Inflation, Wheat, Dasu-1 Hydropower Project, Elections Issue, Pak Economy Risks & Interest Rate Hike, Finland Joins Nato, Gold Prices, IMF Global Risk

TOPLINE

• Inflation rate has reached 35.37%, leading to a shortage of affordable groceries in Islamabad during Ramadan.
• Punjab Food Department will procure over 532,810 metric tonnes of wheat, while wheat production is declining due to the use of traditional varieties and outdated farming techniques. Recent heavy rains and hailstorms in Punjab have damaged 5-6% of the wheat crop, causing an estimated loss of Rs 23 billion.
• The World Bank estimated a $1.3 billion financing gap for Dasu-1 hydropower project due to increased forex requirements, while a warehouse belonging to a Chinese company working on the project was gutted by a significant fire at Dasu, requiring assistance from firefighters in two other districts.
• The Supreme Court ordered the Punjab provincial assembly election to be held on May 14, but the government refused to implement it, causing a crisis. The House of Sharif urged a reference against the judges in the Supreme Judicial Council. The Sharif family will be travelling to Saudi Arabia to perform Umrah at the King’s invitation.
• Pakistan's economy faces risks due to low forex reserves, high inflation, and low economic growth while the SBP expects the revival of a $6.5 billion IMF loan program, and has raised the policy rate to 21% to combat inflation.
• Finland has joined NATO in a historic shift triggered by the war in Ukraine, prompting anger in Russia where officials have cast the move as a threat. The French President is? on a three-day visit to China starting today.
• Gold prices mounted by Rs 5000 to the record highs of Rs 214500 per tola. Global gold prices are at $198/ounce.
• The IMF warned that the recent banking crisis in the US and Europe could spread to non-bank institutions such as pension funds, adding complexity to central banks' fight against high inflation.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Inflation Hits Record High in Pakistan: The inflation rate has reached 35.37%, leading to a shortage of affordable groceries in Islamabad during the Holy Month of Ramadan, and people have been queuing up for free flour drives across the country. The absence of functional price control committees has made the situation worse, with residents expressing frustration towards the government for not helping the common man.
• Punjab to Procure Wheat: The Food Department of Punjab will procure over 532,810 metric tonnes of wheat from the division, with 40 procurement centers set up to facilitate farmers and the issuance of gunny bags. The wheat procurement target has been set for Faisalabad, Toba Tek Singh, Jhang, and Chiniot districts, and a total of 754,689 bardana will be distributed among farmers. [The Nation]
• Wheat Production Declining in Pakistan: Dr Sikandar Khan, Principal Scientific Officer at the National Agricultural Research Council, stated that declining wheat production in Pakistan is a significant concern, and the primary reason for this decline is the use of traditional varieties and outdated farming techniques. Dr Khan suggested hybrid wheat as a solution, stating that it has a higher yield potential than traditional varieties and can meet the increasing demand for food. [The Nation]
• Wheat Crop Damaged by Rains: Recent heavy rains and hailstorms in many districts of Punjab have damaged 5 to 6% of the wheat crop, amounting to an estimated loss of Rs 23 billion, according to the Punjab agriculture authorities. Of the 16.014 million acres of the area under wheat, 0.8 million acres were partially damaged, and 30,000 acres were fully damaged due to the inclement weather up to March 30, 2023. [Dawn]
• Pakistan's Cotton Crisis: Pakistan's cotton production has been declining steadily in recent years due to the climate crisis. Excessive heat, unexpected rains, and dry weather have reduced both the quantity and quality of harvests, with cotton becoming increasingly vulnerable to pests and other cotton-killing insects, resulting in cotton production almost halving in the past ten years from 13.6 million bales in 2011 to around 7 million in 2021. [DT]
• FM Assures Textile Industry Support: Pakistan's Finance Minister Ishaq Dar met with a delegation of the All Pakistan Textile Mills Association (APTMA) and said that the government is committed to providing maximum support to the textile industry to boost Pakistan's export-led growth. He directed the relevant authorities to address and resolve the issues of APTMA on a priority basis, and the delegation thanked him for the support. [BR]
• Gold-Silver Hit Record Highs: Gold and silver prices on Tuesday shot up to the historic highs on the local market, traders said. Gold prices mounted by Rs 5000 to the record highs of Rs 214500 per tola, surpassing the previous historic highs of Rs 210,500 per tola on Jan 30, 2023.? The precious metal prices for 10 grams also surged to the new highs of Rs 183,900, up by Rs 4288. On the world market, gold prices stood for $1982 per ounce. [BR]
• Pakistan Cement Exports: Cement sales in Pakistan dropped by 24.19% in March 2023 due to a decline in construction activities caused by political instability, but exports of cement increased significantly after a long break. Despite the decline in domestic sales, the industry witnessed a 48.46% increase in exports during the same period. [ET] [The News] [ARY] [ProPakistani]

