Inflation, Wheat & Yellow Rust Disease, Petrol Imports, LNG Prices & Russian Oil Deal, Financial Support from China & UAE

TOPLINE

• Short-term inflation as measured by the SPI increased to 44.61% Y-o-Y for the week ended on April 13.
• Agriculture department has formed teams to control yellow rust disease affecting wheat crops in Bajaur tribal district, while the current wheat crisis highlights inadequacies in past government measures to provide a sustainable solution to Pakistan's food security issue.
• Rs 123 billion was the import value of petroleum products in Feb 2023, up 34% from Feb 2022. The gas mafia raised LPG price by Rs 10 to sell at Rs 310/kg. Moreover, Pakistan has concluded talks with Russia for crude oil imports and is expected to receive the shipment in May.? The price of petrol is likely to increase by Rs 15 per liter for the second half of April 2023, while high-speed diesel (HSD) may see a hike of only 30 paisa.
• Asian Development Bank is willing to defer AEFS of DISCOs till Dec 31, 2023 to bring Second Power Distribution Enhancement Investment Program on track. Pakistan is to receive? $1.3 billion financial support from China and the UAE.?
• The Supreme Court ordered the State Bank to allocate Rs 21 billion for the upcoming general elections in Punjab and KP by April 17. Jamaat-e-Islami announced an all parties conference to develop a consensus on same-day elections while PML-N rejected talks with the PTI on any issue.
• KissanGPT, an Indian AI voice assistant for agriculture-related queries powered by GPT is a new tool that has piqued the Indian govt and industry players' interest.
• Fighting between the Sudanese army and paramilitary group Rapid Support Forces (RSF) continued for a third day in the Sudanese capital Khartoum, causing explosions and a rising civilian death toll of around 100.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Inflation in Pakistan Surges: Based on data released by the Pakistan Bureau of Statistics, short-term inflation as measured by the Sensitive Price Index (SPI) increased to 44.61% year-on-year for the week ended on April 13. On a week-on-week basis, the SPI eased by 0.60%, but food items including fruits, potatoes, onions, chicken, meat, eggs, and cooking oil are becoming costlier due to the Ramazan-related demand spiral. [Dawn]
• Cotton Review: "The cotton market witnessed a bullish trend with an increase in trading volume and an increase in the prices of cotton due to textile spinners' interest in buying quality cotton. However, the international cotton markets saw fluctuations in cotton rates, and the US dollar increased against the Pakistani rupee, causing complaints from the All Pakistan Textile Mills Association. The rate of cotton in Sindh and Punjab is between Rs 18,000 to Rs 21,000 per maund while the rate of Phutti is between Rs 6,500 to Rs 8,500 per 40 kg. The Spot Rate Committee of the Karachi Cotton Association has increased the spot rate by Rs 2,000 per maund and closed it at Rs 19,700 per maund. [BR]
• Knitwear Export: Rs 73.9 billion was the export value of knitwear in Feb 2023, up 1.05% compared to Rs 73.1 billion in Feb 2022, according to the Pakistan Bureau of Statistics. [ET]
• Wheat Crops Hit by Yellow Rust Disease: Yellow rust disease has affected wheat crops in several areas of Bajaur tribal district, but the agriculture department is responding by forming teams to visit affected areas and advise farmers on how to control the disease, with fungicide spray as the recommended solution. Local farmers have reported the outbreak but have also said that agriculture department teams have been visiting affected areas and providing advice. [Dawn]
• Wheat Crisis Highlights Inadequacies: The present wheat crisis, combined with a significant increase in twin deficits (fiscal and current account), indicates that the measures taken by past governments have proved inadequate to provide a sustainable solution to the food security issue currently being faced by Pakistan. [Dawn]
• PM Orders Sugar Crackdown: Prime Minister Shehbaz Sharif has ordered a major crackdown on sugar smugglers, hoarders and profiteers, and will convene a meeting in Islamabad to develop a strategy to prevent these activities, following reports of profiteering and smuggling. [ET] [RP] [Channel 24] [Dunya]
• Scenic Sunflower Drive: Traveling on the 17.5km long Sir Aga Khan Jhirk Mulla Katiyar bridge between Tando Mohammad Khan and Thatta on a spring is a pleasure. Bright yellow fields of sunflowers that line the route make the journey more pleasant. Further into Thatta, more sunflower fields run parallel to the roads. [Dawn]
• Gold Prices: The price of gold in Pakistan hit a record high on Friday, with 10-gram gold reaching Rs 187,414 and tola gold reaching Rs 218,600. This surge was attributed to the depreciation of the Pakistani rupee against the US dollar and an increase in the global price of gold to $2,034 per ounce. [Dawn]
• Free Rice Seeds for Balochistan Farmers: The government of Balochistan will distribute free rice seeds and other equipment to farmers in four districts with the help of a $5m grant from the Asian Development Bank, following damages worth over Rs 300 billion to the agriculture sector caused by monsoon rains in 2022. The provincial government has previously provided free wheat seeds to farmers, leading to record production of wheat this year. [Dawn] [ET]
• Inefficient Price Bureau: Much like various other departments that exist and function on taxpayer money but have little to show performance wise, the provincial Bureau of Supply and Prices (BSP) has done precious little ever since its inception. [ET]
• Call for Land Reforms in Sindh: The Hari Welfare Association marked International Peasants Rights Day by calling for land reforms in Sindh, Pakistan to address the poverty and food insecurity faced by small-scale farmers, agricultural workers, and rural communities. The association noted that the Sindh Tenancy Act of 1955 has never been implemented and the Sindh Land Revenue Act of 1967 has been manipulated by feudal lords to benefit themselves. [ET] [The News]

