Fuel Exports & PR Revenue, Kinno Exports Danger, Foreign Tourism Rise, IMF on Jan 11, Global Min. Tax, Indian Sugar Export Ban Expected.

TOPLINE

• Pakistan achieved a record fuel oil export of around 600,000 tonnes in FY’24, due to a lack of domestic demand. Pakistan Railways declared that it generated Rs 41 billion in the first 6 months of the current fiscal year.
• Pakistan's mandarin (kinno) export for the current season is anticipated to decrease by 50% from a few years ago, reaching 2.75 million tonnes but earning only $100 million compared to the previous $220 million with quality and shelf life issues being concerns.
• In 2023, Pakistan saw a remarkable 115% increase in foreign tourism, generating $1.3 billion in revenue.
• Pakistan is on the IMF Executive Board agenda for January 11, where final approval for the next $700 million tranche under the $3 billion Stand-By Arrangement may be granted.
• Major multinational companies are now subject to a global minimum tax for the first time, following international tax reforms implemented by 140 countries. The reforms involve applying a minimum tax rate of at least 15% on corporate profits, with an anticipated annual revenue boost of up to $220 billion.
• India, the second-largest sugar producer, is expected to ban sugar exports this crop year due to a production decline caused by dry conditions in key states. This marks a shift from 6 years of being a net exporter.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• South Asian Pioneer: TOMCL's Historic Beef Export to China - The Organic Meat Company Ltd (TOMCL) made history as the first South Asian company to export cooked frozen beef to China, the world's largest meat importer, securing a unique position among the two companies licensed for this in South Asia. The achievement was announced in a stock filing on December 31, 2023. [Dawn]
• Pakistan's Kinno Export Expected to Halve, Facing Quality Challenges: Pakistan's kinno export for the current season is anticipated to decrease by 50% from a few years ago, reaching 2.75 million tonnes but earning only $100 million compared to the previous $220 million. Quality and shelf life issues have notably impacted exports, according to Waheed Ahmed, the Patron-in-Chief of the All Pakistan Fruit and Vegetable Exporters Association. [Dawn] [ET]
• Crackdown on Fertilizer Hoarding Amidst Urea Import - Caretaker Prime Minister Anwaar ul Haq Kakar was informed about the import of 0.2 million metric tonnes of urea for buffer stock during a meeting. He directed legal action against those hoarding and profiteering from fertilizer, emphasizing that those exploiting farmers won't be forgiven. [BR] [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• ADB Grants $500K for Private Sector-Led Housing in Seven Countries: The Asian Development Bank (ADB) is granting $500,000 in regional technical assistance to seven countries, including Pakistan, to enhance the role of the private sector in delivering inclusive, affordable, and climate-resilient housing ecosystems. The ADB will explore private sector solutions and identify potential pilot projects as part of this initiative. [Dawn]
• Record Fuel Oil Exports Soar: In the first half of the current financial year, Pakistan achieved a record fuel oil export of around 600,000 tonnes, exceeding the total exports of 277,000 tonnes for the entire previous fiscal year. The surge in exports was attributed to a decline in domestic demand resulting from a transition to cleaner energy sources. [The News]
• Caretaker Government Raises LPG Cylinder Price by Rs 18.52 in January: The caretaker government has increased the price of a domestic 11.8-kilogram LPG cylinder by Rs 18.52 for January 2024, as per a notification from Ogra. This adjustment reflects a Rs 1.57/kg increase, bringing the LPG price to Rs 256.43/kg, with the rise attributed to fluctuations in Saudi Aramco-CP and US dollar exchange rates. [The News]
• Pakistan Eyes Privatization to Tackle Circular Debt in Power Sector: To address Pakistan's circular debt issue, policymakers emphasize privatizing state-owned electricity producers, given a substantial portion of the country's sovereign debt is in power sector loans. Concerns arise over significant outstanding foreign loans against government power producers (GPPs), prompting efforts to recover these loans from payments to generation companies (Gencos). [ET]
• NTDC Proposes Thar Coal Conversion for Lalpir & Pakgen Power Stations: The NTDC supports converting Lalpir and Pakgen to Thar coal for enhanced stability and increased power in the Mepco region. The proposal's viability, according to NTDC's Deputy Managing Director, depends on factors like electricity demand, transmission availability, and utilization of Lalpir and Pakgen, as mentioned in a letter to PPIB. [BR]
• Sukkur Barrage Engineer Rejects Old Kari Mori Aqueduct Rehab: The Chief Engineer of Sukkur Barrage's right bank region, Sohail Hameed Baloch, considers rehabilitating the old Kari Mori aqueduct futile due to its poor condition. Despite a multi-million rupee scheme to control deluge in the trial phase, the aqueduct, a crucial source of irrigation water for Johi taluka, remains nonfunctional even after attempted repair. [Dawn]
• Railways Sees 46% Revenue Boost in Half Year: Pakistan Railways declared on Monday that it generated Rs 41 billion in the first 6 months of the current fiscal year. In the first half of the previous fiscal year, the railways reported revenues of Rs 28 billion, indicating a 46% increase in revenues for July-December in the current fiscal year. [ET]

