PAR News - Wed, 24 Apr 2024

TOPLINE

• Finance Minister Aurangzeb anticipates a 2.6% GDP growth in FY24 from government economic stabilization efforts, with improvements in agriculture and industry efficiency and a projected decrease in inflation to 24% from 29.2% in the previous fiscal year.
• Muhammad Zohaib Khan, chairman of P@SHA, stated that the IT industry fully supports the Ministry of IT and Telecom initiatives to achieve a $3.5 billion export target for the fiscal year 2023-24.
• Wheat farmers in Punjab are facing difficulties selling their crop at the government's official support price due to concerns with the procurement policy and issues with the 'Bradana App' for gunny bags distribution.
• Recent urea price hikes by Fatima Fertilizers Company Ltd and Fauji Fertilizer Company Ltd have raised concerns, as both companies increased their prices to Rs 4,400 per bag despite operating on subsidized gas and having unchanged gas input costs.
• The Indus River System Authority (IRSA) is distributing approximately 250,000 cusecs of additional water among provinces after recent rains increased dam storage by 0.8 MAF.
• During a meeting with Naeem Mir, chairman of the Supreme Council of All Pakistan Anjuman-e-Tajran, Finance Minister Muhammad Aurangzeb encouraged the business community to register with the newly launched 'Tajir Dost App' to facilitate their operations.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Hyderabad: Bread Prices Set - The Hyderabad deputy commissioner, citing a drop in wheat flour prices, has set new prices for tandoori chapati and naan at Rs 15 and Rs 18 respectively. These prices were determined under the Sindh Essential Commodities Price Control Act, with shops required to display and adhere to these rates or face legal action for non-compliance. [Dawn]
• Punjab Wheat: Sales Struggle - Wheat farmers in Punjab are facing difficulties selling their crop at the government's official support price due to concerns with the procurement policy and issues with the 'Bradana App' for gunny bags distribution. Despite an increase in cultivation area from 685,000 acres last year to 714,000 acres this year, the government has cut the procurement target, forcing farmers to consider selling at lower prices in the open market. [Dawn]
• GDP Growth Forecast: FY24 Outlook - Finance Minister Aurangzeb anticipates a 2.6% GDP growth in FY24 from government economic stabilization efforts, with improvements in agriculture and industry efficiency and a projected decrease in inflation to 24% from 29.2% in the previous fiscal year. He noted measures to enhance agricultural efficiency, citing exceptional crop production and a substantial 33.6% increase in agricultural credit disbursement from July to February 2024. [MG]
• IT Exports: Ambitious Goals - Muhammad Zohaib Khan, chairman of P@SHA, stated that the IT industry fully supports the Ministry of IT and Telecom initiatives to achieve a $3.5 billion export target for the fiscal year 2023-24 and proposed aiming for $5 billion in exports for 2024-25. [BR]

