IMF Talks Due, IMF Imposed Measures, Wheat Price Crashes, Gas Sector Debts, Pak x Afg Discussions, Russia Terror Attack.

TOPLINE

• Finance Minister M. Aurangzeb will head Pakistan's delegation with meetings of the World Bank Group and IMF in Washington DC from April 15-20. The IMF has advised reintroducing an 18% general sales tax (GST) on petrol, raising the levy on petrol by Rs60, and reinstating the previously abolished 18% GST from March 2022.
• The IMF advised the FBR to review tax incentives to eliminate duplications. The IMF suggests implementing a uniform excise duty on all locally made cigarettes to generate extra revenue. The government introduced a compulsory tax registration scheme for retailers and wholesalers in six cities of Pakistan to expand the tax base.
• The imported wheat market crashes in Punjab due to cheaper Sindh wheat, leading to a 90% reduction in flour mill purchases. Imported wheat drops by Rs 160/maund, and domestic wheat by Rs 400. This results in an Rs 80 drop in the price of a 20 kg flour bag in Punjab.
• The gas sector prepares for another challenge as $1 billion is earmarked to divert RLNG to the domestic sector to alleviate the anticipated crisis in fiscal year 2024-25. State-owned entities are burdened by Rs 710 billion circular debt, mainly due to RLNG supply, with PLL facing Rs 142 billion debt and PSO grappling with Rs 568 billion debt.
• Pakistan and Afghanistan are set to hold significant trade discussions in Kabul today, following recent Pakistani airstrikes on terrorist hideouts inside Afghanistan.
• Russia held a national day of mourning after the terrorist attack that killed at least 137 people in Moscow, as officials continue to suggest a Ukrainian role in the massacre claimed by Islamic State.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Punjab Wheat Market Crashes Due to Sindh Competition: The imported wheat market crashes in Punjab due to cheaper Sindh wheat, leading to a 90% reduction in flour mill purchases. Imported wheat drops by Rs 160/maund, and domestic wheat by Rs 400. Farmers urge the government not to extend the deadline for imported wheat shipments to prevent losses as local wheat enters the market. This results in an Rs 80 drop in the price of a 20kg flour bag in Punjab, with further reductions expected. [ET]
• Delayed Wheat Procurement Centers Worry Farmers: Farmers' organizations are worried about the government's delay in setting up wheat procurement centers in Sindh, despite an earlier announcement by the provincial food minister. Operations were supposed to start on March 20, but the centers have yet to be established. [The News]
• Karachi Retailer Fined for Selling Flour Below Official Rate: In Karachi's Jodia Bazar, a retailer was fined for selling flour below the official rate, causing complaints from the Karachi Wholesale Grocers Group. The retailer sold flour at Rs 115/kg, below the official rate of Rs 123/kg, prompting action from the Deputy Commissioner's team. Wholesale Grocers Chairman Abdur Rauf criticized the penalties, citing price differences. [ARY]
• Lahore Red Meat Quality Declines, Export Impact: The quality of red meat in Lahore has declined due to diseases affecting cattle. International export partners are hesitant to buy Pakistani meat due to concerns about foot and mouth disease and vaccine shortages, impacting exports. [ET]
• Proposed Export Ban: Stabilizing Ramadan Prices - Commerce Minister Jam Kamal proposed a ban on exporting livestock, sugar, wheat, onion, banana, and rice to stabilize prices, during a meeting chaired by Interior Minister Syed Mohsin Naqvi on March 19, 2024, to ensure affordable prices during Ramadan. [BR]
• SPI Shows March Improvement: Short-term inflation, measured by the Sensitive Price Index (SPI), fell to 29.06% year-on-year by March 21, down from over 30% for the past 18 weeks, mainly due to declining prices of tomatoes, onions, and potatoes, resulting in a 1.13% week-on-week decline in SPI. [Dawn]
• European Exports Dip: Pakistan's exports to European countries, despite GSP+ status, dropped by 6.89% year-on-year to $5.411 billion in the first eight months of the current fiscal year. Reduced demand in western, southern, and northern Europe is cited as the primary cause by the State Bank of Pakistan. [Dawn]
