GAR Seeds, Petroleum Prices, Agri Sector Priority, Gas Tariff for Export Sectors, FBR Tax Collection, SBP Interbank $ Purchase,Global Warming

TOPLINE

• Guard Agricultural Research offers a Rs 30 million award, the Shafi Malik Plant Breeders, to scientists who develop high-yielding seeds for wheat, cotton, and rice, demonstrating success and acceptance for three years.
• The federal government has lowered petroleum product prices in Pakistan for the month of June. Petrol decreased by Rs 8 per liter, while high-speed diesel (HSD) and light diesel oil (LDO) prices dropped by Rs 5 per liter, with no change in kerosene oil prices. The new prices of petrol and diesel are Rs262 and Rs253 per litre, respectively.
• PM Shehbaz Sharif pledges to make the agricultural sector priority in budget, offering incentives for increased production with a focus on achieving high yields and fair prices through initiatives like the Kissan package.
• Pakistan extends $9/MMbtu gas tariff for export sectors in May-June 2023, supported by Rs 4.0 billion grant to SNGPL. Subsidy ensures uninterrupted gas supply, promotes economic growth.
• The Federal Board of Revenue has collected Rs 559 billion in May 2023, falling short of the monthly target by Rs 62 billion. To achieve the increased tax collection target of Rs 7.6 trillion for the fiscal year, the FBR needs to collect over Rs 1.4 trillion in June 2023.
• Pakistan's State Bank permits banks to buy US dollars from the interbank market for card-based cross-border transactions with international payment schemes aiming to ease market pressure until July 31, 2023.
• Limiting global warming to 1.5 degrees Celsius won't fully prevent severe consequences for developing nations. Around 200 million people will face extreme heat and half a billion people will experience rising sea levels. Aim for a temperature boundary of 1 degree Celsius or lower to mitigate harm.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Wheat Ban Scrutinized: The Sindh High Court (SHC) has instructed the food secretary to provide a justification for the ban on the inter-district movement of wheat in the province, particularly its transportation to Karachi. The court sought details regarding the supply of wheat to different flour mills and questioned the criteria used to restrict wheat movement between districts, as the petitioner argued that Karachi was not receiving its reserved quota of wheat despite it being harvested within the province from Badin to Ubauro. [The News]
• Cash Reward for High-Yielding Seeds: Guard Agricultural Research and Services has announced a cash reward of Rs 30 million for breeders who develop high-yielding seeds for wheat, cotton, and rice. The award, called the Shafi Malik Plant Breeders award, will be given to individual scientists who develop seeds that demonstrate acceptance among farmers, millers, and the market and exhibit desired traits consistently for three consecutive years. The award is not limited to any specific organization and is open to breeders from both the private and public sectors. [PO]
• NAB Requests Flour Mills Accounts: The National Accountability Bureau (NAB) has expanded its investigation into the alleged corruption in the free flour scheme and has requested written accounts of 4.5 million bags from mills in Punjab, as well as records from 1,100 mills related to the provision of free flour at Ramadan Bazaars. NAB officials visited the Pakistan Flour Mills Association (PFMA) and collected information regarding the distribution of free flour during Ramadan, with the PFMA stating that the millers had no role in the distribution process. [ET]
• Sindh Food Authority Expands: Sindh Chief Secretary Dr Muhammad Sohail Rajput has directed the Sindh Food Authority (SFA) to recruit technical experts and establish offices in all districts of the province. The chief secretary emphasized the need for prompt formulation of service rules and instructed the SFA to present them before the upcoming Sindh cabinet meeting. The SFA's annual performance report highlighted inspections and actions taken against non-compliant establishments, including canteens, milk shops, ice factories, meat/poultry shops, manufacturing units, bakeries, and RO plants. [Dawn]