AGRI-INPUTS, WEATHER, WATER & POWER

• Petroleum Import: Rs 123 billion was the import value of petroleum products in Feb 2023, up 34% from Rs 91.8 billion in Feb 2022.? Pakistan's import of refined petroleum products increased by 9% to $2.03 billion in March compared to $1.87 billion in February, while the purchase of crude oil from foreign markets decreased by 16% to 596,000 tonnes in March. This is because local refineries slowed down production due to the reservoirs filling up with products in low demand, such as furnace oil. [ET] [ET]
• Petrol Prices May Rise: The price of petrol is likely to increase by Rs 15 per liter for the second half of April 2023, while high-speed diesel (HSD) may see a hike of only 30 paisa, according to oil industry sources. The ex-depot price of petrol is expected to go up by Rs 14.77 per liter, HSD by Rs 0.30 per liter, kerosene oil Rs 8.96 per liter, and light diesel oil (LDO) Rs 3.36 per liter for the second fortnight of April. [ET]
• Petroleum Dealers Oppose Fuel Plan: The Pakistani government's plan to reduce fuel prices for motorbikes and small cars has encountered opposition from petroleum dealers who are afraid of not receiving reimbursement on time. The government had previously announced that motorbikes and small cars would be offered fuel at a cheaper rate while luxury cars would be charged an additional Rs 50 per liter. [ET]
• LPG Prices Increase Sharply: Taking advantage of the rise in the prices of petrol and kerosene, the gas mafia has also increased the price of the Liquefied Petroleum Gas (LPG) by Rs 10. The LPG’s official price is Rs 229 per kg. However, it is sold in all the major cities of the country at Rs 310 per kg. [ET] [DP] [ARY] [ProPakistani]
• Accusations over Iranian LPG: Lube Gas Private Company has accused OGRA of importing substandard Iranian LPG due to the failure to set up testing laboratories and resolve the dispute between JJVL and SSGC, resulting in a loss of domestic production of almost 400 metric tonnes per day, inflicting a loss of billions of rupees on the national exchequer and a foreign exchange loss of around $200 million per year. [The News]
• Karachi Water Meters: The administration of the Karachi Water and Sewerage Board (KWSB) has decided to install electromagnetic meters in hydrants as well as at industries and factories to ensure large scale users are billed the right amount for usage. [ET]
• NEPRA Approves K-Electric FCA: The National Electric Power Regulatory Authority (Nepra) has approved a paisa 58 per unit positive adjustment in the Fuel Cost Adjustment (FCA) of K-Electric for February 2023, which is lower than the Rs 1.61 per unit increase requested by the company. K-Electric will recover paisa 58 per unit in April 2023 bills, and the FCA for February will reduce K-Electric's current charge of Rs 1.71 per unit for January. [BR] [ET]
• Dengue Outbreak: With dozens of dengue cases reported in Lahore, the authorities have instructed officers of the departments concerned to go to the field to destroy larvae at hotspots. According to the data released by the health authorities, there have been 28 confirmed cases of dengue fever reported. [ET]
• ADB Agrees on AEFS Deferment: Asian Development Bank (ADB) has expressed willingness to defer Audited Entity Financial Statements (AEFS) of electricity distribution companies (DISCOs) till December 31, 2023 to bring Second Power Distribution Enhancement Investment Program on track, saying the auditor’s certificate cannot be treated as an assurance report on compliance with financial covenants. [BR]
• Progress in Pakistan-Russia Oil Talks: Pakistan's talks with Russia regarding crude oil imports have concluded with significant progress on the mode of payment, with Russian crude oil expected to arrive in Pakistan in May if the order is successfully placed. However, officials have not disclosed the details of the breakthrough or the minor issues that remain to be resolved within the next few days. [The News]
• Recent Floods Devastate Sindh: The chief minister of Sindh province in Pakistan, Syed Murad Ali Shah, reported that the recent floods pushed 5 million people below the poverty line and 4.3 million are now facing food insecurity. The International Rescue Committee agreed to support the provincial government in post-flood relief, climate change-related plans, and in the health sector, particularly malnutrition. [Dawn] [ET] [The Nation]
• Railway Underpass Jahanian: The Economic Coordination Committee (ECC) of the Cabinet has approved Rs261 million in funds for the construction of the Railway Underpass Jahanian, District Khanewal. [BR]
• Ministry Releases PSDP Funds: Despite financial constraints and disruptions caused by floods last year, the Ministry of Planning has released Rs 129 billion for development projects under the Public Sector Development Programme (PSDP) for the fourth quarter of the year 2022-23. [ET] [The Nation] [The News] [Geo] [Samaa] [Dunya]
• MOL Invests in Pakistan's Energy Sector: Hungary-based oil and exploration company MOL has announced a $23 million investment in the Tal block in Khyber Pakhtunkhwa to boost indigenous oil and gas exploration and production, to reduce energy shortages in Pakistan. The bidding process for an exploratory well 'Razgir' has started. [The News]
• Punjab Plans Power Grid: The feasibility study for the establishment of Punjab’s power transmission firm, the Punjab Provincial Grid Company (PPGD), has been completed, and plans to establish a main resource data center in the department were highlighted. The feasibility study for the solarisation of district and sessions courts in Punjab has also been completed, with work on establishing the PPGD Punjab grid company having begun in the last quarter of 2021 during the period of former chief minister Usman Buzdar. [Dawn]