AGRI UPDATES & PAKISTAN POLICY

• Pakistan Seeks Final Approval for $700M IMF Tranche on January 11: Pakistan is on the IMF Executive Board agenda for January 11, where final approval for the next $700 million tranche under the $3 billion Stand-By Arrangement may be granted. The current program is expected to conclude in April, with around $1.8 billion yet to be disbursed out of the total amount, and the initial tranche of $1.2 billion was released in July. [Dawn]
• Year-on-Year Inflation Hits 29.7% in Pakistan - In December 2023, year-on-year inflation based on the Consumer Price Index (CPI) rose to 29.7%, up from 29.2% the previous month and 24.5% in December 2022. The average CPI for the first half of fiscal year 2023-24 was 28.79%, compared to 25.02% in the same period last fiscal year. On a month-on-month basis, inflation increased by 0.8% in December 2023. [BR]
• ECP Accepts 22,711 Nomination Papers for General Elections: The Election Commission of Pakistan (ECP) has received 25,951 applications for the upcoming general elections, with 22,711 nomination papers accepted and 3,240 rejected. [BR] [Dawn]
• PTI Leaders Challenge Nomination Paper Rejections in Sindh Elections: PTI leaders, including Shah Mehmood Qureshi, Haleem Adil Sheikh, and Firdous Shamim Naqvi, have approached election tribunals to contest the rejection of their nomination papers for the February 8 elections in Sindh. [Dawn]
• Afghan Delegation Visit: The Afghan interim government is making efforts to improve relations with Pakistan regarding the banned Tehreek-e-Taliban Pakistan (TTP). A delegation from the Afghan Taliban, led by Kandahar Governor Mullah Sherin Akhund, is set to visit Pakistan on January 3 to engage in critical discussions with authorities in Islamabad. [ET]
• Pakistan's Foreign Tourism Generates $1.3 Billion in 2023 - In 2023, Pakistan saw a remarkable 115% increase in foreign tourism, generating $1.3 billion in revenue, announced Caretaker Minister Wasi Shah. The UN World Tourism Organisation's 'World Tourism Barometer' reported a notable 92% recovery to pre-pandemic levels. [ET]
• FBR Seeks Authority to Penalize Non-Compliant Govt. Organizations: The Federal Board of Revenue (FBR) is poised to be granted legal authority to impose penalties and prosecute government organizations that fail to integrate with its "real-time accessed data analysis repository (RADAR)" for access to financial and economic transaction information. [BR]
• Caretaker PM Kakar Displeased with Support for Baloch Protesters: Caretaker Prime Minister Anwaarul Haq Kakar expressed dissatisfaction with the support for Baloch protesters in Islamabad, addressing their demands for the recovery of missing family members and protesting against alleged extra-judicial killings in Balochistan. During a press conference in Lahore, Kakar, visibly irked, devoted over 15 minutes to address these concerns. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide: Israel withdrew tanks from some Gaza City districts and announced plans to reduce troop numbers, but fighting and intense bombardment continued in other areas of the Palestinian enclave. Israel admits that the fighting is likely to persist for months. [BR] [Dawn] [Dawn] [Reuters] [CNN] [NBC] [CBS] [AP] [NYT] [WP]
• Iran's Alborz Warship Enters Red Sea via Bab el-Mandeb Strait: Iran's Alborz warship has entered the Red Sea through the strategic Bab el-Mandeb strait, as reported by the Tasnim news agency. While specific reasons for the deployment were not provided, Iranian military vessels have operated in the area since 2009. The move occurs amid heightened tensions over the globally significant waterway. [Dawn] [Reuters] [Al Jazeera] [WION] [JT] [BI]
• Ethiopia Secures Stake in Somaliland Berbera Port: Ethiopia reached a "historic" agreement on Monday to secure a stake in the main port in Somalia's breakaway region of Somaliland, aiming to enhance its access to the sea. The deal for Somaliland's Berbera port follows Ethiopian Prime Minister Abiy Ahmed's previous statements asserting the country's right to access the Red Sea. [Dawn] [Reuters] [Barrons] [BBC] [Al Jazeera] [France 24] [The Guardian] [BBG]
• Putin Vows More Strikes After Ukrainian Attack on Belgorod: President Putin stated on Monday that Moscow would increase its strikes on military targets in Ukraine, responding to a Ukrainian attack on the Russian city of Belgorod over the weekend. The Ukrainian assault, in retaliation to Moscow's large-scale attack on Ukrainian cities, resulted in 25 casualties. [Dawn] [Kyiv Post] [BBC] [NYT] [The Guardian] [Reuters] [AP] [Al Jazeera] [CFR]
• Xi Jinping Open to Collaboration with U.S. in Diplomatic Ties: China's President Xi Jinping expressed willingness to collaborate with the United States for bilateral ties, exchanging congratulations with President Joe Biden on the 45th anniversary of diplomatic relations. Xi highlighted that both nations have "weathered the storms" and contributed to global peace and prosperity. [Dawn] [Reuters] [Asia Society] [CFR] [GAO]
• Powerful 7.6 Magnitude Quake Hits Central Japan: A powerful earthquake with a preliminary magnitude of 7.6 hit central Japan on Monday, causing building damage, power outages, and disruptions to travel. Evacuation warnings were issued for some areas on the west coast. Waves of around one meter were reported along the Sea of Japan coast, with authorities cautioning the potential for larger waves. [Dawn] [Reuters] [Al Jazeera] [IE] [FT]
• Global Minimum Tax Enforced on Multinational Corporations: As of Monday, major multinational companies are now subject to a global minimum tax for the first time, following international tax reforms implemented by 140 countries. The reforms, aimed at closing loopholes, involve applying a minimum tax rate of at least 15% on corporate profits, with an anticipated annual revenue boost of up to $220 billion. [The News] [LT] [Bloomberg Tax] [UNCTAD]
• India Set to Halt Sugar Exports Amid Production Decline: India, the second-largest sugar producer, is expected to ban sugar exports this crop year due to a production decline caused by dry conditions in key states. This marks a shift from 6 years of being a net exporter. The country may even need to import sugar in the following year as farmers switch to other crops, exacerbated by El Nino-induced dry conditions. [BR] [Reuters] [Tridge]
• EU Deforestation Rules Impact Coffee Importers, Reshape Global Markets: Importers of coffee to the European Union are cutting purchases from small farmers globally in anticipation of the EU Deforestation Regulation (EUDR) that bans goods linked to forest destruction, effective late in 2024. The compliance challenges and costs are already having unintended impacts, potentially reshaping global commodities markets. [BR]

