Flood Risk, Petroleum Products Decline, Foreign Reserves, Cotton Rate, SC Judge Qazi Faez Isa, US-India Meeting, WB Finances

TOPLINE

• Climate Change Minister Sherry Rehman warns of heightened flood risk during Eid Ul Azha in northern Pakistan due to rising temperatures, urging vigilance and precautions as temperatures are projected to be four to six degrees above normal.
• Pakistan's petroleum sector faces challenges as oil import bill and local production of petroleum products decline, leading to decreased exports and lower reserves, with a decrease of 21.84% in oil imports in dollar terms and 32.67% in petroleum product imports.
• Pakistan's foreign reserves decreased by $515 million primarily due to external debt servicing, with total reserves standing at $8.864 billion as of June 16, 2023, and an inflow of $300 million from China.
• Karachi Cotton Association decreases spot rate by Rs 300 per maund to Rs 18,700, reflecting a bearish local cotton market, while new crop rates range from Rs 18,300 to Rs 18,600 per maund in Sindh and Rs 19,500 to Rs 19,700 per maund in Punjab.
• Chief Justice-designate Qazi Faez Isa questions the legitimacy of a nine-member bench hearing appeals against military trials, highlighting the courts' responsibility to decide cases in accordance with the law.
• US President Joe Biden subtly references human rights concerns in India during a meeting with Prime Minister Narendra Modi, emphasizing the importance of democratic values, while Prime Minister Modi defends his record and denies discrimination in India.
• The World Bank announces plans for easier financing for countries affected by natural disasters, and the IMF makes $100 billion in special drawing rights available for vulnerable nations, aiming to strengthen global finance efforts, including crisis financing, debt relief, financial system reform, and climate change funding.?

