Food Price Inflation, Subsidized Flour & Hoarders Crackdown, Cotton Spot Rate, NDMA Flood Warning, Russian Oil Exports, SC on Election Funds

TOPLINE

• The World Bank has stated that food prices in Pakistan have been increasing for 11 consecutive months, with consumer price inflation for food items reaching 47.2% in March 2023 on a Y-o-Y basis.
• The Government will continue to subsidize wheat flour for deserving people, while Balochistan plans to crack down on wheat hoarding and aims to buy 1 million bags of wheat. In Hafizabad, 10 trucks loaded with over 6,000 sacks of wheat were seized.
• KCA increased the spot rate by Rs 200 per maund to close at Rs 19,500 per maund. Meanwhile, farmers are showing growing interest in cotton plantation, and early sowing has already been completed on 0.4 million acres.
• NDMA has warned of a 72% chance of devastating floods in Pak this year due to the rapid increase in temperature, glacier melting and early monsoon.
• Pak is nearing a crude oil deal with Russia as a team arrived in Karachi to finalize details. Russia has also started exporting fuel to Iran for the first time.
• The Supreme Court has issued notices to officials for not providing funds to the Election Commission to hold general elections in Punjab. Meanwhile, the Bar Council has called for a boycott of courts across the country to protest against the formation of a "one-sided and controversial bench" to hear petitions against a pending law.
• China’s exports surged in March as the world’s second-largest economy continued to rebound from Beijing’s harsh “zero-COVID” policies.? Total exports soared 14.8% year on year and imports fell 1.4%.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Pakistan's Food Inflation Soars: The World Bank has stated that food prices in Pakistan have been increasing for 11 consecutive months, with consumer price inflation for food items reaching 47.2% in March 2023 on a year-on-year basis, the highest in South Asia after Sri Lanka. The bank also reported that the purchasing power of households has been eroded by as much as 38% due to these increases, and wide differences exist between the inflation rates of various food commodities. [BR]
• Oilseeds Export: Rs 2.9 billion was the export value of oilseeds, nuts and kernels in Feb 2023, up 175% compared to Rs 1.06 billion in Feb 2022, according to the PBS. [ET]
• Wheat Import: Rs 26.9 billion was the import value of wheat in Feb 2023, up 22.7% compared to Rs21.9 billion in Feb 2022, according to the PBS. [ET]
• PM Promises Flour Subsidies: Prime Minister Shehbaz Sharif has stated during his visit to a free flour distribution center in Muzaffargarh that the government will continue to provide subsidies on wheat flour for deserving people after Ramadan. So far, 4.9 million flour bags have been distributed among deserving families in Dera Ghazi Khan division, and the Prime Minister directed that priority be given to women, the elderly and the handicapped during the distribution process. [The Nation] [ET] [The News]
• Wheat Crackdown in Balochistan: The Balochistan government plans to crackdown on wheat hoarding in the province, as the food department is procuring wheat in the main wheat-producing area. The government aims to buy one million bags of wheat, and any wheat that landowners refuse to sell at the subsidized price will be confiscated. Additionally, two solar-powered water supply schemes for Mastung's Shaheed Nawab Ghous Bakhsh Raisani Memorial Hospital are nearing completion, funded by a provincial assembly lawmaker. [ET] [The Nation]
• Wheat Smuggling Foiled: Officers of district administration and PASSCO seized 10 trucks loaded with over 6,000 sacks of wheat, each weighing 1000 kg, being smuggled to KP and other areas of Punjab from Hafizabad, violating the ban on carrying wheat out of the district. Legal action is being taken against the smugglers while the DC visited different wheat procurement centers to review arrangements for providing facilities to farmers and witnessed the distribution of ‘Bardana’ among growers. [PO]
• Preventing Sugar Smuggling: The Caretaker Chief Minister of Punjab, Mohsin Naqvi, presided over a meeting to prevent sugar smuggling, where it was decided to monitor sugar transportation at exit routes and to review the proposal to enforce Inventory Management System in sugar mills. The meeting also discussed formulating a mechanism for registration and inspection of godowns and brokers, and Mohsin Naqvi ordered effective steps to bring stability to sugar prices and prevent smuggling. [The News] [The Nation]
• Cotton Spot Rate Increases: The Spot Rate Committee of the Karachi Cotton Association increased the spot rate by Rs 200 per maund to close at Rs 19,500 per maund. Trading volume remained satisfactory, and cotton prices in Sindh were reported to be in between Rs 17,000 to Rs 20,000 per maund. The rate of cotton in Punjab is in between Rs 18,000 to Rs 20,000 per maund. [BR]
• Growing Cotton Interest in Pakistan: Farmers in Pakistan are showing growing interest in cotton plantation, and the weather forecast for the Kharif season is fairly conducive, which is expected to help recover the country's cotton production from last year's collapse. Farmers are increasingly opting for early sowing, partly due to the timely announcement of intervention prices by the federal government and the trend of high lint prices, and cotton sowing has already been completed on 0.4 million acres till April 1, 2023. [The News]
• Exporters Oppose SBP Circular: Syed Usman Ali, Senior Vice Chairman of Towel Manufacturers Association of Pakistan, expressed concern over a new circular from the State Bank of Pakistan (SBP) that imposes restrictions on exporters who delay repatriating their export proceeds. Ali argued that delayed remittances can be caused by factors outside of the exporters' control and urged the SBP to withdraw the circular and work with exporters to develop a comprehensive strategy for the growth of exports, which are the backbone of Pakistan's economy. [BR]

