- The coalition government plans to present ambitious fiscal targets in the upcoming 2024/2025 budget to support negotiations for a new IMF bailout deal, despite protests. The National Assembly passed 4 bills to meet IMF conditions on State-Owned Enterprises, but finalizing the budget strategy paper may be delayed pending agreement with the IMF.
- The SBP's Monetary Policy Committee has reduced the policy rate by 150 basis points to 20.5% after maintaining it at a record-high of 22% for almost a year, citing lower inflation. This marks the first rate cut in 4 years.
- The government permitted the Pakistan Sugar Mills Association (PSMA) to export 150,000 metric tons of sugar despite domestic prices remaining high at around Rs 160 per kg.
- The Rice Exporters Association of Pakistan (REAP) has proposed a One Window Tax System to simplify tax payments and support exporters.
- The NEC, chaired by Prime Minister Shehbaz Sharif, has approved a Rs 3.792 trillion development outlay for the next fiscal year, a 57% increase over the current fiscal year's federal PSDP. This includes Rs 1.5 trillion for the federal PSDP.
- A study by Singapore’s Nanyang Technological University (NTU) links man-made emissions and wildfires to around 135 million premature deaths worldwide between 1980 and 2020. The EU Commission announced the launch of a software model of Earth, aimed at simulating and monitoring environmental hazards while finding ways to mitigate climate change.
AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS
- Government Allows Sugar Export: The government permitted the Pakistan Sugar Mills Association (PSMA) to export 150,000 metric tons of sugar despite domestic prices remaining high at around Rs 160 per kg. This decision, influenced by sugar millers within the Pakistan Muslim League-N coalition, was made under pressure just two days before the national budget to address their surplus production demands. [BR] [Dawn] [ET] [RP]
- Congo Virus Caution at Eid Cattle Markets: Health experts advise caution at cattle markets before Eid-ul-Azha due to the risk of the Congo virus. Dr. Kiran Habib highlights the importance of preventive measures against diseases associated with sacrificial animals. The Crimean-Congo hemorrhagic fever (CCHF) can spread through tick bites or contact with infected animals or fluids. [ET] [The Nation]
- Mixed Mango Crop: This year's mango crop is good in size, though Sindh's crop was affected by pests. While some growers harvest ripe Sindhri mangoes in June, others pick unripe fruit hastily for the market and export prematurely to countries like Iran and Dubai, impacting prices and export volumes negatively. [Dawn]
- Concerns Raised Over Tax Incentive Misuse: Representatives across sectors expressed concerns over the misuse of tax incentives for former Fata/Pata regions, stating that concessions introduced in 2019 harmed ghee, edible oil, and steel industries nationwide. They urged the government to revoke these exemptions for five years. [Dawn]
- Stable Cotton Market with Low Trading: The local cotton market saw stability with low trading volumes. In Sindh, new cotton was priced at Rs 20,000-20,500/maund, while Phutti ranged from Rs 9,000-10,000/40 kg. In Punjab, cotton prices were between Rs 20,000-20,500/maund, and Phutti ranged from Rs 10,000-12,000/40 kg. The Spot Rate remained unchanged at Rs 19,700/maund, with Polyester Fiber priced at Rs 367 per kg. [BR]
- REAP Proposes Simplified Tax System: The Rice Exporters Association of Pakistan (REAP) has proposed a One Window Tax System to simplify tax payments and support exporters. Chairman Chela Ram Kewlani emphasized the need for a transparent, hassle-free tax payment system to allow exporters and industrialists to pay taxes without fear. [BR]
- Jute Imports Plummet in April: Rs 732 million was the import value of jute in April 2024, down 46.2% compared to Rs 1.4 billion in April 2023, according to the PBS. [ET]
- Textile Exports Dip in April: Rs 7.74 billion was the export value of art, silk and synthetic textile in April 2024, down 18.86% compared to Rs 9.54 billion in April 2023, according to the PBS. [ET]