AGRI UPDATES & PAKISTAN POLICY

• Low-Interest Agri Loans: National Bank of Pakistan (NBP) has launched a low markup rate agricultural loan program to support the farming industry. The program offers loans to finance a range of agricultural needs, including warehouse, solar tube-well, fisheries, new tractors, agriculture baler, seeds, soil, and pesticides, etc., and includes special discounts on the markup rate for women to encourage female participation in the farming industry. [BR]
• Pakistan Secures Aid from China & UAE: Pakistan's Finance Minister, Ishaq Dar, announced on Friday that Pakistan would receive financial support from China and the United Arab Emirates worth $1.3 billion. The UAE has promised $1 billion to support Pakistan's forex reserves, while China released the last tranche of a $1.3 billion rollover loan, providing a much-needed boost to the ailing economy as it seeks to meet conditions for the resumption of an International Monetary Fund bailout. [BR] [Dawn] [ET] [PO]
• Fast-Track Approval for $900 Million Loans: Pakistan, on Friday, requested two multilateral financial institutions to fast-track the approval of $900 million budget support loans aimed at fulfilling the condition of arranging the $6 billion financing at the earliest to reach a staff-level agreement (SLA) with the International Monetary Fund (IMF) by next week. [ET]
• Allocation for Punjab & KPK Elections: The Supreme Court of Pakistan has directed the State Bank of Pakistan (SBP) to allocate Rs 21 billion ($127 million) for the upcoming general elections in Punjab and Khyber Pakhtunkhwa by April 17. The court has ordered the SBP and the Finance Ministry to submit compliance reports by April 18. [BR] [BR] [Dawn]
• JI to Host APC for Same-Day Elections Consensus: Imran Adnan Following the ruling alliance and the opposition’s expression of willingness to engage in dialogue, the Jamaat-e-Islami (JI) announced on Sunday it would host an all parties conference (APC) after Eid Ul Fitr to develop consensus on same-day elections. [ET]
• PML-N Rejects Talks: The ruling PML-N on Sunday categorically ruled out holding talks with the PTI on the issue of elections or anything else – dashing the hopes of the Jamaat-e-Islami, which tried a day earlier to initiate negotiations between the government and the opposition to break the existing political impasse. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Oil Prices: Oil prices rose on Friday, with Brent crude futures up 21 cents at $86.30 per barrel and West Texas Intermediate crude futures (WTI) up 35 cents at $82.51, as the International Energy Agency (IEA) said that global oil demand would reach a record high this year due to the recovery in Chinese consumption. However, the IEA also cautioned that deep output cuts announced by OPEC+ producers could exacerbate the oil supply deficit and negatively impact consumers. [BR]
• OPEC Flags Demand Risks: OPEC has flagged downside risks to summer oil demand in its monthly oil report, shedding light on the factors behind the surprise output cuts announced by OPEC+ producers earlier this month. The report stated that oil inventories were more ample and global growth faced a number of challenges, with potential downside risks to global economic development including high inflation, monetary tightening, stability of financial markets and high sovereign, corporate and private debt levels. [BR]
• Gold Prices: Gold prices pulled back sharply on Friday after surging to a more than one-year peak in the last session, as the dollar bounced and a Federal Reserve official flagged the need for another interest rate hike. Spot gold was down 1.8% at $2,003.60 per ounce by 01:52 EDT (17:51 GMT). US gold futures settled 1.9% lower at $2,015.80. [BR]