• Promises for Agriculture Sector: Prime Minister Shehbaz Sharif pledged to prioritize the agriculture sector in the upcoming budget by offering incentives to farmers to enhance production and boost the rural economy. He emphasized the importance of the agriculture sector as the backbone of the economy and highlighted the government's efforts in achieving record wheat yield through the Kissan package and ensuring prosperous farmers through fair support prices for crops. [Dawn]
• Minister Criticizes UN Report on Food Crisis: Federal Minister for National Food Security and Research Tariq Bashir Cheema dismissed a United Nations report on possible "acute food insecurity" in Pakistan, calling it an attempt to sensationalize and compare the country to hunger hotspots in Africa. He stated that Pakistan has sufficient food stock to meet its requirements and there is no need to be concerned. The report by the Food and Agriculture Organisation (FAO) and World Food Programme (WFP) warned of worsening food insecurity in Pakistan if the economic and political crisis continues to deteriorate, exacerbating the effects of the 2022 floods. [Dawn]
• Proposed 50% Tax on Sugary Beverages: Healthcare professionals and experts are calling for a 50% sales tax on Sugar-Sweetened Beverages (SSBs) to reduce their consumption and address the high prevalence of diabetes in Pakistan. They argue that increasing taxes on SSBs would not only help prevent diseases like diabetes and cardiovascular conditions but also generate significant revenue for health promotion efforts. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Govt Decreases Petroleum Prices for June: The federal government has announced a reduction in the prices of petroleum products for the month of June. The price of petrol has been decreased by Rs 8 per liter, while high-speed diesel (HSD) and light diesel oil (LDO) prices have been reduced by Rs 5 per liter. The price of kerosene oil (SKO) remains unchanged. The new price of petrol is now Rs 262 from Rs 270 per liter, the rate of HSD is also came down by 1.9% from Rs 258 to Rs253 per liter, the price of LDO is also reduced by 3.2% to Rs 147.68 from Rs 152.68 per liter. The price of SKO is at Rs 164.07 with no change. These adjustments in prices have been made despite no significant changes in the exchange rate and global oil prices during May. [BR] [Dawn]
• Sindh-Punjab Water Conflict: The National Assembly Standing Committee on Water Resources expressed serious concern about the water shortage in the country during their meeting. The committee discussed the ongoing conflict between Sindh and Punjab regarding water distribution and losses, with officials estimating a 27% water scarcity in the country. Disputes over water sharing and allegations of theft have created a lack of confidence between the two provinces. [BR]
• WASA Submits ADP of Rs 51.85 Billion: WASA has submitted an ADP of Rs 51.85 billion to the Punjab government, including projects for water supply and sewage treatment. The proposed schemes cover initiatives such as water supply from the Indus River, land acquisition for the Dadocha Dam project, and sewage treatment plants. The development plans aim to improve water and sanitation infrastructure in Rawalpindi and Islamabad. [ET]
• Controversial Canal Projects Deferred by ECNEC: The Executive Committee of the National Economic Council has postponed the approval for funds allocation for the Greater Thal Canal Phase-II and Chaubara Branch Canal projects until a consensus is reached among the provinces at the Council of Common Interests (CCI) meeting. Sindh's representative, Senator Nisar Ahmed Khuhro, strongly opposed the projects and requested their deferral, citing the need to address controversial projects and water distribution through the CCI in line with the 1991 water apportionment accord. [Dawn]
• ECNEC Approves Rs 120 Billion Projects: The Executive Committee of the National Economic Council (ECNEC) has approved four development projects with a total value of over Rs 120 billion. One of the approved projects is the establishment of the 48MW Shounter Hydropower Project in Neelam Valley District, AJK, with a revised cost of Rs14,985 million. The project will be financed mostly by the Saudi Fund for Development (SFD) and the remaining portion through the AJK Annual Development Program (ADP). [BR] [ET]