ENERGY - WEATHER, WATER & POWER

• Energizing Industry: Addressing SOE Losses - Finance Minister Aurangzeb stressed the urgent need to improve the energy sector to support industry, while also addressing the significant losses caused by 70-80 loss-making State-Owned Enterprises, which contribute around 90% of total losses. He warned that these entities pose an unsustainable burden, resulting in substantial annual losses to the national treasury. [BR]
• Urea Prices: Sharp Increase - Recent urea price hikes by Fatima Fertilizers Company Ltd and Fauji Fertilizer Company Ltd have raised concerns, as both companies increased their prices to Rs 4,400 per bag despite operating on subsidized gas and having unchanged gas input costs. FFCL raised its price by Rs 551, while FFC increased by Rs 633, marking a roughly 17% rise. [Dawn]
• Fears Over Pakistan's Fuel Deregulation Plan: Pakistan's proposal to deregulate fuel prices has raised concerns among top refiners, who warn that it could lead to the halting of planned upgrades worth up to $6 billion and force some refineries to shut down. The Oil & Gas Regulatory Authority (OGRA) aims to lower prices for consumers by allowing oil marketers and refineries, rather than the government, to set fuel prices. [BR]
• Oil Production Up, Gas Production Down: Yearly Trends - Oil production in the country increased by 1% year-on-year in the first nine months of the current financial year, driven by fields like Chak 2, Lashari Centre, Bolan East, and Bettani, according to Arif Habib Limited. However, gas production saw a 3% year-on-year decrease, primarily due to declining output from fields such as Qadirpur, Sui, Kandhkot, and Uch, where Uch Power Limited's operations were affected. [The News]
• SIFC Tackles K-Electric Issues Before PM's Visit: The Special Investment Facilitation Council (SIFC) is addressing K-Electric's pending issues ahead of Prime Minister Shahbaz Sharif's Saudi Arabia visit. Discussions on matters like Multi-Year Tariff (MYT) and write-off claims with NEPRA were held on April 22, 2024, while mediation on receivables and payables continues. [BR]
• PPL Boosts Production: Energy Security Milestone - Pakistan Petroleum Limited (PPL) has announced a notable increase in production, adding 17 MMscfd of gas and 530 bpd of oil/condensate to its portfolio. This achievement is seen as vital for enhancing national energy security, achieved through cost-effective measures, and is expected to help narrow the energy demand-supply gap while saving foreign exchange reserves. [The News]
• Karachi: 'Economic Load Shedding' Tackled - Federal Power Minister Awais Leghari acknowledged in the National Assembly that K-Electric is performing 10-hour daily loadshedding in parts of Karachi to compensate for losses due to power theft. He described this strategy as "economic load shedding" and stated plans to collaborate with provincial governments to address the issue. [Dawn]
• CPEC-II: Strengthening Ties: PM Shehbaz Sharif discussed the second phase of the China-Pakistan Economic Corridor (CPEC-II), highlighting its potential to enhance Pakistan's socio economic development through increased industrial, scientific, and green initiatives. In a meeting with CIDCA Chairman Luo Zhaohui, he praised China's continued support, reinforcing the strong friendship between the two nations. [BR] [ET]
• IRSA Distributes Water Surplus: The Indus River System Authority (IRSA) is distributing approximately 250,000 cusecs of additional water among provinces after recent rains increased dam storage by 0.8 MAF. Despite previous restrictions, IRSA is now allowing maximal utilization of this surplus according to the 1991 Water Apportionment Accord. [BR]
• Akram Wah Canal: Lining Proposed - Consulting firms Nespak and ACE have recommended lining the Akram Wah canal, differing from previous advice to retain its wall. Their revised feasibility study has been submitted to the Sindh Irrigation and Drainage Authority and is currently under review with involvement from the World Bank. [Dawn]
• Supreme Court's Concern: Delay in Super Tax Decisions - The Supreme Court, led by a three-judge bench, expressed concern over high courts' delay in making final decisions on the supertax for high-earning individuals under Section 4C of the Income Tax Ordinance, 2001. In a hearing involving 167 petitions, taxpayers challenged the constitutionality of the amended Section 4C for the tax year 2023. [BR]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Iranian President Praises Pakistan's Solidarity with Gaza: Iranian President Dr. Seyyed Ebrahim Raisi commended Pakistan's stance on Gaza, predicting Palestinian triumph in any conflict with Israel. During his visit to Allama Iqbal's mausoleum, he emphasized the strong Iran-Pakistan bonds and the role of Iqbal's poetry in fostering relations, expressing confidence in further strengthening ties. [BR] [Dawn] [ET]
• Imran Khan: No Negotiations - Imran Khan, the incarcerated founder of Pakistan Tehreek-e-Insaf (PTI), dismissed rumors of any negotiations with authorities, stating that no one has approached him regarding a deal. He made these remarks after a hearing in the Al-Qadir Trust case, questioning why there would be any negotiations with him, especially since no talks occurred around the general elections on February 8. [BR]
• Government Targets Spending Reduction in 2024-25 Budget: The government aims to cut spending in the 2024-25 budget with a contributory pension scheme and halting provincial project funding. A committee, led by the Deputy Chairman of the Planning Commission and including officials from the Cabinet and Finance Divisions, is tasked with devising the plan, with experts Kaiser Bengali, Farrukh Saleem, and Muhammad Naveed Iftikhar also involved. [BR]
