Hunger Index, EPZ Imports, Monsoon Flooding, Bank Advances, Importing Cash USD, Global Grain Price Surge, US Rate Decision.

TOPLINE

• Pakistan has been ranked 99 out of 121 countries in the Global Hunger Index.
• The government approved the import of construction goods from local industries into existing and upcoming Export Processing Zones in Punjab and Khyber Pakhtunkhwa.
• The NDMA has warned of flash floods and urban flooding in the catchment areas of the Rivers Indus and Kabul from July 27-30 due to heavy rainfall. Hub has been disconnected from Karachi after the road was destroyed. In the last 4 days in KPK, there have been devastating flash floods, landslides, and roof collapses, resulting in at least 15 fatalities and 14 injuries. The River Sutlej overflowed leading to flooding of 80 villages in Bahawalnagar.
• In FY23, bank advances to the private sector in Pakistan plummeted by nearly 87% to Rs 211 billion, down from Rs 1,612 billion in the previous fiscal year.
• The central bank updated its instructions for foreign exchange companies for importing US dollars, allowing them to import cash dollars against the value of their consignments within 5 working days. Banking spreads in Pakistan reached their highest level in 19 years during the second quarter of 2023 due to interest rate hikes.
• India's move to restrict exports of certain types of rice could help exacerbate food price inflation. IMF Chief Economist Gourinchas said that India's restriction would have a similar effect of the suspension of the Ukraine Black Sea grain export deal with grain prices possibly seeing a 10-15% price rise this year.?
• Asian markets will be subdued today as investors await the Federal Reserve’s rate decision. The S&P 500 closed at its highest since April 2022, as the Conference Board’s US consumer confidence index climbed to a two-year high.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Cotton Market: The Spot Rate Committee of the KCA on Tuesday included Rs 235 as up country expense in the spot rate and closed it at Rs 17, 935 per maund. The local cotton market remained steady and the trading volume remained low. [BR]
• 99th on Hunger Index: Pakistan has been ranked 99 out of 121 countries in the Global Hunger Index despite the score improving from 28.1 to 26.1 from 2006. [Dawn]
• Toshakhana Lands Regulation: The government on Tuesday introduced a bill in the Senate proposing a fine of five times the value of a gift, if not deposited to Toshakhana within the stipulated time period. The bill will be applicable on members of armed forces and judiciary also. [Dawn]
• NGO disputes increase in sugar prices: An NGO called Judicial Activism Panel has filed an application in the Lahore High Court challenging the increase in sugar prices. The petitioner seeks to restrain authorities from imposing fixed prices and excessive increases in sugar prices not determined in accordance with the law, emphasizing the significant power held by sugar millers in Pakistan, with many political coonnections. [ET]
• Missing funding hinders shrimp farming : Preparations are underway for a pilot project to establish shrimp farming in Punjab, with plans to build a farm on 4,000 acres of land and the potential for shrimp farms to cover 9 million acres in the province. Progress has been hindered by delayed financial support from the federal government, with only a small portion of the allocated funds released to the Punjab Fisheries Department. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Import concessions: The government has approved amendments to the Export Processing Zones Authority (EPZA) Rules to allow the import of construction goods from local industries into existing and upcoming EPZs in Punjab and Khyber Pakhtunkhwa. The changes aim to facilitate the speedy development and achievement of export targets in these zones by allowing the import of construction materials in local currency for locally manufactured products by Pakistani entrepreneurs for the next five years. [Dawn]
• Indus & Kabul River Floods: The NDMA has warned of flash floods and urban flooding in the catchment areas of the Rivers Indus and Kabul from July 27 to July 30 owing to expected heavy rainfalls. Tarbela Dam is 80% of its’ capacity and Mangla Dam is at 76% of its full capacity. [BR]
• Sutlej Floods cause destruction: In Bahawalnagar, residents have constructed river embankments, but many have collapsed due to the overflowing water from the Sutlej River. This has led to the flooding of over 80 villages and submerged thousands of acres of farmland in the past six days. Rescue 1122 has safely relocated around 1,100 people and about 4,000 animals to secure places. [ET]
• Floods devastate KP: Over the past four days, Khyber-Pakhtunkhwa has been hit by devastating flash floods, landslides, and roof collapses, resulting in at least 15 fatalities and 14 injuries. Several districts, including Mansehra, Upper and Lower Chitral, Upper Dir, Swat, and Shangla, have been severely affected, with extensive damage to houses and infrastructure reported by the Provincial Disaster Management Authority. [ET]
• Balochistan Floods: Torrential rains and flash floods wreaked havoc in Balochistan on Tuesday as flash floodsswept away roads, cutting off road links of the province with other parts of the county and inundating a large number of villages in Lasbela. The alternative road between Hub and Karachi was destroyed. [Dawn]
• Electricity theft goes unchecked: The Power Division revealed that electricity theft over the last 15 months has caused an estimated financial impact of Rs 500 billion. Despite receiving numerous complaints and registering FIRs, only 528 individuals were arrested on theft charges. The committee expressed frustration at the lack of effective measures to prevent electricity theft, and also criticized the electricity distribution companies for their unsatisfactory performance and reports of massive load shedding in various constituencies. [BR]
• Equity for Petroleum Dealers: The Pakistan Petroleum Dealers Association (PPDA) has agreed to an increase in petroleum dealers' margin on petrol and diesel in four equal fortnightly hikes of 41 paise per liter (total Rs1.64), effective from September 1. The proposal has been discussed and agreed upon in the presence of relevant authorities and will be submitted for approval before implementation.[Dawn]
• Thar Railway Track: Sindh decided to lay a railway track from Thar Coalfields to the main railway line for supplying coal to other plants and factories. The board meeting approved the levelised tariff of $37.36 per tonne for the financial close stage petition for 7.8MTPA of Block-I and the levelised tariff of $30.40 per tonne for the contract stage petition for 11.2MTPA of Block-II. [Dawn]
• Trade Portal: The Pakistan Trade Facilitation Portal (PTFP) was launched on Tuesday at a local hotel in Karachi as a one-stop solution for information related to exporting and importing products in Pakistan. It was developed by the ITC in collaboration with the TDAP and funded by the FCDO of the UK and provides information on customs regulations, import and export procedures, trade documentation and linkages with regulatory organizations. [BR]