• OGRA to Oversee Private Sector LPG Air-Mix Plants: The government has allowed the private sector to set up LPG Air-Mix Plants (AMPs) and handed over the responsibility of overseeing the business to the Oil & Gas Regulatory Authority (Ogra). Private firms can establish LPG AMPs as long as they meet Ogra's requirements, and the LPG Policy 2016 provisions regarding supply preferences will not apply to private-sector AMPs. This decision aims to address the limitations faced by public sector gas companies in developing AMPs and to promote the growth of the LPG business in the private sector. [Dawn]
• Nepra Urges K-Electric for Negotiations: NEPRA has called on K-Electric to initiate negotiations for an out-of-court settlement regarding the refund of Rs 47 billion to consumers. The discussion took place during a public hearing where Nepra approved adjustments in Fuel Charges Component (FCA) and Quarterly Tariff Adjustment (QTA) with an overall impact of Rs 20 billion. [BR]
• Nepra Approves FCA Adjustment: The National Electric Power Regulatory Authority (Nepra) has determined that ex-Wapda distribution companies (Discos) will charge an additional Rs 1.61 per unit, while K-Electric will refund Rs 0.05 per unit to consumers for electricity consumed in April, based on the monthly fuel cost adjustment (FCA) mechanism. This decision will result in Discos collecting around Rs 15.63 billion and KE refunding approximately Rs 72 million in the upcoming bills. Nepra also discussed KE's request for a tariff increase of Rs 5.2 per unit but reserved its judgement on the matter. [Dawn] [ET]
• Solar Systems for Residents Using Coal Royalty: Sindh Energy Minister Imtiaz Ahmed Shaikh announced that the royalty from Thar Coal Block-2 would be used to install solar systems on the houses of Thar residents, ensuring uninterrupted power supply, including water supply. The provincial government is focused on the development and upliftment of Thar, with initiatives such as establishing schools, providing training programs, sports facilities, and supporting mental health services. [BR]
• Oil and Gas Companies' Revenue Shortfall: Pakistan's oil and gas exploration companies are seeking a budgetary grant or tariff subsidy of Rs 500 billion to address the revenue shortfall of state-owned gas companies. The companies have reduced their drilling activities by 50% due to a cash flow crisis caused by delayed payments from Sui gas companies totaling Rs 1,244 billion. [The News]
• Concessionary Gas Tariff: The Pakistani government has extended a concessionary gas tariff of $9 per MMbtu for the supply to five export-oriented sectors during May and June 2023. To facilitate this, a supplementary grant of Rs 4.0 billion will be provided to Sui Northern Gas Pipelines Limited (SNGPL) to disburse the subsidy, ensuring uninterrupted gas supply to the export-oriented sectors and promoting economic growth. [BR] [The News]

AGRI UPDATES & PAKISTAN POLICY

• Minister Stresses IMF Commitment: Minister of State for Finance Aisha Pasha affirmed the government's commitment to the International Monetary Fund program, stating that they are not considering any alternative plans without the IMF. When asked about a backup plan in case the talks with the IMF fail, she mentioned the possibility of a Plan-B but reiterated that the government is currently focused on the IMF program. [BR]
• Qureshi Stays Committed to PTI: A group of PTI defectors, including Fawad Chaudhry, met with Shah Mehmood Qureshi in Adiala Jail in an attempt to persuade the party's vice chairman to abandon Imran Khan. However, the meeting, which took place in a separate room of the jail, seemingly failed to achieve its objective. Shah Mehmood Qureshi's son, Zain Qureshi, expressed support for his father and reaffirmed their commitment to the ideology of Tehreek-i-Insaf and Imran Khan, emphasizing principles and service over positions and greed. [Dawn]
• Hearing of Audio Leaks Commission Adjourned: The Supreme Court has adjourned the hearing of challenges against the government-notified commission investigating audio leaks until next week, following objections from the fact-finding body that the proceedings did not comply with the requirements of a newly-passed law. The Supreme Court (Practice & Procedure) Act 2023, which was stayed by the court in April, introduced changes to the Chief Justice's discretionary powers and required every matter to be heard and disposed of by a bench constituted by a committee comprising the Chief Justice and two senior judges. [Dawn]