ENERGY - WEATHER, WATER & POWER
- NEC Approves Rs 3.792 Trillion Budget: The NEC, chaired by Prime Minister Shehbaz Sharif, has approved a Rs 3.792 trillion development outlay for the next fiscal year, a 57% increase over the current fiscal year's federal PSDP. This includes Rs 1.5 trillion for the federal PSDP, with allocations for public-private partnerships, SOE investments, and provincial development plans. [BR] [Dawn] [ET]
- Government Boosts Hydel Project Funding: The federal government will allocate Rs 418.8 billion for 58 hydel and water sector projects in the 2024-25 fiscal year, with the main focus on ongoing projects. Of this, Rs 213.224 billion will go to hydel projects, including Rs 169.328 billion from the government and Rs 43.896 billion from projected foreign loans. [BR]
- Guggal Resin Seized in Karachi: The Sindh Wildlife Department and Anti-Narcotics Force seized 17,935 kilograms of rare wild plant Guggal from a container bound for a Gulf country. The estimated international market value of the confiscated resin is in billions of rupees. This seizure, conducted at Karachi Gateway Terminal, included 335 sacks of the protected and rare wild plant resin Guggal. [ET]
- K-P Adopts Indus Telemetry for Water Management: Khyber-Pakhtunkhwa (K-P) has adopted Indus Telemetry, an advanced water management technology, automating canal monitoring for real-time flow data acquisition. Installed by the IWMI under USAID's initiative, it sets a benchmark for water management in Pakistan. [ET]
- Government Increases NHA Funding: The government has allocated Rs 180.284 billion for 104 National Highways Authority (NHA) projects in the 2024-25 Public Sector Development Programme, a 16% increase from the current year's Rs 156 billion. This includes Rs 167.800 billion for 90 ongoing projects and Rs 12.484 billion for 14 new projects. [BR]
- Nepra Rejects Govt's Bagasse Power Pricing Change: Nepra denied the federal government's request to change the fuel price mechanism for bagasse-based power projects. The upfront tariff for new bagasse-based cogeneration IPPs was set by Nepra in 2013 and extended to bagasse CPPs in 2014 through suo-motu proceedings. [The News]
- PARCO Invests $1.3 Billion in Hydrocracker Unit: Pak Arab Refinery Limited (Parco) intends to invest up to $1.3 billion in setting up a hydrocracker unit to convert furnace oil into petrol and diesel, aiming to ensure sustainable oil supply and energy security in the country. This initiative aligns with the government's new refinery policy, which offers incentives for upgrading plants to produce cleaner Euro-5 fuels. [ET]
- Go Energy Plans 500 MW Floating Solar Project: Go Energy Pvt Ltd intends to build a 500 MW floating solar power project on Keenjhar Lake to supply electricity to K-Electric via STDC's transmission line, announced Energy Minister Nasir Shah during a board meeting. Additionally, the meeting decided to engage private companies to lay electricity transmission lines as part of efforts to enhance Sindh's transmission infrastructure. [MG]
- Industries Threaten Closure Over Tax Exemptions: Leading industries like steel and ghee/cooking oil threaten nationwide factory closures if the government extends tax exemptions for industrial units in former tribal areas beyond June 30, 2024, citing annual revenue losses of over Rs 100 billion. [BR]
- PTA Plans Fee for Compliance Certificates: The Pakistan Telecommunication Authority (PTA) intends to introduce an application/processing administrative fee for issuing certificates of compliance (CoC) and review its current type approval fee structure to cover regulatory costs. Currently, no such fee is charged by PTA for processing and issuing CoCs. [BR]
- Government May Encourage Local Solar Panel Assembly: The government may incentivize local assembly of solar panels in the 2024-25 budget. He believes the government won't impose new taxes or duties on solar panels, which already have a zero percent GST, except for inverters carrying an 18% GST. [Dawn]