AGRI-INPUTS, WEATHER, WATER & POWER

• Gas Price Revision in Pakistan: The federal government has revised the consumer gas prices in Pakistan, introducing the concept of protected and non-protected categories. The aim is to protect the poor segment from price increases and to ensure high-end users pay for the actual cost of gas, as per the Petroleum Division's reply to a question in the Senate. [BR]
• Thar Coal Project Accused: Activists in Thar, Pakistan, alleged on Tuesday that the coal project in the desert region had poisoned drinking water, citing a report that raised questions about Engro Corporation's claims that their operations are not harming the drinking water or the integrity of subsoil and water aquifers in the Thar coal area. [Dawn]
• Dasu-1 Project Financing Gap: The World Bank has estimated a financing gap of $1.3 billion for the Dasu-1 hydropower project in Pakistan due to increased forex requirements, despite calling the project's implementation progress "moderately satisfactory." The Bank Mission noted that the total cost is expected to increase by only 3% for the hydropower component despite implementation delays. [BR]
• Chinese Warehouse at Dasu Dam Site Gutted: A warehouse complex belonging to a Chinese company working on the Dasu hydropower project in the Kohistan district of Khyber Pakhtunkhwa province caught fire and was gutted, according to a Rescue 1122 official. The fire was significant and required assistance from fire brigades from two other districts to bring it under control. [ET] [The News] [Dunya] [RW]
• Pakistan Initiates Waste Composting: The Lahore Waste Management Company in Pakistan has initiated a waste compost plan to separate different kinds of garbage, produce fertilizer, and prevent environmental and public health hazards resulting from unsegregated garbage. This move comes as the company collects 5,500 tonnes of garbage daily from over 6,000 containers in the city. [ET]
• Opinion: Tulare Lake Was Drained Off the Map - “Tulare Lake, once the largest body of freshwater west of the Mississippi River, has resurfaced at a rapid pace due to recent storms, causing concern among farmers and residents in Kings County, California. The lake's resurgence could lead to lost harvests, submerged homes, and failed businesses in the $2 billion agricultural industry that sends products such as cotton, tomatoes, safflower, pistachios, and milk around the world.” - By Soumya Karlamangla & Shawn Hubler [NYT]