AGRI UPDATES & PAKISTAN POLICY

• Shortcut Policy Bill Attempted: Strong opposition from both friends and foes forced the government to defer for one day its plan to give “unbridled powers” to the caretaker set-up, as part of electoral reforms. Under the plan, the text cleared by the Parliamentary Committee on Electoral Reforms was to be passed through a shortcut, with the last-minute addition of a controversial clause to enlarge the scope of the caretakers, which would have allowed them to decide on “urgent matters”. [Dawn]
• IK ECP Visit: Imran Khan appeared before the ECP after the Police Chief was instructed to produce Khan before the commission in a contempt case. The non-bailable arrest warrants against the former premier were suspended. Khan has been summoned by the PTI Chief in the Toshakhana case today to record his statement. [Dawn]
• IMF Deal: Guaranteeing that the caretaker set-up and the next government, will adhere to the country’s agreement with the IMF, PM Shehbaz on Tuesday assured international donors that funds given for flood victims will be spent judiciously while addressing the third meeting of the International Partners Support Group. [Dawn]
• Importing Cash Dollars: The central bank has updated its instructions for foreign exchange companies for importing US dollars, allowing them to import cash dollars against the value of their export consignments of permissible foreign currencies within five working days through reputed cargo or security companies. [Dawn]
• Debt Crushing Loans :During the first two weeks of the fiscal year 2023-24, the cash-strapped federal government borrowed Rs 500 billion from scheduled banks to support its budget. This borrowing marked a significant increase of 218 percent compared to the same period in the previous fiscal year, while also repaying Rs 750 billion to the State Bank of Pakistan during the same timeframe, which was a 190 percent increase compared to the previous year. [BR]
• Streamlining Property Tax Payments: The FBR has issued guidelines on tax payment for property sellers and transferors to streamline property transactions and ensure tax compliance. The guidelines require sellers or transferors to provide concrete evidence of fulfilling the deemed income tax liability related to the property before the transfer can take place. Taxpayers on the Active Taxpayers List (ATL) have two options to demonstrate tax compliance, including making separate tax payments through the FBR online payment system.[Dawn]
• Skyrocketing Interest Rates: In FY23, bank advances to the private sector in Pakistan plummeted by nearly 87% to Rs 211 billion, down from Rs 1,612 billion in the previous fiscal year. The decline in borrowing was attributed to the impact of high interest rates and an economic slowdown, with most of the borrowing being directed towards short-term working capital rather than expansion investments. Banking spreads in Pakistan reached their highest level in 19 years during the second quarter of 2023 due to interest rate hikes. The weighted average banking spreads rose from 4.14% in the fourth quarter of 2021 to 7.73% in April-June 2023, according to data from the State Bank of Pakistan. [The News] [Dawn]
• Caretaker PM: Minister for Information and Broadcasting, Marriyum Aurangzeb, stated that the caretaker prime minister would be appointed following the procedure outlined in the Constitution. According to the Constitution, the Prime Minister and the opposition leader will jointly finalize the interim PM's appointment after consultation Prime Minister Shehbaz Sharif will also seek guidance from PML-N Quaid Muhammad Nawaz Sharif and consult with allied parties in this regard.[BR]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• India Rice Export Ban: India's move to restrict exports of certain types of rice could help exacerbate food price inflation. IMF Chief Economist Gourinchas told a news conference that India's restriction would have a similar effect of the suspension of the Ukraine Black Sea grain export deal, helping to drive up prices in other countries. He added that global grain prices could rise 10-15% this year. [Reuters] [BR]