- Sazgar Engineering Works Sees Surge: Sazgar Engineering Works Limited (PSX: SAZEW) saw a remarkable surge in auto rickshaw sales and production in May 2024, with a 275.86% year-on-year increase in sales and a 205.65% increase in production compared to May 2023. Additionally, there was a significant 61.88% month-on-month increase in sales compared to April 2024. [MG]
PAKISTAN - ECONOMICS, POLITICS & SECURITY
- Coalition Pushes Ambitious Budget Amid IMF Talks: The coalition government plans to present ambitious fiscal targets in the upcoming 2024/2025 budget to support negotiations for a new IMF bailout deal, despite opposition protests. The National Assembly passed four bills to meet IMF conditions on State-Owned Enterprises, but finalizing the budget strategy paper may be delayed pending agreement with the IMF. [BR] [The News] [BR]
- State Bank of Pakistan Cuts Policy Rate: The State Bank of Pakistan's Monetary Policy Committee has reduced the policy rate by 150 basis points to 20.5 percent after maintaining it at a record-high of 22 percent for almost a year, citing lower inflation. This marks the first rate cut in four years, following a period of monetary tightening that saw the rate rise to 22 percent by June 2023 from 7 percent in June 2020. [BR] [BR] [Dawn] [ET]
- PPP Raises Concerns on Punjab Government Consultation: The PPP has voiced concerns about the Punjab government's lack of consultation on important matters like the budget and the recently-introduced defamation law. While the PPP isn't formally part of the coalition government, it has supported the ruling party in the assembly during legislative proceedings. [Dawn]
- Sharif Government Presents Economic Survey: Prime Minister Shehbaz Sharif's government is presenting the Economic Survey 2023-24 today. Despite agriculture performing well, the economy fell short due to a contractionary fiscal policy. Factors like floods, global commodity price hikes, and political uncertainty contributed to the economic contraction of 0.2% in 2022-23. However, there's been a moderate recovery in economic activities during 2023-24. [BR]
- Government Plans Privatization Despite Objections: The government plans to privatize about 24 state-owned entities, including Pakistan International Airlines and power distribution companies, despite objections from both the treasury and opposition benches over perceived flaws in the privatization approach. [BR]
- Finance Minister Reports Loan Figures: Finance Minister Muhammad Aurangzeb informed the National Assembly that domestic loans raised from March 1 to April 30, 2024, amounted to Rs 3,004 billion, while external loans totaled $433 million, excluding IMF borrowing. He also stated that the total bilateral debt stock stands at $26.121 billion. [BR]
- Government Rejects Sales Tax Increase: The standard rate of sales tax will remain unchanged at 18 percent from July 1, 2024, as the government has rejected the proposal to raise it to 19 percent for the fiscal year 2024-25. Prime Minister Shehbaz Sharif personally rejected the proposal to increase the standard rate of sales tax. [BR]
- Coalition Pursues IMF Deal: The coalition government is set to announce ambitious fiscal targets in the 2024/2025 budget to support its negotiations for a new IMF bailout deal, aiming to address Pakistan's slow economic growth and potential default. Talks with the IMF are underway for a loan of $6 billion to $8 billion to stabilize the economy. [ET]
- Rupee Slips Amid Rate Cut: The Pakistani rupee depreciated by Rs 0.17 to Rs 278.37 against the US dollar on Monday due to anticipated increased demand following a reduction in the State Bank of Pakistan's policy rate. Despite this, the rupee has shown a net gain of 10.32% over nine months compared to its record low in September 2023. [ET]
INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT
- Hamas Blocks Gaza Ceasefire: US Secretary of State Antony Blinken attributed the delay in a Gaza ceasefire to Hamas during his Middle East peace mission. Speaking after meeting with Egyptian President Abdel Fattah al-Sisi in Cairo, Blinken stated that Hamas was the only party yet to agree to President Biden's proposed plan, which had Israel's backing before its announcement on May 31. [BR] [Dawn]