• Pakistan Tackles Tobacco Trade to Meet IMF Conditions: Experts propose that Pakistan can fulfill IMF conditions, boost tax collection, and raise the tax-to-GDP ratio by tackling illicit tobacco trade. The IMF suggests implementing a uniform excise duty on all locally made cigarettes to generate extra revenue, as recommended by the Federal Board of Revenue (FBR). [ET]
• Soybean Oil Import: Rs 1.58 billion was the import value of soybean oil in Feb 2024, up 41.7% compared to Rs 1.12 billion in Feb 2023. [ET]
• Worn Clothes Import: Rs 8.31 billion was the import value of worn clothing in Feb 2024, up 30.4% compared to Rs 6.38 billion in Feb 2023. [ET]
• Fish Export: Rs 8.99 billion was the export value of fish and fish preparations in Feb 2024, down 12.08% compared to Rfs 10.22 billion in Feb 2023. [ET]
• Basmati Export: Rs 23.03 billion was the export value of Basmati rice in Feb 2024, up 73.13% compared to Rs 13.3 billion in Feb 2023, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• PM Prioritizes Reko Diq Security: FBR, Energy Ministry Act - PM Shehbaz Sharif prioritized security for Reko Diq project workers and logistics to Gwadar seaport. The FBR outlined steps for registering unregistered mobile phones with the PTA, and the Ministry of Energy adjusted spot LNG price forecasts with projected figures provided by M/s Pakistan LNG Limited. [BR] [BR] [BR]
• IMF Recommends 18% GST on Petrol for Bailout Package: The IMF has advised reintroducing an 18% general sales tax (GST) on petrol as part of ongoing discussions with the government to secure the final tranche of its bailout package. Express News reports that the IMF has suggested raising the levy on petrol by Rs60 and reinstating the previously abolished 18% GST from March 2022. [ET]
• Caretaker Govt Approves 30% Cost Hike for PSDP Projects: The caretaker government approved a 30% cost increase for ongoing projects in the federal Public Sector Development Programme. The fiscal year 2022-23 portfolio includes 1,153 projects, with 909 ongoing valued at Rs 7.96 trillion and 244 new projects totaling Rs 2.26 trillion, according to IMF estimates. [Dawn]
• Gas Sector Faces Crisis: $1 Billion for RLNG Diversion - The gas sector prepares for another challenge as $1 billion is earmarked to divert RLNG to the domestic sector to alleviate the anticipated crisis in fiscal year 2024-25. State-owned entities burdened by Rs 710 billion circular debt, mainly due to RLNG supply, with PLL facing Rs 142 billion debt and PSO grappling with Rs 568 billion debt related to RLNG supply to gas utilities. [ET]
• Pak-China to Accelerate CPEC Phase-2, Plan New Corridors: Pakistan and China have decided to expedite phase-2 of CPEC and establish a working group for five new economic corridors. This was discussed during a meeting between Federal Minister Ahsan Iqbal and Chinese envoy Jiang Zaidong, aligning with the Planning Ministry's 5Es framework. [BR]
• Pakistan, SFD Ink $107M Hydropower Deals: Pakistan and the Saudi Fund for Development (SFD) signed two loan agreements worth $107 million for hydropower projects during the SFD delegation's visit. Minister for Economic Affairs Ahad Khan Cheema lauded SFD's financing across multiple sectors. [BR]
• OMAP Urges LCs Limit Boost to Ease OMC Strain: OMAP has urgently asked for LCs limit increase for OMCs due to financial strain, citing concerns to Petroleum Minister Musadiq Malik including foreign exchange losses, OMC margins, sales tax, Iranian diesel smuggling, infrastructure development cess, and price mechanism revisions, warning of industry collapse. [The News]
• Refining Sector Mulls Delaying Crude Oil Imports: Due to low domestic consumption and high HSD stocks, the refining sector is considering delaying crude oil imports, with one refinery potentially shutting down next week. Pakistan Refinery Limited (PRL) has warned of possible plant closure, notifying the Ministry of Energy and Oil & Gas Regulatory Authority. [The News]
• Karachi Port Terminal Upgraded, Lacks Railway Track: Karachi Port's upgraded bulk cargo terminal, managed by Abu Dhabi Ports Group, lacks a railway track. Despite a $220 million investment initially and plans for an additional $1.8 billion over the next decade, the terminal's capacity has increased, but it lacks rail connectivity. [ET]
• Corporate Result: Rs 23.01 billion was the profit reported by Fatima Fertilizer Co for the year ended Dec 31, 2023, up 56.4% from a profit of Rs 14.71 billion last year. [ET]