• IMF Slow Growth Outlook: The IMF has slightly upgraded its outlook for world growth this year on the back of resilient service sector activity in the first quarter and a strong labour market. growth is expected to slow to 3% in 2023 and then stay there. [Dawn] [CNBC] [DW]?
• Global Markets in Waiting: Asian markets are likely to be subdued today as investors await the Federal Reserve’s rate decision, with equity futures for the Asian region mixed. The S&P 500 earlier closed at its highest since April 2022, as the Conference Board’s US consumer confidence index climbed to a two-year high. Meanwhile, the Fed is reaching a pivotal moment in its fight against inflation as differences among policymakers over hiking rates have started to deepen. [Bloomberg] [Bloomberg]
• Russia-Ukraine War: Russian lawmakers on Tuesday backed legislation increasing the maximum age limit for compulsory military service to 30. Russia's withdrawal from an agreement allowing safe passage through the Black Sea and the recent attack on a grain hangar at a key port on the Danube River are complicating Ukraine's efforts to export grain, potentially closing off an important route and raising shipping insurance rates. [NYT] [Dawn]
• Chinese FM: China named Wang Yi, a veteran diplomat, its new foreign minister on Tuesday, removing former rising star Qin Gang after a mysterious one-month absence, barely half a year into the job. [Dawn] [AlJazeera] [CNN]
• Oil Prices: Oil prices rose to fresh three-month highs on Tuesday, as signs of tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy lifted sentiment. Brent futures and US West Texas Intermediate (WTI) crude rose to the highest since April 19. The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the OPEC and allies. [BR]

PAKISTAN - REMAINDERS

• Largest Share Buyback: Engro Corporation Ltd has completed a share buyback exercise worth Rs 11.6 billion, repurchasing 39.5 million shares from the Pakistan Stock Exchange (PSX) over a period of less than six months. [Dawn]
• Renewable Energy: Pakistan’s energy sector can save around $8.6 billion over the next decade by implementing improved power production strategies, The Policy Research Institute for Equitable Development (PRIED) and a research institution, Renewables First, released earlier in a study. [Dawn]
• Opinion - Energy Transition: green dreams, brown realities: “Pakistan is endowed with huge renewable energy resources waiting to be harvested. The potential for solar, wind, hydro, biomass, waste to energy, and geothermal is 2,900,000MW, 340,000MW, 53100MW, 5000MW, 1000MW and 1000MW, respectively. Despite this tremendous indigenous potential, Pakistan heavily relies on imported fossil fuels to meet its energy demand. By 2030, the country’s energy demand is expected to reach 108-126 million tons of oil equivalent (TOE).” - Namairah Aziz [BR]
• Opinion - The fires in Europe: “...this summer is likely to be a wake-up call. For the first time in modern history, these places are having to contend with temperatures rising into the upper 40s (Celsius). The small rooms of old historic sites and the general lack of air conditioning means that the temperatures are high enough to make people sick not only with heatstroke but also with food poisoning and other heat-related ailments.” - Rafia Zakaria [Dawn]