Pakistan Daily Economy Update - 6 May

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1. May . 6, 2017 KCCI - eBulletin Budgetary borrowings go up 50% Borrowings for budgetary support went up 50% in 10MFY17, making it difficult for the government to achieve its deficit target. The SBP has reported that borrowings for budgetary support for the period has risen to PKR 805Bn from PKR 536Bn a year ago. Dawn. Revenue board documents PKR 56Bn real estate transactions in 5 months FBR has documented PKR 56Bn worth of property transactions under the amnesty scheme granted for real estate sector during the past five months and through which it collected PKR 1.5Bn in taxes. The govt. has announced amnesty scheme for whitening the undeclared property investment and under the scheme a buyer needs to pay 3% additional tax on the differential amount between valuation tables issued by FBR and property rates notified by provincial govt. The News. Textile mills for continuity of zero-rating regimes Pakistan’s textile mills have urged the govt. to continue with zero rating regimes in next budget as it would have a devastating impact on the growth of textile industry. They claimed that it was earlier agreed that govt. would move to “no tax-no refund” arrangement for exporters as it is beyond the exporter's means to acquire taxable inputs and keep waiting for refund. BR. Companies demand end to ‘super tax’ Foreign companies operating in Pakistan have demanded that the government should discontinue super tax from FY17. The tax was initially imposed in FY16 for one year, however, the government did not withdraw it has become a major stream of tax revenue. Dawn. Provisional figures: July-April collection stands at PKR 2.52Tn FBR has provisionally collected PKR 2.52Tn during 10MFY17 as against PKR 2.35Tn in 10MFY16, reflecting an increase of PKR 172.6Bn. The direct tax collection amounted to PKR 978.8Bn; sales tax PKR 1.01Tn; federal excise duty (FED) at PKR 144Bn; and customs duty remained PKR 386.6Bn during 10MFY17. The tax machinery is facing a revenue shortfall of PKR 150Bn and now would have to collect PKR 1.10Tn in the remaining period of May.’17-Jun.’17 to meet the annual target of PKR 3.62Bn set for FY17. On monthly basis, the FBR will have to collect PKR 551.2Bn per month to reach the budgetary target. BR. Asian Development Bank’s lending hits all-time high in 2016 The Asian Development Bank (ADB) lending surpassed the $ 30Bn mark for the first time in 2016 on growing demand in the region for infrastructure finance. Co-financing operations of the ADB hit a new record in 2016, exceeding the $ 14Bn mark and reflecting the importance of partnerships in addressing Asia and the Pacific's continuously growing development needs. Tribune. K-electric to receive additional 100MW in Ramzan The Sindh govt. is set to add 100MW to ease Karachi’s power deficit at the end of May’17 and provide some relief to city dwellers in the fasting month of Ramazan. Sindh Chief Minister has said that we are set to start supplying 100MW to K-Electric from the Nooriabad power station from 27th May’17. Tribune. Transmission line project: Tariff approved on intervention by PM House Nepra has approved a tariff of 0.0388 cents per unit for Lahore-Matiari Transmission Line Project for 25 years after intervention from the Prime Minister's House. The reference Transmission Service Charges (TSC) is based on 98.5% availability with 1.5% annual non-penalized maintenance outages. The reference PKR/Dollar rate has been assumed at PKR 104.40. The tariff has been calculated on the basis of Build Own Operate and Transfer (BOOT) basis. BR. IPPs withdraw sovereign guarantee encashment demand After getting assurance from the government, the IPPs have withdrawn the sovereign guarantee encashment demand in the larger national interest. The IPPs withdrew the demand after a meeting with the Ministry of Water and Power Secretary last week to settle various issues including the overdue verified and audited amounts under the Power Purchase Agreement. Dawn. Sugar mills get license to set up 60MW projects The govt. has allowed two sugar mills to set up more than 60MW of bagasse-based cogeneration plants in Punjab. Each project is estimated to cost around $ 35Mn. The Nepra has granted power generation licenses to Bahawalpur Energy Limited, and Ittefaq Power Limited, for their proposed generation facilities of 31.20MW each. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (JU'17) Gold (MY'17) Gold (10g) Local Silver (MY'17) Cotton(KHI)-40 kg Kibor-6M 5-May 5-May 5-May 5-May 4-May 4-May 5-May 4-May 5-May 5-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.85 105.90 49,851 -4.78 45.55 1,229 42,857 16.38 7,180 6.15% Forex Reserves 28-Apr $ Bn 21.00 0.01% -0.14% 1.15% NM** -4.21% -0.78% -2.18% -0.44% 0.00% 0.00% WoW -0.71% YoY -2.29% -3.06% 18.67% -38.80% -160.74% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Mar 17 Remittances $ Bn 14.06 Jul-Mar 17 Exports* $ Bn 15.12 Jul-Mar 17 Imports* $ Bn 38.50 Jul-Mar 17 Trade Balance* $ Bn -23.39 Jul-Mar 17 Current Account $ Mn -6,130 % 4.09 Avg. CPI-FY17* Jul-Apr 17 Mar-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 May-16 GBP, 5-May-17, 135.2 EUR, 5-May-17, 114.8 USD, 5-May-17, 104.5 Aug-16 USD GBP Govt. decides to cut salaries of employees linked with CPEC The federal govt. has decided to cut salaries of contractual employees hired to execute various projects after the finance ministry refused to pay them as per their agreements. The contractual employees of development projects may face up to a 33% cut, depending upon their salary packages. The decision has been taken at a time when the federal govt. is considering giving a 10% to 15% increase in salaries to its regular employees from FY18. Tribune. PSX gains 567 points over MSCI euphoria Pakistan equities on 5th May‘17 closed with handsome gains as aggressive institutional buying over MSCI euphoria propelled the benchmark KSE100 Index to retest the coveted 50,000 level. Despite a weak start in the morning due to index heavy Oils opening the gap and then down and briefly stalling the momentum after losses in global crude, the wider market got back in the positive track helped by heavy institutional buying primarily in MSCI names. Dawn. FBR wins battle against tax evasion, firm to pay PKR 96.2Mn Digital Links, a supplier of surveillance equipment, has admitted to evading taxes, and agreed to pay PKR 96.2Mn. According to the FBR, the total recoverable tax amount is PKR 96.2Mn. The amount includes a default surcharge of PKR 19.6Mn besides penalty of PKR 38.3Mn, which is equal to 100% of the principal tax liability. Tribune. Feb-17 May-17 Source: KCCI Research ; Oanda.com Quote of the Day “Being imaginative is having ideas; being creative is converting ideas into production.” Private sector credit rises 54% to PKR 457Bn Bank credit to the private sector rose 54% to PKR 457.4Bn in 10MFY17, as financial institutions continued to lend firms in the wake of low interest rate environment and pickup in economic activity. The News. Cement dispatches reach 33.88MT in 10 months The cement industry dispatched 33.88Mn tons during 10MFY17 as compared to 31.90Mn tons during 10MFY16, up by 6.21%. Whereas, domestic consumption surged by 10.74% to 29.87Mn tons in 10MFY17 from 26.97Mn tons last year, while the exports declined by 18.63% from 4.92Mn tons last year to 4.01Mn tons. The News. Nov-16 EUR Amornrat Pratoomma Chart of the Day ELECTRICITY CONSUMPTION PER CAPITA 2016 (KWH) 5,000 4,000 3,000 2,000 1,000 4,646 3,927 2,996 1,645 814 805 535 472 311 140 0 Source: KCCI Research, IEA Disclaimer This report has been prepared by KCCI Research & Development Cell. The information Made-in-China jet takes maiden flight contained herein have been compiled or arrived at based upon information obtained from The first large made-in-China passenger plane took off on its maiden test flight on 5th May‘17, marking a key milestone on the sources believed to be reliable and in good faith. Such information has not been country’s ambitious journey to compete with the world’s leading aircraft makers. Built by aerospace manufacturer COMAC, the independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' plane will reduce dependence on European consortium Airbus and US aerospace giant Boeing. Dawn. understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk