Cyclone Biparjoy, Karachi LG Elections, Petroleum Prices, Pakistan-Azerbaijan Relations, Tobacco, Foreign Exchange Reserves, US-Iran Relations

TOPLINE

• Severe weather caused by Cyclone Biparjoy brings heavy rains, strong winds, and dust storms to Sindh, resulting in casualties and disruptions across the region.
• In Karachi's local government elections, the PPP won the mayorship for the first time, with Murtaza Wahad as the mayor candidate. However, the election is marred by allegations of abuse of power, forced disappearances, clashes, and accusations of rigging by the PTI.
• Petroleum prices in Pakistan remain unchanged, except for a slight increase of Rs 2.5 per liter in light diesel oil, citing stable international prices as the reason for the decision.
• Pakistan and Azerbaijan strengthen bilateral cooperation in energy, trade, and aviation, with plans for flights between Islamabad and Baku and the initiation of cheap LNG shipments.
• Pakistan's tobacco sector faces Rs 240 billion tax evasion, with two multinationals paying most taxes. Recent report disputes figures, credits track and trace system for reducing illicit trade, praised by health activists.
• Pakistan's foreign exchange reserves rise by $107 million to $4 billion but decrease to $3 billion after paying $1 billion to China. The Finance Minister expresses disappointment with the IMF's handling of the bailout package amid concerns over reserves and budgetary measures.
• The United States engages in informal negotiations with Iran, seeking to limit its nuclear program and secure the release of imprisoned Americans, aiming to ease tensions and restore diplomatic relations.
• South Korea's pioneering approach to food waste management involves banning food scraps from landfills, converting 90% of discarded food into valuable resources, attracting global attention and potential for emission reduction.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Tea Import: Rs 13.9 billion was the import value of tea in May 2023, up 47% from Rs 9.5 billion in May 2022, according to the PBS. [ET]
• Rs 49.9 billion was the export value of cotton cloth in May 2023, up 10.3% compared to Rs 45.2 billion in May 2022, according to the Pakistan Bureau of Statistics. [ET]
• Eid Ul Azha Sacrificial Animal Prices Soar: The price of sacrificial animals for the upcoming Eid Ul Azha festival has surged in the metropolitan city due to factors such as floods, economic instability, and increased transportation costs. As a result, many individuals are facing financial hardships and are unable to afford individual sacrifices, opting instead for collective sacrifices. However, even the cost of collective sacrifice packages has increased compared to previous years, ranging from Rs 15,000 to Rs 25,000, prompting some to contribute to lower-cost options. [ET]
• Leveraging Pakistani Mangoes for Trade Diplomacy: In a bid to tackle Pakistan's trade deficit, businesspeople are urging Pakistani missions abroad to organize mango festivals as a means of promoting trade diplomacy. The Pakistan Business Forum (PBF) has called for these festivals to showcase the diversity and richness of Pakistani mangoes and leverage the occasion of Pakistan's 75th anniversary of independence to accelerate efforts in boosting exports through "Mango Diplomacy." [ET]
• Addressing Damaged Wheat Sale: The Economic Coordination Committee (ECC) of the Cabinet has instructed the Ministry of National Food Security and Research (MNFS&R) to address the issue of selling damaged wheat owned by Passco. The MNFS&R will work with the Finance Division to resolve the matter, following recommendations from a committee established by the MNFS&R for the transparent sale or auction of partially damaged wheat under the supervision of General Managers of Passco. Sorting of the partially damaged wheat will be prioritized, and the sale/auction process will be carried out in phases. [BR]
• Cotton Spot Rate: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Thursday decreased the spot rate by Rs 3,00 per maund and closed it at Rs 20,200 per maund. The rate of new crop of cotton in Sindh is in between Rs 19,700 to Rs 19,800 per maund.? The rate of Phutti in Sindh is between Rs 8,500 to Rs 9,200 per 40 kg. The rate of cotton in Punjab is in between Rs 20,000 to Rs 20,200 per maund and the rate of Phutti is in between Rs 9,000 to Rs 9,200 per 40 kg. [BR]