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Empowering Women in Eid Ul Azha: Ruqya Fareed, the owner of a cattle farm, has established a unique sacrificial animal market in Shadman Town No 2, where women can buy and sell animals for Eid Ul Azha. The market provides an opportunity for women who are unable to fulfill their religious obligation of sacrifice due to the absence of male family members, and also allows women involved in rearing sacrificial animals to generate income. Additionally, women who wish to support their male family members in the same business can set up stalls in the market. [Dawn]
• Punjab Farmers Disappointed by Insurance: Many farmers in Punjab, Pakistan, are disappointed as an insurance policy intended to cover losses from natural calamities is failing to provide coverage to all eligible farmers. The policy, approved in 2017, was highly anticipated and over 2.2 million farmers have registered for it in the past six years, with Rs 1.390 million paid out as compensation. However, some farmers whose crops were destroyed this year have found themselves without the expected protection, leading to frustration and dismay. [ET]
• 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 18,700 per maund. The local cotton market remained bearish and the trading volume remained satisfactory. The rate of new crop of cotton in Sindh is in between Rs 18,300 to Rs 18,600 per maund. The rate of Phutti in Sindh is between Rs 7,200 to Rs 8,000 per 40 kg. The rate of cotton in Punjab is in between Rs 19,500 to Rs 19,700 per maund and the rate of Phutti is in between Rs 8,800 to Rs 9,500 per 40 kg. [BR]
• Textile Industry Faces Challenges: Syed Usman Ali, the Senior Vice Chairman of the Towel Manufacturers Association of Pakistan, expressed concern over the neglect of the export sector in the 2023-24 budget and the lack of incorporation of their proposals for the growth of the textile sector. He highlighted various issues faced by the textile industry, including the need for the restoration of zero rating, prompt sales tax refunds, withdrawal of problematic circulars, and continuation of schemes such as DLTL. The association has also raised awareness through an advertisement in the print media regarding these issues. [BR]
• Health Program Contracts Extended: During the 18th provincial cabinet meeting in Punjab, the proposal to impose agricultural income tax on owners of 5-acre land was rejected, and the stamp duty rate was maintained at one percent. The cabinet also approved amendments to the Stamp Act and the Sales Tax on Services Act, extended contracts for health programs, and entrusted the restoration of historical buildings and ancient gates to the Director-General of the Walled City of Lahore Authority. [BR] [Dawn] [The News]
• Dairy Products Import: Rs 1.9 billion was the import value of milk, cream and milk food for infants in May 2023, down 35.6% from May 2022. [ET]
• Carpet Export: Rs 1.2 billion was the export value of carpets, rugs and mats in May 2023, down 11.2% compared to Rs 1.3 billion in May 2022, according to the PBS. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Heightened Flood Risk in Northern Pakistan during Eid Ul Azha: Climate Change Minister Sherry Rehman has warned of a heightened risk of flash floods and glacial lake outburst floods (GLOF) in Gilgit-Baltistan and Khyber Pakhtunkhwa during the upcoming Eid Ul Azha holiday due to rising temperatures. She urged individuals, district administrations, and local organizations to remain vigilant and take necessary precautions to ensure the safety of residents and visitors during this festive period, as temperatures are projected to be four to six degrees above normal. [BR]
• Red Alert for Forest Fires: In anticipation of increased heat and the risk of forest fires, the conservator of the forest office in Rawalpindi has extended the 'forest fire' season and placed the department on a 'red alert' until July 31. All employees of the forest department are on high alert, with round-the-clock surveillance ordered for forests in various areas including Margalla Hills, Murree, Kotli Sattian, Ghora Gali, Panjar, and Kallar Syedan. [ET]
• UAE's AD Ports Group Leases Karachi Port Berths: AD Ports Group of the UAE has signed a $220 million agreement to take over part of Karachi Port in Pakistan, leasing four berths for 50 years. The joint venture with Kaheel Terminals aims to invest in infrastructure and expand the port's capacity, allowing for larger ships and increasing container handling capabilities to one million containers per year. The deal provides much-needed foreign investment for Pakistan's struggling economy and helps address its mounting debt crisis. [BR] [Dawn]
• PNSC Chairman Highlights Opportunities: Rear Admiral Jawad Ahmed, Chairman and CEO of the Pakistan National Shipping Corporation (PNSC), stated that 80 percent of the oil imported into Pakistan is transported through the PNSC, highlighting the crucial role of the shipping industry. During an address at the Korangi Association of Trade and Industry (KATI), he invited the Abu Dhabi Group to invest in Pakistan and become stakeholders at the port, emphasizing the profitability of the shipping business and the potential for growth with the right support. [BR]
• KMC Directed to Continue Gujjar Nullah Work: The Sindh High Court has instructed the Karachi Metropolitan Corporation (KMC) to present the plan and schedule for the improvement of Gujjar Nullah. The court also directed the KMC to continue the ongoing work according to the schedule provided until the next hearing. The petitioners, who reside near Gujjar Nullah, had requested the court to order the respondents to present the original proposal for the drain's enhancement, construction of roads along its banks, and rehabilitation of affected individuals as per the Supreme Court's directions. [Dawn]
• Challenges in Pakistan's Petroleum Sector: During the first 11 months of FY23, Pakistan experienced a decline in its oil import bill and local production of petroleum products by 21.84% and 11.23%, respectively. This led to a decrease in exports of petroleum products by 24.61%, with foreign sales of crude oil and petroleum products dropping by 21.97% and 32.65% respectively. Despite higher international prices, the oil imports in dollar terms decreased by 21.80% to $15.38 billion, while the decline in rupee terms was relatively lower at 6.88%, amounting to Rs 3.713 trillion. The import of petroleum products also decreased by 32.67% to $6.74 billion, or 8.86% in rupee terms to Rs 1.617 trillion. [Dawn]
• Rising Debt Threatens Pakistan's Energy Sector Stability: Pakistan's energy sector is facing a worsening circular debt crisis, with total payables reaching Rs 2.63 trillion by April 2023, surpassing initial projections for the fiscal year. The escalating debt poses a significant threat to the country's financial stability and hampers the smooth functioning of the energy industry, with factors such as unreleased subsidies and interest charges on delayed payments contributing to the problem. Independent power producers have also been affected, with substantial interest charges on delayed payments adding to the crisis. [ET]

