- The IMF's review has enabled a US$700 million disbursement bringing the total to US$1.9 billion. Pakistan's FOREX reserves reached $13.257 billion as the PKR reached a 10-week high above Rs 281 against the USD, marking a seventh consecutive day of gains.
- Pakistan’s listed sugar sector posted record-high earnings of Rs 22 billion in FY23, up 78% YoY, driven by higher sugar prices and improved ethanol performance due to favorable international prices.
- The Heimtextil 2024 exhibition has generated global interest in Pakistani home textile products with export orders of $3 billion anticipated.
- A 6.0-magnitude earthquake, originating in northeastern Afghanistan, caused buildings to shake in various parts of Pakistan on Thursday around 2:30 pm.
- Solar panel prices have dropped by 60-70% due to the dollar depreciation and the removal of a 17% sales tax, with the cost per watt now Rs 45-53, down from Rs 130-140 at the beginning of 2024.
- South Africa accused Israel of genocide in Gaza, urging the ICJ to emergency suspend Israel's genocide. The US and UK conducted an attack against Houthis in Yemen in response to vessel attacks in the Middle East. Iran seized a tanker carrying Iraqi crude bound for Turkey in retaliation by the United States last year.
COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE
- Sugar Sector Achieves Record Rs 22B Earnings, Up 78% in FY23: The listed sugar sector posted record-high earnings of Rs 22 billion in FY23, up 78% YoY, driven by higher sugar prices and improved ethanol performance due to favorable international prices. Net sales increased by 29% YoY to Rs 304 billion, driven by higher exports and a 28% rise in average domestic prices. [Dawn] [ET] [PT] [Pro Pakistani]
- Heimtextil 2024 Spurs Interest, Aims for $3B in Textile Exports: The Heimtextil 2024 exhibition has generated global interest in Pakistani home textile products. Emphasizing the importance of exploring new markets, the expectation is to expand home textile exports. Coordination with Pakistan's embassy at the Frankfurt fair is anticipated to secure export orders amounting to $3 billion. [ET]
- Cement Prices Soar 15% YoY, 70% in Two Years, Industry Faces Downturn: Cement prices in early January, just above Rs 1200, have increased by 15% YoY and 70% over two years, contributing to higher construction costs and a downturn in the industry this year. The FBR has given cement manufacturers until April 30, 2024, to fully implement the Track and Trace System. [BR] [BR]
- Cigarette Industry's Revenue Struggles in Pakistan: A study by the SDPI shows that the cigarette industry in Pakistan has continuously missed revenue targets since 2017 due to a three-tier excise duty structure introduced by multinational companies. Despite a 2017 reduction in cigarette taxes, the Federal Board of Revenue (FBR) has fallen short of revenue goals, illustrating the tax collection pattern from the tobacco sector. [BR]
- Sindh Farmers Push for Rs 5,000 Wheat Price, Reject Corporate Farming: The Sindh Abadgar Ittehad (SAI) has called on the federal government to set the wheat support price in alignment with the increasing cost of farm inputs, particularly urea fertilizer for the 2023-24 season. They are urging for a wheat support price of Rs 5,000/40kg, rejecting the proposal for corporate farming. [Dawn]
- Senate Pushes for Local Garlic Cultivation to End Rs 80B Imports: The Senate Commerce Committee has directed collaboration among key stakeholders to support the cultivation of HG1 garlic, aiming to end the annual Rs 80 billion garlic import. [ET]
- Cutlery Export: Rs 1.34 billion was the export value of cutlery in Nov 2023, up 27.5% compared to Rs 1.05 billion in Nov 2022, according to the PBS. [ET]
- Second-Hand Clothing Import: Rs 11.4 billion was the import value of worn clothing in Nov 2023, up 43% compared to Rs 7.96 billion in Nov 2022. [ET]
AGRI-INPUTS, WEATHER, WATER & POWER
- 6.0-Magnitude Quake Rocks Pakistan, No Reported Casualties: A 6.0-magnitude earthquake, originating in northeastern Afghanistan, caused buildings to shake in various parts of Pakistan on Thursday, as reported by the Pakistan Meteorological Department. The earthquake affected areas from Kabul to Islamabad, including Lahore, around 2:30 pm, but there have been no reports of casualties or financial losses in Punjab. [Dawn]
- Solar Panel Prices Drop 60-70% in Pakistan: Solar panel prices have dropped by 60-70% due to the dollar depreciation and the removal of a 17% sales tax, making them more affordable for the public. The cost per watt is now Rs 45-53, down from Rs 130-140 at the beginning of 2024. Importer Faisal Bawani emphasized the advantages of branded panels, including after-sales service and a 25-year warranty. [ET]
- Mari Petroleum Announces Gas Discovery in North Waziristan's Shewa-2 Well: Mari Petroleum Company Limited (MPCL) announced a gas discovery at the Shewa-2 well in North Waziristan, Khyber-Pakhtunkhwa, with a 55% working interest. Joint venture partners include OGDCL (35%) and OPI (10%). Successful testing of the Lockhart formation revealed a gas flow rate of 51 mmscfd and 391 barrels of condensate per day. New oil and gas blocks have been awarded to enhance exploration and reduce import reliance. [BR] [ET]