AGRI UPDATES & PAKISTAN POLICY

• Supreme Court Orders Punjab Election: The Supreme Court has declared the Election Commission of Pakistan's order unconstitutional and ordered the Punjab provincial assembly election to be held on May 14. However, the court did not make any decision regarding the general election to the KPK assembly as the governor of KPK province ceased to have representation before the court. [BR] [ET]
• Pakistan's Govt Refuses Court Order: The National Assembly and the federal cabinet in Pakistan have refused to implement the Supreme Court's ruling on May 14 as the election date in Punjab, calling it a "murder of justice", and lawmakers in the lower house demanded a full court to hear the issue instead. This has caused a crisis and drawn comparisons with the decision that led to the hanging of Zulfikar Ali Bhutto. [Dawn]
• House of Sharif Criticizes Supreme Court: On Tuesday, the House of Sharif criticized the Supreme Court of Pakistan after it ordered provincial polls despite the government's reluctance to hold the vote, calling the bench "controversial" and the judges "facilitators" of Imran Khan, and urged for a reference against the judges in the Supreme Judicial Council. The Sharif family will be travelling to Saudi Arabia to perform Umrah at the King’s invitation.? [ET] [24 news]
• Pakistan Anticipates IMF Loan: Pakistan is on the brink of a financial breakthrough, as the State Bank of Pakistan (SBP) anticipates the International Monetary Fund (IMF) loan programme worth $6.5 billion will soon be revived. The bank has projected that the foreign exchange reserves will be above $10 billion by the end of June 2023, according to SBP Governor Jameel Ahmad. [ET]
• SBP Raises Policy Rate to Curb Inflation: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has raised the policy rate by 100 basis points to 21% to curb rising inflation, making it an all-time high. Despite believing that monetary tightening will help achieve the medium-term inflation target, the MPC notes that domestic political uncertainty and global financial conditions may pose risks to this assessment. [BR] [Dawn] [ET] [DT] [PO] [PT] [Geo] [The News]
• Pakistan Faces Macroeconomic Crisis: The World Bank has warned that Pakistan may face a macroeconomic crisis due to low foreign exchange reserves and debt service obligations if the IMF's Extended Fund Facility is not completed and additional financing is not secured. The bank also revised its GDP growth projection for Pakistan, expecting growth to slow sharply to 0.4% in fiscal year 2023 due to various factors including high inflation, high energy prices, and import controls. The Asian Development Bank (ADB) has projected that Pakistan's GDP growth will slow down to 0.6% in FY2023, compared to 6% in the last fiscal year, and the average inflation is expected to increase from 12.2% to 27.5% However, the report also noted that the formation of a new government after the scheduled general elections could improve business sentiment and bring political stability. [BR] [BR] [ET]
• Customs Duty Reduced: The Customs classification committee of Pakistan has imposed a lower rate of 3 percent Customs duty on the import of a chemical raw material named “Sodium Naphthalene Sulphate FON-A,” rejecting the previous 16 percent duty imposed by the Collectorate of Customs (Appraisement) East, for making different chemicals in local markets of Pakistan. The ruling has been issued in terms of Chapter-II (Classification) of customs general order (CGO) 12/2002. [BR]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• IMF Warns of Non-Bank Risks: The IMF warned that the recent banking crisis in the US and Europe could spread to non-bank institutions such as pension funds, adding complexity to central banks' fight against high inflation. The IMF economists said that banking risks could intensify due to the continued tightening of global monetary policy and affect the interconnected non-bank sector, which holds almost half of all global financial assets Staff economists from the International Monetary Fund (IMF) have recommended closer regulation of the non-bank financial sector. The call for more stringent oversight came ahead of a semi-annual meeting of finance ministers and central bankers from the IMF and World Bank in Washington. [The News] [BR]
• Australia Provides Aid to Pakistan: Australia will provide AUD $5 million in humanitarian aid to Pakistan to support its flood response and provide life-saving nutrition services to 1.6 million severely malnourished children in 84 flood-affected districts. The Australian High Commissioner to Pakistan, Neil Hawkins, said that this reflects Australia's commitment to the people of Pakistan and its concern about the growing scale of food insecurity and human suffering worldwide. [BR] [ET] [The News]
• Oil Prices Dip on Demand Fears: Oil prices edged lower in choppy trading on Tuesday as weak economic data from the United States and China prompted fears of cooling oil demand and offset earlier gains from OPEC+ plans to cut more production. Brent crude futures were down 73 cents, or 0.8%, at $84.20 a barrel by 12:06 p.m. EDT (1606 GMT). US West Texas Intermediate (WTI) crude futures traded at $80.03 a barrel, down 39 cents, or 0.5%. [BR]
• Fire Ravages Dhaka Markets: A massive fire engulfed the famous Bongo Bazar and three adjacent markets in Dhaka, Bangladesh, leaving them almost completely gutted. The fire was eventually brought under control by more than 600 firefighters after more than six hours of battle, and no fatalities were reported. [Dawn] [The News] [ABC] [AsiaOne]
• France-China Ties: Xi Jinping is pulling out all the stops ahead of a three-day visit starting Wednesday from French President Emmanuel Macron as China’s leader tries to create some distance between Europe and the US in their approaches toward Beijing. With US-China relations in a tailspin, the Chinese leader is looking to prevent Europe from joining in on measures like export controls of key technologies that would hurt growth in the world’s second-biggest economy. [Bloomberg]
• Finland Joins NATO: Finland has joined NATO in a historic shift triggered by the war in Ukraine, prompting anger in Russia where officials have cast the move as a threat. The Finnish flag was raised at the Brussels headquarters of the world’s largest military alliance on Tuesday, a year after Helsinki applied to join. [Dawn] [ET] [Al Jazeera] [FP]
• Trump Faces Charges: Former US President Donald Trump turned himself in for a New York court hearing where he faced criminal charges. He plead not guilty to 34 counts of falsifying business records in a scheme to manipulate the 2016 election. The hearing has the potential to upend the 2024 White House race, where Trump is the presumptive Republican nominee. [Dawn] [ET]

PAKISTAN - REMAINDERS

• Unity Foods collaborates with Nutshell Communications. [BR]
• Opinion: The Need for Policy Reforms - “The ‘Seth Culture’ has hampered the country’s productivity and competitiveness. It has contributed to a lack of competition and innovation in the Pakistani economy, as businesses are often owned and operated by a small group of individuals who prioritize their own interests over those of the broader economy.” - By Shahid Sattar & Amna Urooj [BR]
• Opinion: Struggling for Wheat Flour - “It is happening all the time now. As Ramazan proceeds, a huge rush, sometimes ending in stampedes, at food distribution sites is a common sight. In Karachi, 12 people — women and children — died recently, as they tried to get their hands on sacks of free wheat flour. The latter has become so expensive that for many people queuing up at distribution points is the only way to obtain this most essential dietary staple.” - By Rafia Zakaria [Dawn]