- Study: Emissions, Wildfires, Premature Deaths - A study by Singapore’s Nanyang Technological University (NTU) links man-made emissions and wildfires to around 135 million premature deaths worldwide between 1980 and 2020. The study also highlights how weather phenomena like El Nino and the Indian Ocean Dipole worsen pollution's effects by intensifying air concentration. [BR] [Dawn]
- Heatwave Claims Lives in Odisha: In the past three days, at least eight people died of suspected sunstroke in India's Odisha state. The India Meteorological Department predicts more hot weather for the state this week, with Bhubaneswar recording a maximum temperature of 39 degrees Celsius on Monday. [Dawn]
- EU Launches Earth Simulation Software: The EU Commission announced the launch of a software model of Earth on Monday, aimed at simulating and monitoring environmental hazards while finding ways to mitigate climate change. The Destination Earth initiative created a digital model of the planet using an "unprecedented amount of data" to simulate natural phenomena, according to its website. [Dawn]
- Modi Forms Coalition Government After Election Setback: Indian PM Narendra Modi formed a coalition government following a surprising election setback, with 71 members taking the oath of office. While some key posts remain unchanged, signaling policy continuity, BJP stalwarts like Rajnath Singh, Amit Shah, Nitin Gadkari, Nirmala Sitharaman, and S Jaishankar retain their positions. [ET]
- 2023 Sees Record Armed Conflicts - According to a Norwegian study published on Monday, 2023 witnessed more armed conflicts worldwide than any other year since the end of the Second World War. The Peace Research Institute of Oslo (PRIO) revealed that there were 59 conflicts last year, with 28 occurring in Africa. However, the number of countries experiencing conflicts decreased from 39 in 2022 to 34. [Dawn]
- Russian Wheat Prices Drop Due to Turkey Import Halt: Russian wheat export prices fell after Turkey suspended imports until mid-October. 12.5% protein Russian wheat for late June delivery dropped to $242 per metric ton. European wheat prices fell on Monday due to concerns over Turkey's import ban, but a dip in the euro limited losses. [BR] [BR]
- Oil Prices Surge, Palm Oil Falls: Oil prices surged around 3% to a one-week high on Monday, driven by optimism for increased summer fuel demand. Brent futures rose to $81.58 a barrel, up $1.96, while US West Texas Intermediate (WTI) crude climbed to $77.65, up $2.12. Conversely, palm oil prices closed lower on the Bursa Malaysia Derivatives Exchange, ending a two-day winning streak. [BR] [BR]
- Pak-Afghan Badini Crossing Opening: Tribal elders and businesspersons of Qila Saifullah welcomed the opening of the Badini crossing point between Pakistan and Afghanistan for trade and immigration. They stated that the Balochistan government's decision to formally open the route will facilitate trading with Central Asian states. [Dawn]
- Babusar Road Reopens for Light Traffic: The Babusar road, a popular tourist spot, reopened for light traffic on Monday after a 7-month closure due to heavy snowfall. Diamer Deputy Commissioner Fayyaz Ahmed stated that the road was cleared of snow, allowing vehicles to travel between KP and GB sides from 5am to 5pm daily until Eid Ul Azha. [Dawn]
- Fees from Rejected Visa Applications Impact Pakistanis: New research shows the UK and Schengen countries collected millions in fees from rejected visa applications from Pakistan. Pakistanis spent ￡5.3 million on rejected UK visa applications in 2023, with nearly 40% of applications from Pakistan being rejected that year. Additionally, they spent ￡5.3 million on the UK and €3.344 million on EU visa applications that were unsuccessful. [Dawn]
- Opinion: Corporate Farming - “Instead of viewing the agriculture sector as simply a provider of food for the poor, Pakistan must see it as an engine of economic growth for the next few decades. Meanwhile, when it comes to corporate farming, it can be beneficial for all stakeholders since efficient pooling of available resources can be ensured.” - By Muhammad Sheroz Khan Lodhi [BR]