AGRI-INPUTS, WEATHER, WATER & POWER

• Pakistan Faces High Flood Risk in 2023: The National Disaster Management Authority (NDMA) has warned that there is a 72% chance of devastating floods in Pakistan this year due to the rapid increase in temperature, glacier melting and early monsoon. NDMA is monitoring 17 satellites and 36 flood early warning systems, but if similar catastrophic floods like last year happen now, the country will land in a huge economic crisis. [BR] [PT] [ARY]
• NEPRA Approves Tariff Hike: The National Electric Power Regulatory Authority (Nepra) in Pakistan has approved an increase of 47 paisa per unit in tariffs for Discos, allowing the recovery of an additional amount of Rs 15.454 billion from consumers during the second quarter of the current fiscal year. However, no quarterly adjustments will be passed on to industrial consumers B1, B2, B3, and B4 to the extent of incremental sales until the continuation of the package. [BR] [Dawn] [ET] [PT] [The Nation]
• Sindh to Establish SEPRA: The Chief Minister of Sindh, Syed Murad Ali Shah, announced the establishment of a Sindh Electric Power Regulatory Authority (SEPRA) to tackle energy poverty and improve energy equity in the province. Sindh's Minister of Energy, Imtiaz Shaikh, briefed the cabinet on the province's abundant energy resources, including coal, solar, and wind, which could be used to generate affordable electricity, but faced constraints within the national framework. [BR] [ET] [ET] [ARY]
• Planning Ministry Utilizes Funds: The Ministry of Planning, Development, and Special Initiatives has requested that the Power Division use its own unutilized funds to enable payment of Rs 930 million for the acquisition of land for a 600-MWp solar power plant in Muzaffargarh, as directed by the Prime Minister's Office. The Planning Ministry has found that there are several power sector projects with substantial allocations but low releases and utilization, and that the Power Division could potentially use these unutilized funds to meet the demand for land acquisition. [BR]
• Solar Mini-Grids Transform Village: Indus Earth Trust has installed 19-kilowatt mini-grids powered by solar energy in Ishaq Jokio, a small settlement in the Sindh province of Pakistan, to provide a life-changing solution to residents who are accustomed to enduring long hours of power cuts during peak consumption in summer. The villagers provided the land for the installation of the mini-grids, which have transformed their lives and bred prosperity in the hamlet. [ET]
• Asia's LNG Imports Rebound: Lower spot prices for liquefied natural gas (LNG) are driving a rebound in Asian imports, with China and India leading the way in March. Cheaper prices are attracting price-sensitive buyers, with China and India increasing their LNG imports, while smaller Asian importers such as Pakistan, Bangladesh, and Thailand also recorded higher arrivals in March from February. Meanwhile, Europe's LNG imports are heading higher, as utilities take advantage of lower spot prices to maintain high natural gas inventories. [ET]
• Russia Begins Iran Fuel Exports: Russia has started exporting fuel to Iran by rail this year for the first time, according to industry sources and export data. Both countries, under Western sanctions, are working to support their economies and undermine Western sanctions that they consider unjustified, and last autumn, Russia's Deputy Prime Minister Alexander Novak announced the start of swap supplies of oil products with Iran. [ET]
• Pakistan-Russia Crude Deal: Pakistan is nearing a crude oil deal with Russia as a team arrived in Karachi to finalize details, including the mode of payment. Pakistan wants to pay in rupee, but Russia is asking for payment in China’s Yuan or Ruble, and once the deal is done, Pakistan will place the order to Russia for crude oil purchase. [Geo]
• Opinion: The Life-Giving Dams - “Reservoirs and dams are the only answer. New dams have been proposed and some have gone into the first stage of construction. The unavailability of funds, however, is an ongoing issue, and one such project impacted by the lack of funds is the under-construction Mohmand Multipurpose Dam in Khyber Pakhtunkhwa.” - By Muhammad Azfar Ahsan [BR]

