February 2023 in Review

This is a review of the major news trends for the main stories across the month of February.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Wheat Sowing Targets & Supply:?Despite the estimated success rate of 94% for the wheat crop's sowing target in the current fiscal year, the record supply of subsidized wheat to flour mills across Punjab has failed to make wheat affordable for consumers. Nevertheless, the country has recorded over 4.240 million metric tons of wheat stock, which is enough to meet local dietary requirements and maintain strategic reserves. To increase wheat production, the government is utilizing all available resources, and the provincial cabinet has approved starting wheat procurement from March 15. The Sindh cabinet has also set a wheat procurement target of 1.4 million tons. Punjab has requested the federal government to provide wheat stocks to maintain strategic reserves of 300,000 tonnes, while there are plans to set up 466 wheat procurement centers across the province. 9 ships carrying 450,000 metric tons of imported wheat will arrive at Gwadar in March. However, due to heavy rains and floods, the country has missed the wheat sowing target by 4% for the Rabi season 2022-2023.
• Flour/Wheat & Sugar Support Prices:?Flour prices continue to increase ahead of the harvest of the new wheat crop, and the Sindh food department has started releasing wheat crops procured at a lower rate last year at a higher price. Meanwhile, the Sindh government has fixed the support price of wheat at Rs 100 per kilogram, and Punjab may increase the wheat support price for procurement season 2023 to Rs 3,800/40 kg or even Rs 4,000/40kg. The Pakistan Business Forum (PBF) has demanded that the Punjab government revise the wheat support price to Rs 3,900 per maund. The Punjab government has already increased the minimum wheat procurement price to Rs 3,900/40 kg from last year's price of Rs 2,200/40 kg, bringing it up to market level. Additionally, the provincial government is planning to fix the support price of the new crop of sugarcane at Rs 450 per 40 kg and will send a summary to the provincial cabinet for approval.

AGRI-INPUTS, WEATHER, WATER & POWER

• Fuel Crisis:?Pakistan is facing a fuel shortage crisis due to the depletion of foreign exchange reserves, causing banks to stop financing and facilitating payments for imports. As a result, there have been long queues at fuel stations in Punjab throughout February, and aviation fuel shortage has affected operations such as Edhi’s air ambulance. The price of petrol has increased by Rs 22.20 per liter, while the high-speed diesel rate has also gone up by Rs 17.20 per liter. The government has allowed the Pakistan State Oil exchange rate adjustment of Rs 9.92 per liter on petrol and Rs 13.12 per liter on high-speed diesel. Meanwhile, consumers faced multiple price shocks in steel bar prices due to the massive rupee devaluation, and Federal Excise Duty rates on air tickets have also been fixed. The cost of fuel for electricity generation has increased by 59% to Rs 11.20 per unit. On Monday 28 February, there was a city-wide strike in Sindh (on TLP’s call) protesting against the recent inflation hike.?

AGRI UPDATES & PAKISTAN POLICY

• IMF Talks:?Pakistan is grappling with its ever-increasing debt burden as the International Monetary Fund (IMF) puts pressure on Islamabad to withdraw untargeted subsidies, reduce circular debt, and meet the petroleum levy, and Federal Board of Revenue (FBR) tax collection targets. The country's total liquid forex reserves have further fallen by $711 million due to external debt servicing. The IMF has asked Pakistan to increase the general sales tax rate to a minimum of 18% to raise more taxes. The talks between Pakistan and the IMF have resumed as the debt servicing cost is projected to increase to Rs 5.2 trillion. In February, the country's government borrowings from banks increased by 255% in the first 7 months of the current fiscal year. The country's total debt and liabilities rose to a historical level of Rs 63.9 trillion at the end of the first half of this fiscal year due to massive borrowing from domestic and external resources. The external debt servicing increased by 70% in the first two quarters of 2022-23 on a year-on-year basis, worsening the shortage of dollars. The country’s current account deficit (CAD) sharply fell by 67% during the first 7 months of this fiscal year supported by lower import bills. Interest rates on short-term government papers rose to 19.95%, reflecting the cash-strapped government's increased funding needs to cover the budget deficit. In response, Pakistan has introduced a Finance (Supplementary) Bill 2023 outlining tax measures to raise an additional Rs 170 billion in the next 4.5 months to meet the last prior actions agreed upon with the IMF to secure early disbursement of about $1.2 billion installments. The government has implemented "austerity measures'' to steer the country out of its difficulties. Meanwhile, Pakistan's business chiefs have called for the cash-strapped government to allow manufacturing materials stuck at the key port of Karachi into the country, warning that a failure to lift a ban on imports will leave millions jobless.

