Shah has ordered the disbursal of PKR 88Mn to 3 DMCs and the Karachi district council to get their machinery repaired and begin cleanliness work. Tribune. Value USD-Interbank USD-Open MKT Pakistan, IMF trying to reconcile differences on circular debt, tax collection Pakistan and the IMF are struggling to reconcile differences on exact size of circular debt, demand of further hike in electricity tariff and achieving tax collection in the remaining FY20. Despite positive vibes coming out from both sides with regard to ongoing parleys between Pakistan and the visiting IMF review mission, the IMF is still asking the authorities to raise power tariff in the range of over 30 paisa/unit for 2QFY20 and then 3QFY20 in order to curtail the piling up of circular debt. Differences persist over the exact impact of improvement and then calculation over the piling up of circular debt after payment of subsidy amount from the budgetary resources. The second lingering controversy is calculating the revenue collection requirement for 2QFY20 as the FBR has 215 collected PKR 963.5Bn against the fixed target of PKR 1,071Bn thus facing shortfall of PKR 108Bn. Now the FBR will have to collect 205 195 PKR 1,403.5Bn in Oct-Dec FY20 to match the collection with the desired figure of PKR 2,367Bn. The News. FBR reforms may create liquidity issues: SBP SBP has said that tax structural reforms introduced by FBR for documentation of businesses may create liquidity issues and affect overall economic activity in the short-term. As FBR has introduced the CNIC condition for sales over PKR 50,000, the amendment has caused significant unrest in the market. SBP said that, much of the opposition against the reforms arose because of the misunderstanding about the announced measures. It added that such structural reforms are unpopular in nature and were thus delayed earlier, as these might increase businesses' transaction costs, create liquidity issues, and affect overall economic activity in the short term. BR. Unit 124.4 120 100 80 48.8 60 64.6 20 0 -20 -40 -4.2 -3.6 -3.4 -20.3 *Absolute change in million MT -1 Source: KCCI Research;PBS Disclaimer This report has been prepared by KCCI Research & Development Cell. The Cabinet approves construction of PKR 510Bn Dasu Dam information contained herein have been compiled or arrived at based upon Special Assistant to PM on Information, Dr. Firdous Ashiq Awan has said that the federal cabinet has given the go-ahead for the information obtained from sources believed to be reliable and in good faith. construction of PKR 510Bn Dasu Dam after the approval of Executive Committee of the National Economic Council (ECNEC). Work Such information has not been independently verified. on the dam will start in Nov’19. Daily Times. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The