• Illicit Tobacco Trade: Tax evasion in the tobacco sector in Pakistan is estimated to be around Rs 240 billion, with only two multinational companies contributing the majority of taxes paid. The Society for the Protection of the Rights of the Child (SPARC) has disputed these figures, stating that a recent report shows a significant decline in illicit trade in cigarettes after the implementation of a track and trace system, while health activists have praised efforts to curb illegal tobacco trade in the country. [BR]
• Pakistani Beef Exporters Gain Access to Chinese Market: Chinese customs authorities have granted permission for Pakistani meat exporters to sell beef in China, a decision that has been met with enthusiasm by local businessmen. The move is seen as a significant opportunity to tap into the lucrative Chinese market and potentially earn millions of dollars. However, exporters are reminded to comply with the guidelines set by Chinese authorities to ensure successful meat exports. [BR] [ET] [DP] [The News]
• Rising Food Prices & Declining Imports: The UN's Food and Agriculture Organization (FAO) has stated that high food prices will lead to a reduction in food imports by poorer nations this year. While global production of maize, milk, and meat has increased, allowing developed nations to increase their food imports, the FAO's report indicates a 1.5 percent decline in imports for the world's least developed countries, particularly in Africa. Developing countries, including Turkey, Egypt, and Pakistan, are expected to experience a larger drop in imports, around five percent, due to a decrease in purchasing power. [BR] [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Biparjoy Brings Severe Weather: The Met Office has warned of widespread rains, strong winds, and dust storms in Sindh as the cyclonic storm Biparjoy moves towards dissipation. Lower Sindh, including Thatta and Keti Bandar-Gujarat coasts, is expected to experience intense weather conditions with heavy rainfall, while other parts of Sindh will also see windy and rainy weather. Squally winds and heavy rainfall may affect various districts, including Tharparkar, Mirpurkhas, Umerkot, Karachi Division, Hyderabad, and others. Two weather-related deaths were reported – 10 years old Dua Abro, who died under a falling tree, while Lalchand Kanji, 27, fell to his death from the roof because of strong winds. [BR] [Dawn] [ET] [BBC] [Al Jazeera] [HT]
• Petroleum Prices Unchanged: The government of Pakistan has decided to keep the prices of most petroleum products unchanged for the next two weeks, except for light diesel oil, which will see an increase of Rs 2.52 per liter. Finance Minister Ishaq Dar cited stable international prices as the reason for maintaining the current prices of high-speed diesel, petrol, and kerosene. [Dawn] [ET]
• Pakistan's Crude Oil Deal with Russia: Pakistan's Foreign Office spokesperson defended the country's procurement of affordable crude oil from Russia, citing the need to address economic challenges, energy shortages, and high energy costs resulting from reliance on imported petroleum. The spokesperson highlighted that the negotiations for the deal had been ongoing, and the arrival of the first shipments was expected to benefit the Pakistani people. [BR]
• Addressing Load Shedding & Overbilling: During a budget debate in the provincial assembly, opposition and ruling party members called for not extending the license of K-Electric (KE) to put an end to its alleged highhandedness and monopoly. Lawmakers criticized KE for load shedding and overbilling in Karachi and demanded the induction of new power utilities in the city. Additionally, they emphasized the need for completing the Karachi safe city project to ensure the safety of citizens. [BR]
• Baku to Start Shipping Cheap LNG from Next Month: Pakistan and Azerbaijan have affirmed their commitment to enhancing bilateral cooperation, particularly in energy, trade, and aviation. During a meeting between Prime Minister Shehbaz Sharif and Azerbaijan President Ilham Aliyev, the leaders discussed strengthening ties, including the introduction of flights between Islamabad and Baku and the start of LNG shipments to Pakistan. [BR] [Dawn] [ET]