• Imran Khan Politics:?Pakistan Tehreek-e-Insaf (PTI) leader Fawad Chaudhry was released from jail after an Islamabad district and sessions court granted him bail. However, the court has ordered that he refrain from using words that could incite violence against constitutional institutions. Meanwhile, in a major development, Prime Minister Shehbaz Sharif called for an all-party conference (APC) on February 7, inviting all political leaders including PTI chairman Imran Khan to discuss the challenges faced by the country, including terrorism and the economic crisis, which was turned down by Imran Khan.?In response to the delay in holding elections in Punjab and Khyber Pakhtunkhwa (KP), Imran Khan has threatened to launch the?'jail bharo'?(voluntary arrest) movement within 90 days from the date of dissolution of the two provincial assemblies. The movement has already started, and PTI leaders and workers are voluntarily surrendering themselves to the police. However, the PTI's protests are not limited to the 'Jail Bharo Tehreek.' Lawmakers from the party have also protested and staged a walkout from the Sindh Assembly on Monday, raising the issue of rising inflation in the country. Furthermore, Chaudhry Parvez Elahi left the Pakistan Muslim League (PML-Q) and joined hands with the PTI as its central president, hours after his membership was terminated by PML-Q President Chaudhry Shujaat Hussain. As the 'Jail Bharo Tehreek' gains momentum, the government has imposed Section 144 in Lahore. The situation remains tense as the PTI's protests continue and the situation between the government and PTI intensifies.
• Elections Issue:?Syed Aminul Haque (IT Minister) announced that general elections in the country are not possible before October 2023 due to the digital census process which will continue till March and the Election Commission will then need four months for de-limitations. President Dr Arif Alvi wrote a letter to the Election Commission of Pakistan, urging them to announce the election date for the dissolved assemblies of Khyber-Pakhtunkhwa (KP) and Punjab at the earliest or else it would be held responsible for violation of the Constitution. Aspiring candidates, including senior leaders of rival political parties, have filed nomination papers to contest the upcoming by-elections on March 16 on nine National Assembly seats of Karachi that fell vacant after the resignation of Pakistan Tehreek-i-Insaf (PTI) lawmakers. The Election Commission of Pakistan’s (ECP) task of conducting a vote for the vacated National Assembly seats as well as the Punjab and Khyber-Pakhtunkhwa assemblies got harder after its requests for army soldiers for security and judicial officers for conducting voting were declined. The Election Commission of Pakistan (ECP) decided to consult Punjab Governor Baligh Ur Rehman regarding the date of general elections in the province, following a Lahore High Court order. However, the caretaker Punjab government suspended the notifications issued for the creation of a new division, four new districts and two tehsils in the province, which raised questions about its jurisdiction and intentions behind the decision. In a controversial move, President Dr. Arif Alvi unilaterally fixed April 9 as the date for elections to the provincial assemblies of Punjab and Khyber Pakhtunkhwa (KP), accusing the Election Commission and two governors of not fulfilling their constitutional duties. This move was condemned as illegal and unconstitutional by the government. Chairman Pakistan Tehreek-e-Insaf (PTI), Imran Khan, cautioned the superior judiciary that Pakistan was passing through a defining moment and only free and fair elections could steer the country out of the economic quagmire. Meanwhile, Chief Justice of Pakistan Umar Ata Bandial hinted at the quick disposal of suo-motu notice regarding the election date for the Punjab and Khyber-Pakhtunkhwa assemblies. Lastly, almost 4 months after the election, the Election Commission of Pakistan (ECP) de-notified PTI Chairman Imran Khan as a member of the National Assembly on six seats.
• Pak-Afghan Ties:?The Torkham Border, an important border crossing between Afghanistan and Pakistan, was closed for over 6 days in February following concerns over security and the movement of refugees since the Taliban's takeover of Afghanistan. This closure caused significant disruptions in trade and travel. Furthermore, recent terrorist attacks in Pakistan, such as those on the Peshawar Mosque on January 30, 2023, and the Karachi Police Station on February 17, 2023, reportedly carried out by the Tehreek-e-Taliban Pakistan (TTP), have further worsened the situation. In response, Pakistan's Defense Minister and the Director-General of the Inter-Services Intelligence made an unannounced visit to Kabul on February 22, 2023, to discuss security concerns with the Taliban government. The meeting aimed to address security concerns and ensure peace in the region. Mullah Abdul Ghani Baradar, Afghanistan's acting deputy prime minister for economic affairs, emphasized in the statement that political and security concerns should not affect business or economic matters and that the development of commercial and economic ties between Pakistan and Afghanistan is in the interest of both countries.