• SBP Eases Currency Pressure: The State Bank of Pakistan (SBP) has granted permission to banks to purchase US dollars from the interbank market for card-based cross-border transactions with International Payment Schemes (IPSs) like Visa and MasterCard. This decision aims to alleviate currency pressure and facilitate banks, with the facility available until July 31, 2023. The move is intended to bring down the dollar rate in the open market, addressing the recent increase, according to currency experts and bankers. [BR] [Dawn]
• RRMC's Proposal for Transparency and Revenue: The Reforms & Revenue Mobilization Commission (RRMC) has proposed imposing income tax on exporters who delay bringing foreign currency and benefit from exchange rate differences. They also suggested transitioning the tax regime for exporters to promote documentation and transparency, potentially increasing tax revenue for public services and development projects. [BR]
• FBR's May Tax Collection: The Federal Board of Revenue (FBR) has collected Rs 559 billion in May 2023, falling short of the monthly target by Rs 62 billion. To achieve the increased tax collection target of Rs 7.6 trillion for the fiscal year, the FBR needs to collect over Rs 1.4 trillion in June 2023, facing a challenging task. [BR] [ET]
• FBR's Revenue Challenge: The Federal Board of Revenue (FBR) is facing a daunting task as the shortfall in tax collection has reached a record-breaking Rs 433 billion during the first 11 months of the fiscal year. To meet the annual target, the FBR needs to collect Rs 1.43 trillion in June alone, as it has fallen significantly short of the 11-month revenue collection target of Rs 6.64 trillion. [ET]
• Pakistan's IT Industry & Africa: Experts believe that Pakistan's IT industry has the potential to achieve $1 billion in exports to Africa within a couple of years. With Africa's large population, substantial GDP, and growing demand for IT services, Pakistani IT professionals and the government's investments in the industry make it an attractive opportunity to tap into this market. The launch of GITEX Africa 2023 in Morocco serves as a platform for Pakistani IT firms to showcase their capabilities and build connections with African governments and the private sector. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Tightening Policy Spurs Debt Defaults: According to Deutsche Bank's annual default study, a surge in debt defaults is expected in the US and Europe due to the current tightening of monetary policy. The study forecasts peak default rates in the fourth quarter of next year, with estimates of 9% for US high-yield debt, 11.3% for US loans, 4.4% for European high-yield bonds, and 7.3% for European loans. The risk of defaults is attributed to aggressive interest rate hikes, global recession concerns, and specific challenges in sectors like real estate. [BR]
• Qatari PM and Taliban Leader Discuss Peace: Qatari Prime Minister Mohammed bin Abdulrahman al-Thani held a secret meeting with Taliban leader Haibatullah Akhunzada in Kandahar, Afghanistan, signaling a willingness by the Taliban to engage in discussions to ease tensions with the international community. The meeting, which took place on May 12, was the first known encounter between the reclusive Taliban leader and a foreign leader, and the US administration has been briefed on the talks and is coordinating on the issues discussed, including further dialogue with the Taliban and addressing concerns such as girls' education and women's employment. [Dawn]
• Global Warming Impact: Limiting global warming to 1.5 degrees Celsius can prevent catastrophic climate change, but it won't prevent severe consequences for developing nations, according to a consortium of researchers. Even if the Paris Agreement's 1.5C target is achieved, around 200 million people in poorer regions will face extreme heat, and half a billion people will experience the destructive impacts of rising sea levels. To avoid significant harm, the study suggests setting the temperature boundary at or below 1 degree Celsius. [ET] [The News]
• Opinion: Why Are Food Prices So High in Europe? - “The prices of staple food items in Europe, such as sliced white bread in Britain, pasta in Italy, cheese in Germany, and potatoes across the European Union, have significantly increased. In April, consumer food prices in the EU were nearly 17 percent higher compared to the previous year, with the UK experiencing the highest annual food inflation rate in over 45 years, while the United States had a comparatively lower annual food inflation rate of 7.7 percent.” - By Eshe Nelson [NYT]