Pakistan Daily Economy Update - 7 July

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1. July 06 , 2022 KCCI - eBulletin 969MW project shut after damage detected Amid countrywide electricity shortages, the 969-MW Neelum-Jhelum hydropower project, completed at an estimated approved cost of about PKR 508Bn, has been closed for safety reasons, due to major cracks in its tailrace tunnel. It was providing more than 5Bn kWh, to the national grid a year at an average tariff of about PKR 9/unit at no fuel cost. Dawn. List of Indicators Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 6-Jul PKR PKR 207.99 207.75 0.51% 0.61% ECNEC Okays PKR 30Bn Orangi, Gujjar nullahs revamp projects The Executive Committee of the National Economic Council (ECNEC) has approved seven development projects, including two motorways with the total estimated cost of more than PKR 410Bn. Two projects relating to the Restoration and Revamping of Orangi Nullah at a revised cost of PKR 15Bn in Orangi Town and the Restoration and Revamping of Gujjar Nullah at a revised cost of PKR 14.854Bn were also approved, that are being sponsored by the National Disaster Management Authority (NDMA) and will be completed in 21 months. Dawn. 6-Jul KSE-100 index FIPI 6-Jul 6-Jul Pts. $ Mn 41,160 0.78 0.14% NM** Crude Oil 6-Jul $/bbl 98.53 -0.97% Gold 6-Jul $/oz 1,736.5 -1.55% Gold (10g) Local 6-Jul PKR 118,830 0.00% Bank advances to private sector swell by 142% The federal govt.’s budgetary borrowing for FY22 was more than 85% higher than FY21, while the private sector borrowing from banks jumped by 142%. The latest data from SBP shows that the govt.’s budgetary borrowing exceeded by PKR 1226Bn, or 85.4%, to PKR 2661bBn during FY22, depicting an increased fiscal deficit. Dawn. Silver 6-Jul $/oz 19.16 0.20% Cotton(KHI)-40 kg 6-Jul PKR 17,683 0.26% Kibor-6M 6-Jul % 15.49 0.00% 24-Jun $ Bn 16.20 WoW 13.97% Remittances Jul-May 22 $ Bn 28.41 6.26% Exports* Jul-May 22 $ Bn 28.85 27.78% Imports* Jul-May 22 $ Bn 72.18 44.28% Trade Balance* Jul-May 22 $ Bn -43.33 -57.85% Current Account Foreign Direct Inv. Jul-May 22 Jul-May 22 $ Bn $ Bn -15.20 1.60 -1184.8% -4.91% Oil, gas output drops Oil production declined 3% YoY in FY22 to 73,420 barrels per day (bpd). Lower production from Nashpa, Adhi and Makori East oil fields besides no addition of any sizable oil field led to the annual decline in oil production, was the main reason behind this reduction. Similarly, gas production went down 2% YoY to 3,388Mn cubic feet per day (mmcfd) which is largely in line with the five-year average production decline. Dawn. PAC recommends slashing fuel prices The Public Accounts Committee has recommended to the govt. for a reduction in prices of petroleum products, saying oil prices have dropped twice in the global market but the govt. has increased the prices instead of reducing them. The News. Textile sector loses $ 1Bn export orders Claiming that over 300 textile mills have been closed due to a cut in gas supply, the Textile Industry has urged the federal govt. to restore gas supply on an urgent basis, stressing that a loss of almost $ 1Bn in exports has already been incurred because of it. Dawn. Duty drawback SROs modified FBR has changed the PCT heading of four different duty drawback rates on several items to facilitate exporters, which will come into effect from July 1. The export SRO973 was issued to amend SRO209 on export of textile and allied products, while the SRO974 to amend the SRO210 on export of leather and allied products and sports goods. Another notification SRO975 was issued to amend the SRO211 on export of engineering/metal and allied products. While notifications SRO976 was issued to amend SRO212 on miscellaneous products like packing materials, edible products plastic products etc. Dawn. RAS portal to facilitate banks digitally SBP has developed an online portal called the SBP Regulatory Approval System (RAS) to enable regulated entities (i.e. banks, electronic money institutions, payment system operators, payment service providers, etc.) to submit cases or proposals and receive regulatory decisions digitally. The step was taken to promote digitalization and encourage eco-friendly practices. Dawn. Implementation of IFRS 9: SBP issues final instructions SBP has issued final instructions on International Financial Reporting Standard 9 (IFRS 9) for ensuring its smooth and consistent implementation in the banking industry, including banks/ DFIs/ MFBs, with revised implementation timelines. For banks having assets of PKR 500Bn or above, as of 