AGRI UPDATES & PAKISTAN POLICY

• PM Shehbaz Restructures Economic Committees: Prime Minister Shehbaz Sharif has restructured the Economic Coordination Committee (ECC), appointing the Finance Minister as chair and retaining the personal chairmanship of both the ECC and the Cabinet Committee on Energy (CCoE). Additionally, he has constituted the Cabinet Committee on State-Owned Enterprises (CCoSOEs), with Finance Minister Muhammad Aurangzeb as chair. [BR] [BR] [Dawn] [BR]
• FM Aurangzeb to Lead Pakistan at World Bank, IMF Talks: Finance Minister Muhammad Aurangzeb will head Pakistan's delegation at the Spring 2024 meetings of the World Bank Group and IMF in Washington DC from April 15-20. Discussions will focus on an Extended Fund Facility (EFF) with the IMF. [BR] [BR]
• IMF Urges FBR Review of Tax Incentives: The IMF advised the FBR to review tax incentives to eliminate duplications. Despite amendments, new incentives like Section 44A under the Income Tax Ordinance have been introduced, providing tax exemptions for certain investments under the Foreign Investment Act. [BR]
• Compulsory Tax Registration for Retailers in Pakistan: The government introduced a compulsory tax registration scheme for retailers and wholesalers in six cities of Pakistan to expand the tax base. The Federal Board of Revenue (FBR) issued a regulatory order for implementation from April 1, 2024, meeting an IMF condition ahead of a board meeting to approve a $1.1 billion loan tranche. [ET] [ARY]
• World Bank Funds Projects in Pakistan: The World Bank approved $78 million for the Digital Economy Enhancement Project and an additional $71.7 million for the Sindh Barrages Improvement Project in Pakistan. These projects aim to address infrastructure resilience following the 2022 floods and challenges. [ET]
• Pakistan-Afghanistan Trade Talks Amid Airstrikes: Pakistan and Afghanistan are set to hold significant trade discussions in Kabul today, following recent Pakistani airstrikes on terrorist hideouts inside Afghanistan. Commerce Secretary Khurrum Agha will embark on a two-day visit to Afghanistan to address trade-related issues. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide - Ceasefire Possibility: US Secretary of State Antony Blinken's sixth visit to West Asia in under six months aims to address the Israel-Hamas conflict, focusing on Riyadh, Tel Aviv, and meetings with regional leaders. Blinken seeks a ceasefire and the release of hostages held by Hamas to address the humanitarian crisis in Gaza, while Israeli Prime Minister Benjamin Netanyahu's plans for a ground offensive in Rafah complicate efforts. [ET] [SNG] [GN]
• Russia Mourns Victims of Deadly Concert Attack: Russia held a national day of mourning after the terrorist attack that killed at least 137 people in Moscow, as officials continue to suggest a Ukrainian role in the massacre claimed by Islamic State. Putin said in a televised address that security services had captured 4 suspects who he said were trying to flee to Ukraine. President Volodymyr Zelenskiy and other Ukrainian officials have denied any role in the massacre and called the attack a false-flag operation by the Kremlin. One of two suspects formally under arrest for the attack pleaded guilty in a Moscow court and said he’s a citizen of Tajikistan, Russian news agencies reported. [BR] [ET] [BBG]
• Russia Strikes Ukraine, Targets Critical Infrastructure: Russia launched a major airstrike targeting critical infrastructure in Ukraine's Lviv region, with one missile briefly entering Polish airspace, according to Warsaw. Kyiv reported 57 missiles and drones were deployed in the attack, which also targeted the capital Kyiv, following a significant bombardment of Ukraine's energy system. [BR]
• Deadly Storms Hit Brazil's Southeast, Dozens Dead: Heavy storms and rains in Brazil's southeast have left at least 20 dead, prompting urgent rescue efforts. Rio de Janeiro and Espirito Santo faced chaotic flooding, with the death toll rising to 12 in Espirito Santo alone. Mimoso do Sul, one of the worst-hit areas, saw at least 10 fatalities, with fears of more casualties. [Phys.org] [Barron’s] [AJ] [WD]
• AI Climate Aid: Apple CEO Tim Cook said artificial intelligence is an essential tool for helping businesses reduce their carbon footprint, as he joined a climate change dialog Sunday at the China Development Forum. Cook said AI could help businesses calculate a person’s carbon footprint, identify materials available for recovery, and offer strategies for recycling. Apple has set some of the most ambitious targets among its peers for reducing its carbon footprint — with the Apple Watch touted as its first carbon-neutral product. [BBG] [BBG]
• Heatwaves to Drive Global Food Prices, Inflation: Research - New research from scientists and the European Central Bank predicts that global warming and heat waves will drive up food prices and overall inflation worldwide. The impact will be significant, especially in developing nations, due to the increased frequency of extreme weather events disrupting farming and food production. [BR] [Dawn]

PAKISTAN - REMAINDERS

• IFC Eyes Power Discos, Govt Rejects Long-term Role: The IFC is discussing private sector involvement in power Discos with the Power Division. However, the caretaker government's Cabinet Committee on Privatisation decided against IFC's role in Discos' long-term concessional arrangements with the private sector. [BR]
• FBR Probes Money Laundering, Tax Evasion Allegations: The FBR inquiry reveals alleged money laundering and tax evasion by Vicky Trading Pvt. Ltd., linked to Bahria Town, involving billions of rupees. Funds totaling around Rs 319 billion flowed from Bahria to Vicky Trading. The accused company denounces the investigation as "extreme action" and "harassment." [Dawn]
• Opinion: Grain Glut may Wreak Havoc on Market - “As Pakistan is about to harvest a bumper wheat crop, the farmers — producers of this record crop — are a fearful lot, scared of their production. Imports of 2m tonnes of wheat on top of Punjab’s bumper harvest will create a surplus that may lead to a downhill tumble or full-blown crash. The Punjab Government had set itself a mythical target of 25.6m tonnes at an average of 40 maunds per acre. It may not achieve this target, but it would certainly have a much larger crop because of the additional 1.4m acres.” - By Ahmad Fraz Khan [Dawn]
• Opinion: Energy Crisis in Pakistan - “The crisis results from a gap between energy supplies and demand in the country. Countries that are self-sufficient in their energy supplies enjoy prosperous status in the world’s society. As the capacity to do work, energy fuels economic activities and holistically influences the social, political, psychological and developmental aspects of life. The settings where energy is used in a society include households, offices, transportation, manufacturing industries and agriculture sector. The sources of energy supply are renewable and nonrenewable resources.” - By Ali Hassan Bangwar [ET]