AGRI UPDATES & PAKISTAN POLICY

• External Debt Servicing Impacts Pakistan's Foreign Reserves: Pakistan's total liquid foreign exchange reserves decreased by $515 million in the last week, primarily due to external debt servicing. However, the country received a $300 million inflow from China. As of June 16, 2023, Pakistan's total reserves stood at $8.864 billion, with the State Bank of Pakistan's reserves decreasing to $3.537 billion and commercial banks' reserves declining to $5.327 billion. [BR] [Dawn] [The News]
• Finance Minister Agrees to Examine Anomalies in Taxation: Finance Minister Ishaq Dar has reportedly agreed to address concerns raised by the business community by removing anomalies in the finance bill. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) claims that Mr. Dar has agreed to examine a list of anomalies related to income tax, withholding tax, sales tax, FED, and customs in order to improve investor sentiment. One of the key demands accepted by the finance minister is to focus on expanding the tax net instead of burdening existing taxpayers. [Dawn]
• Pakistan's PM Affirms IMF Commitment: Prime Minister Shehbaz Sharif expressed his commitment to the ongoing Extended Fund Facility (EFF) with the International Monetary Fund (IMF) during a meeting with IMF Managing Director Kristalina Georgieva. He stated that his government had completed all prior actions for the 9th Review and was willing to take further steps in collaboration with the IMF, eagerly awaiting the Board's approval for the review. [ET] [The News]
• Prime Minister Calls for Global Fairness: Prime Minister Shehbaz Sharif urged developed countries to distribute resources fairly and highlighted the challenges faced by developing nations, particularly in addressing climate change. He criticized the response of international institutions to Pakistan's appeal for funds after the 2022 floods, emphasizing the need for financial assistance rather than loans. [Dawn]
• Justice Isa Questions Bench: During a hearing at the Supreme Court, Chief Justice-designate Qazi Faez Isa expressed his view that the nine-member bench hearing appeals against military trials was not a proper court. Justice Isa, while stating that he would neither recuse himself nor sit on the bench, stood up from his seat, causing surprise among the judges. The discussion arose as Justice Isa highlighted Article 175(2) of the Constitution, emphasizing the courts' responsibility to hear cases and make decisions in accordance with the law. [Dawn]
• Google's Cloud Programme for Pakistani Startups: Google has introduced its Startups Cloud Programme in Pakistan, offering local technology-driven firms tools, resources, and credits to help them grow and scale their businesses in the cloud. The programme aims to provide an enabling environment for startups and has the potential to contribute $60 billion to Pakistan's GDP by 2030, according to Google's Country Director. The programme includes support from experts, coverage of Google Cloud and Firebase costs, technical training, business support, and other Google-wide offers. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Breakthrough in Submersible Search: The US Coast Guard utilized search patterns depicted in a graphic to locate the missing submersible, Titan, earlier in the week. On Thursday, a remotely operated vehicle discovered five significant parts of the submersible, including debris found approximately 480 meters (1600 feet) from the bow of the Titanic wreck. The exact location of the debris has not been disclosed. [ET] [BBC] [CNN] [NBC] [Sky News]
• Global Finance Initiatives: The World Bank has announced plans to provide easier financing for countries affected by natural disasters, while the IMF has reached its goal of making $100 billion in special drawing rights available for vulnerable nations. The initiatives were discussed at a gathering in Paris with leaders from various countries, aiming to strengthen global finance efforts and address issues such as crisis financing, debt relief, financial system reform, and climate change funding. [BR]
• Exporters Struggle with Rising Rice Costs: Rice exporters are experiencing a surge in prices due to supply concerns and strong demand, reaching a more than two-year peak. Vietnam's 5% broken rice and Thailand's 5% broken rice both saw price increases, with exporters rushing to secure domestic rice to fulfill export contracts amid tight supplies and unfavorable weather conditions affecting output. The high prices may persist due to rising domestic prices and challenges in finding sufficient supply for export. [BR]
• Inflation Prompts Calls for Further Interest Rate Increases: Fed governor Michelle Bowman stated that additional interest rate hikes are necessary to address high inflation, expressing the belief that it is necessary to bring inflation down to the target over time. The Federal Reserve recently paused its aggressive monetary tightening campaign after raising its benchmark lending rate multiple times, but Bowman supports the decision to hold interest rates last week due to mixed economic data. [BR]
• Obama Urges Dialogue on Religious Pluralism in India: Former US President Barack Obama expressed concerns about the treatment of India's Muslim minority and called for the issue to be raised with Prime Minister Narendra Modi during his state visit. Obama emphasized the importance of "religious pluralism" while acknowledging the complexities of discussing human rights with allies. He made these remarks during an interview with CNN while visiting Greece for a session with emerging global leaders. [Dawn]
• US-India Meeting Raises Human Rights Concerns: US President Joe Biden made a subtle reference to the human rights situation in India during his meeting with Prime Minister Narendra Modi at the White House. While acknowledging the importance of religious pluralism, Biden emphasized that democratic values face challenges globally. Prime Minister Modi defended his record and stated that discrimination has no place in India, while activists and progressive lawmakers have been urging President Biden to address human rights concerns in the country. [Dawn]
• Oil Futures Down Over 4%: Oil futures fell over 4 percent on Thursday, as a bigger-than-expected Bank of England rate hike prompted worries about the economy and fuel demand that outweighed support from a surprise draw in US oil supplies. Brent futures were down $3.33, or 4.3%, to $73.79 a barrel at 12:59 p.m. EDT (1659 GMT). US West Texas Intermediate (WTI) crude futures were down $3.41, or 4.7%, at $69.12. [BR]

PAKISTAN - REMAINDERS

• Kin awaits news about 110 migrants. [ET]
• Empowering Individuals through Family Planning: According to a UNFPA report, Pakistan is one of the eight countries that will contribute to half of the projected global population growth by 2050. The report emphasizes the importance of family planning as a means of empowering individuals and calls for the rights and choices of women to determine if, when, and how many children they want to have. It also addresses population anxieties felt in various parts of the world, including in Pakistan. [Dawn]

Opinion: Stagflation silence - “AS the PDM government and its khaki patrons propagate investor-friendly gimmicks like the Special Investment Facilitation Council (SIFC) in the name of economic revival, the working class is being pushed closer to the brink. While the planned handover of public assets like ports to Gulf sheikhs at least makes the news, the virtual silence of our economic ‘experts’ about galloping unemployment is deafening.” - By Aasim Sajjad Akhtar [Dawn]