AGRI UPDATES & PAKISTAN POLICY

• Karachi's Local Government Elections: In the final phase of local government elections in Karachi, the Pakistan Peoples Party (PPP) secured the mayorship for the first time in the city's history. However, the election process was marred by allegations of abuse of power, forced disappearances of rival party members, and clashes between party workers. The rival Pakistan Tehreek-i-Insaf (PTI) accused the PPP of rigging the elections and claimed that many of their members were missing, alleging they were being held by the PPP. The PTI rejected the election results but also pledged to take action against members who failed to participate in the voting. [Dawn]
• Pakistan's Stalled IMF Loan Program: Finance Minister Ishaq Dar accused global institutions of geopolitical motives behind the stalled loan program with the IMF, suggesting they wanted Pakistan to default like Sri Lanka before entering negotiations. However, he also stated that negotiations with the IMF were ongoing and the ninth review would be completed this month. Dar reiterated that Pakistan would meet its obligations with or without the IMF's bailout package and assured that everything was in order and there was no need to worry. [Dawn]
• Foreign Exchange Reserves Rise: Pakistan's foreign exchange reserves held by the State Bank increased by $107 million to $4 billion, but reportedly decreased to $3 billion after paying $1 billion to China. Finance Minister Ishaq Dar expressed disappointment with the IMF's handling of the bailout package, as concerns over reserves and budgetary measures persist. [Dawn]
• Pakistan's Net Reserves in Negative: Former Finance Minister Dr. Hafiz Pasha revealed that Pakistan's net international reserves have reached a negative $14 billion, indicating a worrisome situation. He expressed concern over the exchange rate projections and highlighted Pakistan's high unemployment rate of 11% and its status as having the highest poverty rate, with over 100 million people living below the poverty line. Pasha projected that the rupee-dollar parity should be around Rs 322 based on one-month import cover, while Finance Minister Ishaq Dar believes it should be Rs 244 based on the real effective exchange rate. [ET]
• Combating Tax Evasion & Smuggling: Sardar Ayaz Sadiq, Pakistan's Federal Minister for Economic Affairs, highlighted the negative consequences of smuggling, illegal trade, and tax evasion on the country's economy. Speaking at a briefing session on tax evasion in various sectors, Sadiq expressed concern over the dependence on imported goods and the informal channels that evade duties and taxes. He particularly emphasized the alarming levels of tax evasion in the real estate and tobacco sectors, with estimates indicating a significant loss of tax revenue in the tobacco industry. [BR]
• Addressing Pakistan's Climate Emergencies: Climate Change Minister Sherry Rehman expressed her concerns about the continuous climate emergencies faced by Pakistan, leading to a perpetual cycle of recovery. She shared these views during a meeting with a Danish delegation led by Denmark's Minister for Development Cooperation and Global Climate Policy, Dan J?rgensen. The delegation also included Denmark's Climate Ambassador and Danish Ambassador to Pakistan. [BR]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Oil Prices: Oil prices gained about 3 % to a one-week high on Thursday as the US dollar weakened and data showed a jump in refinery runs in top crude importer China. Brent futures rose $2.07, or 2.8%, to $75.27 a barrel by 1:00 p.m. EDT (1700 GMT), while US West Texas Intermediate (WTI) crude rose $2.00, or 2.9%, to $70.27. That puts both Brent and WTI on track for their highest closes since June 8. [BR]
• Palm Oil Prices: Malaysian palm oil futures rose on Thursday for a third consecutive session, lifted by concerns over hot weather cutting output of both the edible oil and rival US soybeans. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 68 ringgit, or 1.97%, to 3,520 ringgit ($761.25) a metric ton, its highest closing since May 29. [BR]
• South Korea's Food Waste Revolution: South Korea leads the way in tackling food waste. By banning food scraps from landfills, the country converts 90% of discarded food into valuable resources like animal feed, fertilizer, and fuel. This innovative system has drawn global attention, with cities like New York City observing and learning from South Korea's success. Despite the program's cost, experts argue that replicating South Korea's approach could have a significant impact in reducing emissions on a larger scale. [NYT]
• India's $3 Billion Drone Deal with the US: India's defence ministry has given approval for the procurement of armed MQ-9B SeaGuardian drones from the United States. The deal, worth slightly over $3 billion, will involve the purchase of 31 drones made by General Atomics. The announcement is expected to be made during Prime Minister Narendra Modi's upcoming state visit to the U.S. where he will meet with President Joe Biden. [ET] [Reuters] [HT] [WION]
• U.S. Seeks Informal Agreement with Iran: The Biden administration has been engaged in quiet negotiations with Iran to limit its nuclear program and secure the release of imprisoned Americans. The talks aim to ease tensions and reduce the risk of military confrontation, with the goal of reaching an informal agreement described as a "political cease-fire." The discussions include efforts to prevent further escalation in the already strained relationship, address Iran's nuclear activities, and curb its support for proxies in the region. The talks represent a resumption of diplomacy following the collapse of previous negotiations to restore the 2015 nuclear deal. [NYT]

PAKISTAN - REMAINDERS

• Opinion: Wheat for all - “FOOD insecurity in Pakistan has aggravated sharply over the past few years, the inevitable outcome of persistent political instability and declining economic health. With one of the fastest-growing populations in the world, poverty, and vulnerability to climate change, Pakistan’s road to nutritional sufficiency has been long and tumultuous.” - By Tabinda Ashraf Shahid [Dawn]
• Opinion: Huge global economic policy challenges - “A second Bretton Woods moment needs to be invoked, where the philosophical shift needs to be made towards non-neoliberal, non-austerity, counter-cyclical policies. Moreover, such a shift will also allow moving towards much more improved economic institutional quality in individual countries as the mantra of the government is that the problem is replaced with moving towards an ‘entrepreneurial state’.” - By Dr Omer Javed [BR]
• Opinion: Forests, trees as carbon offsets - “ECOLOGISTS and environmentalists have, for many decades, advocated for sustainable forms of economic development. The world has been on an expansive yet destructive development path over the last century. While there can be no denying the benefits to humanity of this rapid development and economic expansion — particularly after 1850 and the discovery of oil — environmentalists have been rightly arguing that improving humanity’s living standards need not be at the cost of the planet.” - By Aijaz A. Nizamani [Dawn]

Opinion: Is the Chinese model of development better than western ones? - “While foreign assistance claims to help poorer countries become more prosperous, often this foreign assistance is not only given based on need alone, it is also linked to securing foreign policy imperatives. Paying attention to how powerful countries use financial aid to achieve their own strategic goals helps understand the lackluster impact of foreign assistance within recipient countries.” - By Syed Mohammad Ali [ET]