• Finnish Border Fence: Finland has unveiled the first section of a 200-kilometer border fence with Russia being built after Moscow's invasion of Ukraine last year. Three meters tall and costing over $400 million, the fence will be completed by 2026, and aims to reduce dependence on the effectiveness of Russian border control. [Dawn]
• President Lula Suggests Political G20: Brazilian President Luiz Inacio Lula da Silva suggested that China, the United Arab Emirates, and other countries should form a "political G20" to mediate and end the war in Ukraine, accusing NATO of prolonging the conflict. Lula also discussed forming a group of countries to mediate the war with Chinese President Xi Jinping and UAE President Sheikh Nahyan and signed deals worth $10 billion in China. Lula criticized the power of the US dollar and the International Monetary Fund, suggesting that a bank like the BRICS bank should have its own currency to finance trade between its member countries. [BR]
• Protests in Israel Over Judiciary Reform: Tens of thousands of people have protested in Israel against the government's plan to overhaul the judiciary, despite the Prime Minister's decision to pause the proposals. The protests follow the US rating agency Moody's decision to downgrade Israel's credit rating from positive to stable, signaling the potential for an economic backlash against the proposals. [ET] [Al Jazeera]
• Sudan Clashes Kill Civilians: Fighting between the Sudanese army and paramilitary group Rapid Support Forces (RSF) continued for a third day in the Sudanese capital Khartoum, causing explosions and a rising civilian death toll of around 100.? [Al Jazeera] [BBC]
• Yemen Begins Prisoner Exchange: A prisoner exchange from Yemen’s civil war started on Friday, following truce talks that ended with an agreement to hold a second round. The International Committee of the Red Cross is coordinating the operation, which will see 887 prisoners released over three days. [Dawn] [ET]
• PIF Secures Aramco Shares: Saudi Arabia has transferred a second tranche of 4% shares in Aramco, the country's state-owned energy giant, worth nearly $80 billion, to the control of Sanabil Investments, a firm controlled by the Public Investment Fund (PIF). The move is in line with diversifying the economy. [BR]
• KissanGPT: ChatGPT is redefining tech disruption in India. Today, developers are building different products on top of OpenAI’s GPT models. Developed by Pratik Desai, founder of Titodi, KissanGPT is an AI voice assistant for agriculture-related queries. Despite being a relatively new tool, it has already piqued the interest of the Indian government and other industry players. [AIM]
• Opinion: America, China and a Crisis of Trust - Journalist Thomas Friedman writes about his recent trip to China, where he attended the China Development Forum and was reminded of the importance of trust in international relations, which has become scarce between the US and China. He also notes the formidable strength of China's Communist Party government and the difficulty in getting anyone to speak on the record during his visit due to the party's police state surveillance and digital tracking systems. [NYT]

PAKISTAN - REMAINDERS

• Jamaat-i-Islami alleges the PDM of tampering with Karachi's population during the recent census. [Dawn]
• Opinion: Outlining a Charter of the Economy - “Pakistan’s economy has been in crisis for a large part of its existence. However, a stage has now been reached where personal, party and institutional interests and differences ought to be restrained and all stakeholders need to agree to some basic principles and policies.” - By Zafar U. Ahmed [Dawn]
• Opinion: Contaminated Lahore - “Pakistani cities are highly mismanaged. Their governing structures are opaque, centralized, and rigidly bureaucratic. As a result, they do not cater to the needs of large swathes of their residents. Karachi is the country’s most obvious case of urban misgovernance, but one can find similar stories of decay from all over, including Lahore.” - By Umair Javed [Dawn]