- SSGC Declares 48-Hour Gas Holiday: Sui Southern Gas Company (SSGC) has imposed a 48-hour gas holiday for all industries, citing a shortage of around 65 mmscfd gas from various fields, depleting their line pack and causing low gas pressures in Sindh and Balochistan. The gas supply company is also facing an additional shortfall of approximately 20 mmscfd from different gas fields. [BR]
- ECC Delays TAPI Incentives Pending Assessments & IMF Alignment: The Economic Coordination Committee (ECC) of the Cabinet has postponed the approval of incentives for the Turkmenistan Afghanistan Pakistan India (TAPI) pipeline project pending a professional assessment, support from the Federal Bureau Revenue (FBR), and alignment with the International Monetary Fund's (IMF) Stand-By Arrangement (SBA). [BR]
- Committee Approves Industrial Energy Tariff Cut to 9 Cents: The Special Investment Facilitation Council's Apex Committee has approved a reduced energy tariff of 9 cents for the industrial sector, down from the current 14 cents. Caretaker Federal Minister for Commerce and Industry, Dr. Gohar Ejaz, stated that this decision will be brought to the next Cabinet meeting and discussed with the International Monetary Fund (IMF), emphasizing it is not a subsidy. [BR]
- NEPRA Approves 2.0% Transmission Loss: NEPRA has approved a 2.0% transmission line loss for Sindh Transmission and Despatch Company (STDC) from its Commercial Operation Date (COD) of January 18, 2018. The decision followed concerns raised by the Sindh government, and it pertains to a 132 KV double circuit transmission line established by STDC. Initially, STDC had requested a 3% allowance for technical losses in its tariff petition. [BR]
- No Bids for 600MW Muzaffargarh Solar Project Despite Incentives: No bids were received for a 600-megawatt solar power project in Muzaffargarh despite incentive revisions and deadline extensions by the Private Power & Infrastructure Board. The project aimed at acquiring renewable energy through international competitive bidding faced setbacks in late 2022 under the Framework Guidelines for Fast-Track Solar PV Initiatives 2022. [Dawn]
AGRI UPDATES & PAKISTAN POLICY
- IMF Approves $700M Disbursement in 1st Review of Pakistan's SBA: The IMF's Executive Board completed the 1st review of Pakistan's economic reform program under the Stand By Arrangement (SBA), enabling a US$700 million disbursement and bringing the total to US$1.9 billion. Former IMF official Ehtisham Ahmed highlighted the prolonged failure of tax reforms and fiscal constraints as risks for Pakistan. The World Bank expressed concern about heightened political uncertainty in Pakistan, projecting a modest 1.7% economic growth for FY 2023/24. [BR] [BR] [BR]
- Forex Rise & Rupee Streak: Pakistan's total liquid foreign exchange reserves rose by $36 million, attributed to an increase in commercial banks' reserves. Pakistan's total liquid foreign exchange reserves reached $13.257 billion, compared to $13.221 billion as of December 29, 2023. The Pakistani currency reached a 10-week high above Rs 281 against the US dollar, marking a seventh consecutive day of gains ahead of the IMF's board meeting. The rupee has gained 9.25%, or nearly Rs 26, in the past 4 months from its all-time low in September 2023. [BR] [ET]
- Justice Ijazul Ahsan Resigns, SCP Succession Plans in Doubt: Supreme Court Justice Ijazul Ahsan has resigned from his position, following Justice Mazahar Ali Akbar Naqvi's resignation a day earlier. Justice Ahsan, who was expected to be the next Chief Justice of Pakistan, submitted his resignation to the president citing Article 206(1) of the Constitution, without specifying a reason for his decision. [Dawn] [ET]
- Supreme Court Reviews PTI Cases: The Supreme Court is set to review the Election Commission's appeal against the Peshawar High Court's decision to restore the PTI's election symbol. Simultaneously, the PTI has filed a contempt petition in the Peshawar High Court against the Chief Election Commissioner and others for not implementing the high court's order. [Dawn]
- Pakistan Sets Record Borrowing of Rs 4.284 Trillion in H1 FY2023: In the first half of the current fiscal year, the Pakistani government set a borrowing record, exceeding the total borrowing for the entire previous fiscal year. Borrowing Rs 4.284 trillion from banks from July to December 2023, it surpassed the total of Rs 3.716 trillion in FY23, restricting private sector access to banking funds and increasing the economic debt burden. [BR]
- Pakistan Set for $27.47B Foreign Debt Payment, Eyes New IMF Loan: Pakistan is set to pay $27.47 billion in foreign debt and interest costs by November 2024, with arrangements made to cover a substantial portion under the ongoing IMF loan program. Analyst Maaz Azam anticipates another IMF loan program after the current standby arrangement concludes in March 2024 to facilitate smooth debt repayment. [ET]