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Turkey-Syria Earthquakes:?On February 6, Turkey and neighboring Syria were rocked by 7.7 and 7.6 magnitude quakes that killed more than 50,000 people. Rescue and recovery efforts have been ongoing due to the massive scale of devastation. The death toll has risen every day since as rescue teams continue to recover bodies trapped under the rubble of collapsed buildings. More than 20 million people have been affected by the geological catastrophe in Turkey and another 8.8 million in Syria. On February 21, A 6.4-magnitude earthquake and a second measuring 5.8 hit Turkey’s southern province of Hatay. Additionally, in February 2023, a 6.8-magnitude earthquake hit eastern Tajikistan with effects being felt as far as Islamabad. On 27 February,?a magnitude-5.2 earthquake occurred in Malatya Province at around 12:04 Feb. 27. The epicenter was about 8 km (5 miles) south-southeast of Yesilyurt. The tremor occurred at a depth of about 10 km (5 miles), and light shaking was probably felt throughout parts of east-central and southern Turkey and northern Syria. The scientists studying the powerful earthquakes that devastated parts of Turkey and Syria this month may bring new insights to a seismic zone that is strikingly similar: the San Andreas Fault in California. The earthquake zones have much in common, with one long, major fault and scores of smaller, secondary ones. Using ground-based and satellite measurements, scientists are learning how the initial 7.8-magnitude quake in Turkey on Feb. 6 spawned aftershocks, including an unusually strong one on a secondary fault just hours after the first.

• US-China Relations & Russia-Ukraine War:?Fierce fighting continues in eastern Ukraine between Moscow and Kyiv, with Russian airborne units joining Wagner mercenaries in the fight for Bakhmut. President Zelenskiy requested F-16s from the US, UK, and Germany, but they all denied the request. Meanwhile, the US shot down a fourth unidentified flying object over Lake Huron, and China is preparing to shoot down an object flying over waters near the port city of Qingdao. The mystery deepens as questions about the three unidentified flying objects downed by US Air Force jets over North America in three days intensified. Several Russian strategic bombers and fighter jets were intercepted by North American air defense forces as they flew over international airspace near Alaska. US Secretary of State Antony Blinken accused China of considering providing weapons to Russia in its war against Ukraine. Joe Biden made an unannounced visit to Kyiv to show solidarity just days before the first anniversary of Russia's full-scale invasion of Ukraine. Chinese leader Xi Jinping is preparing to visit Moscow for a summit with Russian President Vladimir Putin. US President Joe Biden criticized Russia's suspension of a nuclear treaty as Moscow sought closer ties to China and said it was fighting for "historical" lands in Ukraine as the war entered its second year as the EU and the US-backed Kyiv.