• Finance Minister Eyes Foreign Reserves Boost: Finance Minister Muhammad Aurangzeb expressed optimism on Tuesday that Pakistan's foreign exchange reserves would rise to $9-10 billion by June 2024. Speaking to the media after his address at the "Leaders in Islamabad Business Summit 2024 collaborating for Growth," he indicated confidence in the success of the traders' scheme and its potential to bring about improvement. [BR]
• Government Borrowing Soars: Economic Strain - Between July 1, 2023, and April 12, 2024, the government borrowed a significant Rs 5.301 trillion from banks, marking a 71% increase from the previous fiscal year and surpassing the total borrowing for FY23. This reflects challenges in stabilizing public finances, with increasing funding demands straining the economy. [The News]
• Pakistan: Loan Targets Missed - Pakistan received about $9.8 billion in foreign loans and grants from July to March, missing the annual target of $17.4 billion. Disbursements have slowed, with March's intake dropping to less than $204 million from $318 million in February. [Dawn]
• Pakistan's M2 Hits Rs 33.43 Trillion, Currency Stable: As of April 12, 2024, Pakistan's broad money (M2) reached Rs 33.43 trillion, up by Rs 40.39 billion from the previous week and Rs 1.91 trillion from June 2023. Currency in circulation rose to Rs 9.12 trillion, with a slight decrease compared to June 2023. The currency in circulation as a percentage of M2 was 27.28% compared to 26.76% the previous week and 29.02% in June 2023. [MG]
• Economic Empowerment: Tajir Dost Initiative - During a meeting with Naeem Mir, chairman of the Supreme Council of All Pakistan Anjuman-e-Tajran, Finance Minister Muhammad Aurangzeb encouraged the business community to register with the newly launched 'Tajir Dost App' to facilitate their operations and acknowledged their key role in Pakistan’s economic development. [BR]
• CitiBank Foresees Rate Cut Delay, Monitors Budget Impact: CitiBank anticipates Pakistan's central bank to delay rate cuts until June, keeping the monetary policy rate at 22% to gauge the FY2025 budget's impact on inflation. They highlight a cautious approach in the March MPC meeting due to administered price adjustments and upcoming budget implications. [The News]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israel Genocide: The Israel-Hamas war marked its 200th day with increased shelling by Israel in Gaza City and southern Gaza amid concerns of a possible Israeli invasion in the region. There were reports of strikes in southwest Gaza and Khan Yunis, and artillery impacts at the Bureij and Nuseirat refugee camps. [BR] [Dawn]
• Asia Leads Global Climate Disasters in 2023: In 2023, Asia faced the most climate and weather-related disasters globally, primarily floods and storms, causing significant casualties and economic losses, as reported by the United Nations. The World Meteorological Organization highlighted Asia's rapid warming pace, with increasing heatwaves and melting glaciers posing threats to the region's water security. [BR] [Dawn]
• Malaysia: Fatal Helicopter Collision - Two Malaysian military helicopters collided and crashed during a training session near Kuala Lumpur, killing all 10 crew members. The accident occurred at the Lumut naval base during a rehearsal for Naval Day celebrations, with online footage showing one helicopter clipping another, causing both to crash. [Dawn]
• Maritime Tragedies: Migrants Perish - On Tuesday, twenty-one migrants died in maritime disasters while attempting to reach safer shores. Off the Horn of Africa, a boat capsized near Djibouti, resulting in at least 16 deaths with 28 others missing. Additionally, five migrants drowned attempting to cross the English Channel from France to Britain. Separate from these incidents, 22 bodies were recovered off the Tunisian coast near the city of Sfax. [Dawn]
• Gold Prices: Declining Trend - Gold prices dropped for a second consecutive day, reaching a more than two-week low of $2,311.07 per ounce, as diminishing Middle East tensions prompted investors to book profits ahead of key U.S. economic data releases. This followed a significant rise in prices from March to April, which saw gold hit an all-time high of $2,431.29 on April 12. [BR]
• Oil & Palm: Price Surge - Oil prices increased on Tuesday with Brent crude futures rising to $88.04 a barrel and U.S. West Texas Intermediate crude to $83.00 a barrel, driven by a lower US dollar index and a shift in investor focus towards global economic conditions. Meanwhile, palm oil futures also rose, closing at 3,969 ringgit ($830.68) per metric ton. [BR] [BR]

OPINION(S) & REMAINDERS

• Digital Progress Boosts Development: The inaugural Digital Development Index report shows that districts with better digital transformation also have higher human development scores, even though over half the country lacks internet access. This report is part of the National Human Development Report 2024, launched in collaboration with the UNDP by Minister Ahsan Iqbal. [Dawn]
• Editorial: Farmers’ Anxiety - “WHEAT prices in Punjab have plummeted far below the minimum support price owing to a bumper harvest, reckless imports, large carryover stocks being held by the food department, and a collapsing international grain market, the crashing prices must worry farmers. The rates being offered by flour mill owners and stockists for the new crop have already dropped to Rs 2,800 per 40 kg compared to the official support price of Rs 3,900 in south Punjab due to the food department’s absence from the market.” [Dawn]
• Opinion: The Fissures Within - “THERE was nothing surprising about the by-election results. The ruling PML-N won the majority of the National Assembly and provincial assemblies’ seats up for grabs in Punjab amid allegations of rigging. It may not be an exact repeat of the Feb 8 general elections but the by-polls were not fair either. Being in power, the party has full control of the administration in the province, which gives it a distinct advantage.” - By Zahid Hussain [Dawn]