AGRI UPDATES & PAKISTAN POLICY

• Supreme Court Notices Officials: The Supreme Court of Pakistan has issued notices to officials for not providing funds to the Election Commission to hold general elections in Punjab. The officials were directed to appear in person with records and details of all monies under their control, custody, or management. [BR] [The News]
• Election Funds Delay: Pakistan's Supreme Court has summoned the attorney general, finance secretary, State Bank of Pakistan governor, and Election Commission of Pakistan (ECP) secretary over the government's failure to release Rs21 billion ($122 million) to the ECP to hold elections in Punjab and Khyber-Pakhtunkhwa. The ECP had informed the court that it had not yet received the funds to be able to hold the elections in Punjab in order to meet the May 14 deadline set by the apex court. [ET]
• Appeal of Disqualified Former PM: Former Prime Minister Sardar Tanveer Ilyas's appeal against his disqualification by the AJK High Court will be heard by a full bench of the Azad Jammu and Kashmir (AJK) Supreme Court on Thursday. The development came after the registrar of AJK SC removed objections against the third appeal. [The News]
• Pakistan Bar Council Boycotts: An eight-judge Supreme Court bench, led by the chief justice, will hear three petitions against a pending law that aims to curtail the powers of the chief justice on Thursday, but the Pakistan Bar Council (PBC) has called for a boycott of courts across the country to protest against the formation of a "one-sided and controversial bench" to hear the case "prematurely," and opposed the Supreme Court's move to take up the petitions against a yet-to-be-introduced law. [Dawn] [ET] [Dunya]
• IMF Delays Pakistan Deal: Pakistan emphatically requested the International Monetary Fund (IMF) on Wednesday to show some flexibility and sign the staff-level agreement, however, it could not get a date despite Islamabad’s growing concerns about the fallout of a worsening economic crisis. [ET]
• Pakistan to Miss Fiscal Targets: An International Monetary Fund (IMF) report has revealed that Pakistan will miss the fiscal and debt reduction targets of this fiscal year and the situation will become worse in the next fiscal year with a budget deficit peaking at 8.3% of the size of the nation’s economy. [ET]
• IMF Projects Pakistan's Debt Decrease: The International Monetary Fund (IMF) has projected a decrease in Pakistan's government gross debt from 75.8% of GDP in 2022 to 73.6% in 2023 and further decline to 68.9% in 2024. The IMF report also projected a decrease in the net debt of Pakistan to 68.7% of GDP in 2023, and government expenditure to decrease to 19.1% of GDP in 2023 compared to 19.9% in 2022. [BR]
• Pakistan's Growth Forecast Downgraded: The IMF has revised Pakistan's growth forecast for 2023 from 6% to 0.5%, and predicts a 27% inflation rate for the country. The IMF also warned of rising unemployment in Pakistan and the government is in talks with the IMF to receive a key tranche of a $6bn bailout package signed in 2019. [Al Jazeera]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• China's March Exports Surge: China’s exports surged in March as the world’s second-largest economy continued to rebound from Beijing’s harsh “zero-COVID” pandemic policies.? Total exports soared 14.8% year on year, customs data showed on Thursday, the first rise in six months and a sharp rise from March last year, when lockdowns crippled the economy. Imports fell a smaller-than-expected 1.4%. [Al Jazeera] [Dunya]
• China & India Boost LNG Imports: Cheaper spot prices for liquefied natural gas (LNG) are resulting in China and India recording rising imports in March. The spot price of LNG for delivery to north Asia has dropped 67% from its northern winter peak and is now $12.50 per million British thermal units (mmBtu). [Dawn]
• US Perception of China: Americans are increasingly seeing China as an “enemy” of the US rather than a competitor, reflecting growing public skepticism over the ability for the world’s two largest economies to cooperate, according to a new survey. Some 38% of respondents to the survey by the Pew Research Center labeled China as an “enemy,” up 13 percentage points from last year, while more than half described China as a “competitor.” The poll results come as a veteran Chinese diplomat warned that unless the US fundamentally changes its attitude toward the nation, there’s no point in holding talks on ways to safeguard the relationship. [Bloomberg] [Bloomberg] [Bloomberg]
• Hope for Diplomatic Ties: Saudi Arabia hosted delegations from Iran and Syria, raising hopes for re-establishing diplomatic ties after years of bitter divisions. This comes ahead of a meeting of representatives of nine Arab countries to discuss letting Syria attend an Arab League summit next month and Syrian Foreign Minister Faisal Mekdad meeting his Saudi counterpart to discuss a political solution to the Syrian crisis. [BR]
• Oil Prices: Oil prices rose 2% on Wednesday as cooling US inflation data spurred hopes that the Federal Reserve is getting closer to ending its cycle of interest rate hikes and cushioned the impact of a small build in US crude oil stocks. Brent crude gained $1.79, or 2.1%, to $87.40 a barrel by 1 p.m. EDT (1700 GMT) while US West Texas Intermediate rose $1.92, or 2.3%, to $83.43. Prices had risen about 2% on Tuesday. [BR]
• Qatar-Bahrain Ties: Qatar and Bahrain are resolving a years-long dispute and restoring diplomatic ties. Saudi Arabia, the UAE, Bahrain and Egypt severed diplomatic and trade ties with Qatar three years ago. Delegates from the two countries met on Wednesday at the headquarters of the Gulf Cooperation Council (GCC) General Secretariat in the Saudi capital, Riyadh, the countries’ foreign ministries said in separate statements. [AlJazeera] [AlJazeera]
• Opinion: Mass Layoffs & Absentee Bosses Create a Morale Crisis at Meta - “Mark Zuckerberg has announced that 2023 will be the "year of efficiency" at Meta, with mass layoffs being carried out in the first two rounds over the past six months, and two more to come, which will lead to over 21,000 job cuts. Zuckerberg will also close 5,000 open positions, which equates to 30% of Meta's workforce.” - By Sheera Frenkel and Mike Isaac [NYT]
• Opinion: California Economy Is on Edge After Tech Layoffs and Studio Cutbacks - “California's tech companies and supply chain logistics sectors are struggling due to high interest rates, investor skittishness, labor strife, and other turmoil, despite the state's economic powerhouse status. Severe flooding has caused crop losses and job layoffs, and the cost of living is becoming increasingly unaffordable while the state faces a $22.5 billion deficit in the 2023-24 fiscal year.” - By Kurtis Lee [NYT]

PAKISTAN - REMAINDERS

• Opinion: Saudi Reset & The New Arab Order - “Pakistan also tried to mediate in the Saudi-Iran conflict, only to be snubbed, when Imran Khan was prime minister because, it is now becoming clear, the Chinese and Russians had already engaged them in deep, behind-the-scenes negotiations.” - By Shahab Jafry [BR]
• Opinion: Now or Never - “The ongoing episode of distress in parts of the US banking industry, caused by the rapid rise in interest rates, has renewed focus on ‘zombie’ banks — barely surviving, financially undead institutions that have large unrealized losses sitting on their thinly capitalized balance sheets. The term has previously been used for firms that are financially unviable but have been kept alive by repeated government bailouts, akin to our state-owned enterprises.” - By Sakib Sherani [Dawn]