- Pakistan's Dollar Bonds Surge Ahead of IMF Review Meeting: Pakistan's sovereign international dollar bonds experienced a rise on Thursday in anticipation of the International Monetary Fund (IMF) executive board meeting for the first review of the country's $3 billion program. The bonds saw an increase of up to 1.77 cents, with the 2026 bonds showing the most significant rise to 70.79 cents on the dollar, as per Tradeweb data. [BR]
- Council Approves Rs 121B Savings, Freezes Certain Projects Spending: The Special Investment Facilitation Council (SIFC) has approved the cancellation of 76 provincial projects, saving Rs 121 billion, and frozen spending on parliamentary and prime ministerial initiatives. This aligns federal spending with constitutional obligations, saving Rs 149 billion for the current fiscal year. However, 247 provincial projects will still receive funds, requiring an additional nearly Rs 800 billion in the coming years. [ET]
INTERNATIONAL – OVERVIEW & MARKET OUTLOOK
- Israeli Genocide: ICJ - South Africa has accused Israel of genocide in Gaza, urging the International Court of Justice to emergency suspend Israel's military campaign. During ICJ hearings, South Africa argued that Israel's actions, causing extensive destruction and over 23,000 deaths in Gaza, aimed at the "destruction of the (territory's) population." [Dawn] [AP] [BBC] [Reuters] [Haaretz] [PBS] [Amnesty] [NPR]
- Yemen Bombings: The United States and Britain have conducted a significant attack against Iranian-backed Houthis in Yemen in response to over two dozen recent attacks on vessels in the Red Sea and Gulf of Aden. According to an anonymous U.S. official, the military operation targeted more than a dozen Houthi sites, including radar systems, airfields, and storage sites for drones and missiles. [France 24] [VOA] [Reuters] [CNN] [The Guardian] [FT]
- Middle East Waters Tensions: Iran has reportedly seized a tanker carrying Iraqi crude bound for Turkey in retaliation for a similar confiscation by the United States last year. Iranian state media stated that the action was taken by the Navy of the Islamic Republic of Iran in the Gulf of Oman by a court order, likely escalating regional tensions. [ET] [Al Jazeera] [Reuters] [BBC] [CNN] [The Guardian] [CNBC] [FT]
- Black Sea Demining: Turkey, Bulgaria, and Romania, NATO members, have signed an agreement to jointly demine the Black Sea, addressing the threat posed by mines from Russia's invasion of Ukraine. The mines, initially laid along Ukraine's Black Sea coastline, have washed up in the waters of these three countries, endangering shipping and complicating Ukraine's attempts to navigate a Russian naval blockade. [BR] [Al Jazeera] [AP] [Reuters] [VOA] [France 24] [ABC]
- Taiwan Elections: Taiwan’s election on Saturday will offer the first major geopolitical test for global investors in a year that promises other challenges, from a Federal Reserve policy pivot to the US presidential race. The impact on world markets will most likely be a slow burn rather than immediate volatility, say China watchers, with much hinging on the victors’ proclamations and Beijing’s response. [BBG] [Barrons] [ECFR] [Fulcrum]
- Gold Up 0.5% to $2,033.70 Amid Weaker Dollar, Eyes on US Inflation: Gold prices rose 0.5% to $2,033.70 per ounce on Thursday, supported by a weaker dollar, while investors awaited the US inflation report for insights into the Federal Reserve's policy direction. Analysts suggest gold is range-bound, citing key support at $2010 and the need for a breakthrough above $2045 for fresh momentum. [BR] [Gold Price] [Billion Vault] [CNN]
- FBR Extends Track & Trace Deadline for Cement to April 30, 2024: The Federal Board of Revenue (FBR) has extended the deadline for cement manufacturers to fully implement the Track and Trace System to April 30, 2024. Originally set for December 31, 2023, the initial deadline was not met as the system was only implemented on one production line of each manufacturing company, falling short of the required full implementation. [BR]
- Pakistan's Auto Downturn: 66% December Plunge, 53% H1 Fall - Car sales in Pakistan plummeted by 66% in December 2023 compared to the previous year, and the cumulative sales for the first half of fiscal year 2024 saw a significant 53% year-on-year decline, dropping to 39,454 units from 84,116 units in the same period last year, according to data from the Pakistan Automotive Manufacturers Association. [BR]
- Opinion: Assessing Efforts to Save Our Planet - “With the last conference of parties (COP) 28 hosted by Dubai having ended a few weeks ago, this is as good a time as any to reflect on how far we have come in the global effort to contend with what could potentially be an existential threat to humanity. We are living today in what is referred to as an Anthropocene epoch, which is basically a unit of geologic time covering the most recent period in Earth’s history.” - By Syed Mohammad Ali [ET]