31st Dec’21, and for all DFIs, SBP has set the revised implementation date as 1st Jan’23. For all other banks and MFBs, SBP has extended the implementation deadline of IFRS 9 to 1st Jan’24. BR. FBR takes step aimed at further liberalizing baggage rules FBR has made baggage rules more liberal, enhanced special allowances for Foreign Exchange Remittance Card (FERC) holders, and revised the baggage allowance for foreign nationals and tourists to allow them to bring any items (excluding mobile phones) of the value up to $800. Under the draft rules, the FBR has also decided to revise allowances for Pakistani nationals not availing the transfer of residence, which include personal wearing apparel, one laptop computer and any other item except mobile phone. Where, the value of duty-free allowance would be \ up to $ 400 in cases of stay abroad is up to 30 days. BR. Forex Reserves YoY Jul-Mar 22 LSM Growth* % 9.40 % 12.15 Jul-Jun 22 Avg. CPI Discount Rate % 13.75 May-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Major Currencies 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Jul-21 USD Oct-21 GBP Jan-22 EUR Apr-22 Jul-22 Source: KCCI Research “Try not to become a man of success, but rather try to become a man of value.” Albert Einstein Repatriation of Profit/Dividend on Foreign Investment in $(Mn) Fiscal year 2022-23: Foreign assistance estimates revised upward to PKR 5.5Tn The govt. has revised upward the estimated foreign assistance to PKR 5.503Tn by around 74% from the initial budgeted PKR 3.166Tn for FY23, after incorporating the estimated assistance of PKR 558Bn from IMF, PKR 558Bn from Saudi Arabia and PKR 744Bn of SAFE China deposit, which were not included before in the original budget presented on 10th Jun’22. BR. IMF explains how country can realize its export potential IMF Resident Representative, Esther Perez Ruiz has said that Pakistan needs proactive policies – exchange rate flexibility, efficient allocation of resources, elimination of untargeted subsidies, and creating a conducive business environment in the country to realize the export potential. She stated that Pakistan has yet to embrace integration and more integration with regional and developed markets, as it is extremely important for Pakistan for technology transfer and to improve competition, to reduce the external vulnerabilities and to increase Pakistan’s per capita GDP growth. BR. 2000 UK desires to take trade up to £ 7Bn UK is the third largest global trading partner of Pakistan and is keen to double its bilateral trade up to £ 7Bn in a few years to achieve mutual prosperity, as remarked by British High Commission’s Counsellor and Group Head on Economic and Trade Mahesh Mishra. It was also said that Pakistan had been placed in the Enhanced Framework in order to give it the same level of market access (preferential tariffs) for exports to the UK as was available under the European Union’s GSP Plus scheme. Tribune. 500 Sindh growers demand wheat support price at PKR 4,000 Sindh Growers have asked the provincial govt. to fix PKR 4,000 support price of wheat crop for FY23 season failing which growers would only grow the grain for their own requirement and consumption. The meeting noted that the govt. was importing wheat at PKR 4,400/40kg., whereas not offering the price it is paying for wheat’s import. Dawn. EUR, 6-Jul-22, USD, 6-Jul-22, 215.5 207.8 Quote of the Day ADs told to get permission: SBP updates list of items for import transactions SBP has updated the list of items for which banks are required to obtain prior permission before initiating the import transaction. As per updated list, import under the all Codes starting with prefix 84 including Nuclear Reactors, Boilers, Machinery and Mechanical Appliances; Parts Thereof, all Codes starting with prefix 85 including Electrical Machinery and Equipment and Parts Thereof and motor cars (CKD) will be required to get prior permission from the SBP for initiating the import transaction. BR. DGCV revises customs value of printed, misprinted waste paper Directorate General Customs Valuation (DGCV) has revised the custom value of printed/ misprinted waste paper of all sorts under section 25-A of the Customs Act, 1969, which was previously determined in 2020. Since the Valuation Ruling was more than eighteen months old, the Directorate has decided to revise the same as per prevalent market price. BR. GBP, 6-Jul-22, 249.5 1496.3 1600.5 1500 1000 0 136 Jul-May FY21 Jul-May FY22 May FY22 Source: KCCI Research, SBP Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.