PAKISTAN - REMAINDERS

• KDA Plans 14,000-Acre Housing Scheme Near Karachi's Northern Bypass. [Dawn]
• India & Pakistan Exchange Lists of Nuclear Installations & Prisoners: On the first day of the year, India and Pakistan exchanged lists of nuclear installations and prisoners, a tradition under the 1988 Agreement on the Prohibition of Attacks against Nuclear Installations and Facilities. This annual exchange reflects a rare instance of cooperation between the two nuclear-armed nations. [Dawn] [The Statesman] [HT] [IT] [Mofa] [Fas]
• Challenges Hit Agri-Food Tech Startups in 2023: Investors quizzed by AgFunder this month noted the exit of ‘tourist capital’ from the sector, more realistic valuations, and a renewed focus on profitable business models rather than growth at all costs, although some believe we’ve now veered from “a cycle of over-hype” to an over-correction. [AFN]
• One-Third of Pakistani Universities Lack Regular Heads: Around one-third of public sector universities in Pakistan, totaling about 50/154, currently lack a regular head, operating with acting vice-chancellors. [Dawn]
• Opinion: Fertilizer Subsidy - “Wheat is the most important dietary component in food consumed in Pakistan. The same is reflected in Pakistan’s cultivation trends, with over 22 million acres of farmland — more than 50 per cent of the cropped area — allocated to wheat crops in the winter. The winter season is when fertilizer requirements peak, and fertilizer plants have to compete with power plants for natural gas in order to produce nitrogenous fertilizer.” - By Aijaz A. Nizamani [Dawn]