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Pakistan Daily Economy Update - 4 April

IM Insights
By IM Insights
6 years ago
Pakistan Daily Economy Update - 4 April

Reserves, Sales

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  1. Apr . 04, 2018 KCCI - eBulletin FBR likely to abolish automatic audit selection in budget 2018 The FBR is likely to abolish automatic audit selection of non-filers of tax returns in the upcoming budget. At a pre-budget seminar, Tariq Masood, member Legal, said that FBR is also working on streamlining the audit cases and has recently decided to avoid multiple tax audits under audit policy. It has been decided that if a taxpayer has been selected under Sections 214C or 177 of the Income Tax Ordinance 2001 during the past year then the FBR will not select the taxpayers for next year. The govt. introduced Section 214D into the Income Tax Ordinance, 2001 through Finance Act 2015 under which a taxpayer is automatically selected for audit if income tax return is not filed for the preceding year. The law resulted in accumulation of audit cases and some estimates suggested that the pendency of audit cases reached to around 1Mn. The News. Non-filers to be penalised further in upcoming budget Haroon Akhtar Khan, Special Assistant to the PM on revenue, has said that withholding tax rates for non-filers of income tax returns would go up further from Jul’18. He said the govt. would ensure that it widens the difference in rates for filers and nonfilers of income tax returns in the forthcoming budget. Akhtar maintained that the govt. would not impose any new tax in the budget. Tribune. Banking companies: withdrawal of Super Tax proposed Pakistan’s banking industry has strongly proposed FBR to withdraw Super Tax from banking companies in budget 2018-19. According to the banking industry, super tax was introduced vide Finance Act 2015 with retrospective effect for one year. However, the levy has been extended every year. With the levy of super tax @ 4%, total tax on banking sector has increased to 39%. It was therefore recommended that this tax should not be extended further. BR. PM likely to seek China’s help in maintaining forex reserves PM Abbasi is likely to seek support from China during his upcoming visit to Beijing to sustain the depleting foreign exchange reserves of the country. The govt. had projected only $ 1Bn borrowing from the commercial banks during the entire ongoing FY18. However, the govt. has gone beyond the limit in just eight months to sustain its foreign exchange reserves. Reserves held by SBP are sharply depleting from last one and half year and reached to $ 11.8Bn last week. Finance Ministry has said that govt. desperately needs $ 3Bn to finance the previous loans and current account deficit before Jun.’18. The Nation. CPEC projects to add 17,000MWs to national grid: Cabinet told The federal cabinet has been informed that energy projects under CPEC will contribute over 17,000MW to the national grid after completion. In a presentation given by the Planning Ministry, the cabinet was updated about various projects being undertaken in energy sector, infrastructure projects, industrial cooperation and development projects of Gwadar. BR. Absence of agriculture projects from CPEC worries ministers Some members of the federal cabinet have raised concern over the fact that agriculture sector has totally been ignored in the multi-billion-dollar CPEC. Responding to the objections by the ministers during the cabinet meeting, Planning Minister Ahsan Iqbal admitted that agriculture has not been included in the first phase of CPEC, but claimed that agriculture sector has already started receiving benefits from the ongoing energy projects. He further explained that due to the conversion of tube-wells from diesel to solar and electric power, fuel cost has already declined, hence benefitting the farmers. BR. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 3-Apr 115.60 116.35 0.00% 0.17% Crude (MY'18) 3-Apr 3-Apr 3-Apr 3-Apr PKR PKR Pts. $ Mn $/bbl 46,013 -2.10 63.57 0.59% NM** 0.84% Gold (MY'18) Gold (10g) Local 3-Apr 3-Apr $/oz PKR 1,332.6 50,442 -0.95% -0.26% Silver (MY'18) Cotton(KHI)-40 kg 3-Apr 3-Apr $/oz PKR 16.39 7,931 -1.54% -1.33% Kibor-6M 3-Apr % 6.50 $ Bn 17.95 -0.01% WoW -0.72% Remittances 22-Mar FY18 Jul-Feb 18 $ Bn 12.83 YoY 3.41% Exports* Imports* Jul-Feb 18 Jul-Feb 18 $ Bn $ Bn 14.85 39.13 11.66% 17.19% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Feb 18 Trade Balance* $ Bn -24.28 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 1.94 Jul-Feb 18 Jul-Jan 18 LSM Growth* % 6.33 % 3.20 Jul-Mar 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; Major Currencies 175 China, US trade war: Pakistan unlikely to be affected: official Commerce and Textile Ministry has stated that Pakistan is unlikely to be affected directly or indirectly due to trade "war" between Beijing and Washington. The Ministry has examined the details of products which would be hit by duties imposed by both countries but found that Pakistani products exported to China or US would not be hit in anyway. Pakistan's main export products are from the textile sector - products which do not constitute the duties that have been imposed on each other's products by the two countries. BR. Govt. to inject PKR 50Bn for smooth power supplies Govt. has decided to inject another PKR 40-50Bn in the power sector to ensure seamless energy supplies during the upcoming summer, particularly Ramadan. A two-day meeting of the Cabinet Committee on Energy (CCoE), presided over by PM Abbasi, was told that PKR 53Bn out of PKR 80Bn for the power sector have reached the fuel suppliers and IPPs, improving their cash flows while the remaining funds have been adjusted against debt rollovers and interest payments. Moreover, about PKR 20Bn25Bn worth of two more instalments would be provided by the Finance Ministry over the next few weeks out of the federal budget. Dawn. GBP, 3-Apr-18, 162.7 165 155 145 EUR, 3-Apr-18, 142.2 135 125 115 USD, 3-Apr-18, 115.7 105 95 Apr-17 USD Jul-17 GBP EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "Being criticized is the price of admission for change." Sindh sales tax collection jumps 44.8% to PKR 9.29Bn in March Sindh Revenue Board's (SRB) sales tax collection jumped 44.8% to PKR 9.29Bn in Mar’18 as the provincial authorities speed up \ efforts to recover outstanding dues. With this achievement, the total collection of sales tax during 9MFY18 reached PKR 63.93Bn against PKR 53.34Bn collected in 9MFY17, representing a growth of 19.85 %. Apart from aggressive arrears' recovery drive, the board's efforts to bring the tax-evaders under the net has also paid off. The SRB has set a target of PKR 100Bn for FY18, which is 28.2 % higher than last year’s achieved target of PKR 78 Bn. The News. Govt. plans $ 75Mn fund for borrowers The govt. has decided to set up a $ 75Mn fund at the SBP for borrowers interested in setting up small businesses. With the help of this fund, the PKR equivalent of $ 75Mn will be disbursed to microfinance banks and microfinance institutions, which will, in turn, provide credit lines to eligible small borrowers including micro-entrepreneurs. The credit line would partially ease the liquidity constraints currently being faced by the microfinance sector. Tribune. -20.85% -50.03% 15.64% Edward Snowden Chart of the Day 12 INFLATION VS POLICY RATE (MAR.'14 -MAR.'18) 10 8 6 4 2 0 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Budget to cut income tax, says Miftah PM’s Adviser on Finance Miftah Ismail has said that reduction in income tax rates will perhaps be the only relief for public in the coming budget. The govt. would not be introducing mega projects as it will leave them to the next govt. It will only finance ongoing projects in the coming budget, and will give the opposition a briefing on the budget before the budget session, he said. As per Miftah, the economy is fundamentally growing, private sector is expanding, business is growing, people are having more income; this year $ 20Bn will be added to the economy. The News. Real Interest Rate(%) CPI (%) Policy Rate (%) Source: KCCI Research, SBP, PBS Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained Oil sales fall 7% to 1.79 Mn tons Oil sales fell 7% y-on-y to 1.79Mn tons in Mar’18 due to a sharp decline in furnace oil sale, although consumption of retail fuels herein have been compiled or arrived at based upon information obtained from sources believed to continued to increase on growing auto demand and infrastructure activities. Furnace oil sales slid 43% to 367,524 tons in be reliable and in good faith. Such information has not been independently verified. Mar’18 over Mar’17, while sales of motor spirit increased 11% y-on-y to 598,475 tons as diesel sales rose 14% to 730,052 tons. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' Sales of oil products dropped 2% to 18.2Mn tons during 9MFY18. The News. understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk