- Russia and Pakistan have signed barter deals, with Russia exchanging 35,000 tons of chickpeas and lentils for 45,000 tons of rice, mandarins, and potatoes from Pakistan. These deals aim to bypass payment challenges caused by Western sanctions on Russia.
- Despite economic challenges, the cement industry is recovering, with FY24 dispatches increasing by just over 1%, while domestic dispatches fell by 5%. Revenues rose by 11%, driven by higher prices and a significant 56% growth in exports, which now account for 16% of total dispatches, up from 10%.
- Petroleum product consumption grew by 20% in September FY25, reaching 1.27 million tonnes, driven by higher sales of petrol and high-speed diesel (HSD). HSD sales rose by 25% to 0.49 million tonnes, while petrol sales increased by 22% to 0.63 million tonnes, attributed to anti-smuggling measures and a recovery in economic activity.
- The government plans to borrow Rs 10.10 trillion from banks in Q2 of FY’25 by selling treasury bills (Rs 5.2 trillion) and bonds (Rs 4.9 trillion) to address its budget deficit and repay old debt. Banks in Pakistan are facing a liquidity surplus, prompting them to offer loans at rates as low as 3% to avoid taxes on the Advance-to-Deposit Ratio (ADR) due by the end of 2024.
- Finance Minister Aurangzeb announced restrictions for non-tax filers on buying property, vehicles, and opening bank accounts to expand Pakistan's tax network. The government plans to include wholesalers, retailers, and the real estate sector in the tax system, reduce subsidies on wheat and sugarcane, and ensure tax uniformity across provinces while adding 500,000 new filers this year.
- Iran launched over 180 ballistic missiles at Israel in retaliation, triggering alarms in major cities. Israeli air defenses intercepted some missiles, and US Navy warships also responded. Israeli airstrikes in Gaza on Tuesday resulted in at least 37 fatalities as actions intensified. Oil prices jumped about 3% on Tuesday after Iran's missile attack on Israel, with Brent futures at $73.56/barrel and US WTI crude rising to $69.83/barrel.
AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS
- Russia-Pakistan Barter Agreement: Russia and Pakistan have signed barter deals, with Russia exchanging 35,000 tons of chickpeas and lentils for 45,000 tons of rice, mandarins, and potatoes from Pakistan. These deals aim to bypass payment challenges caused by Western sanctions on Russia. [BR] [ET]
- Cotton Prices Across Provinces: In Sindh, cotton is priced between Rs 17,500 and Rs 18,000/maund, with Phutti at Rs 7,000-Rs 7,200/40 kg. In Punjab, cotton ranges from Rs 17,800-Rs 18,000/maund, and Phutti is between Rs 7,000 and Rs 8,600/40 kg. In Balochistan, cotton costs Rs 17,700-Rs 17,800/maund, while Phutti is priced at Rs 7,290-Rs 8,800/40 kg. Balochi Cotton is valued between Rs 19,900 and Rs 20,200/maund. [BR]
- Pakistan Approves Sugar Exports: The SBP has mandated that all sugar export proceeds to Afghanistan be received in advance through official channels to ensure transparency. The Economic Coordination Committee yesterday had also approved the export of an additional 100,000 MT of sugar, following a prior allowance of 150,000 MT, to help mills manage stocks before the new crushing season. [BR]
- Punjab Approves High-Yield Basmati Rice Varieties: The Punjab Seed Council has approved two new basmati rice varieties that yield 50% more than currently cultivated varieties, with potential production of 60 to 65 maunds/acre compared to the average of 40-45 maunds. Shahzad Ali Malik, Founder Chairman of the Rice Exporters Association of Pakistan (REAP), stated that this increased yield could boost export earnings from $4 billion this year to $10 billion by 2030. [Dawn]
- APTMA Delegation Discusses Export Shortfall: A delegation from APTMA met with Minister of State for Finance Ali Pervaiz Malik to discuss challenges in the textile industry. They expressed concerns over a $9 billion shortfall in textile exports and thanked the government for its economic efforts. [BR] [ET]
- Bangladesh Garment Factories Reopen After Protests: Most garment factories in Bangladesh reopened on Tuesday after protests over a pay hike left one worker dead and several injured. The country, a key supplier for brands like H&M and Zara, has faced widespread unrest, leading to factory closures and worsening production backlogs amid ongoing political turmoil and flooding. [Dawn]
- Cement Industry Shows Signs of Recovery: Despite economic challenges, the cement industry is recovering, with FY24 dispatches increasing by just over 1%, while domestic dispatches fell by 5%. Revenues rose by 11%, driven by higher prices and a significant 56% growth in exports, which now account for 16% of total dispatches, up from 10%. [BR]
- Siddiqsons Scraps TMBP Project, TRG Losses Soar: Siddiqsons Tin Plate Ltd has scrapped its Tine Mill Black Plate (TMBP) project due to high inflation, rising markup rates, and fluctuating rupee-dollar exchange rates, making it financially unviable. Meanwhile, TRG Pakistan Ltd reported a loss-after-tax of Rs 31 billion for FY24, significantly up from Rs 1.333 billion in FY23, with a loss per share of Rs 56.661. [Dawn]
ENERGY - WEATHER, WATER & POWER
- Air Pollution Rises Ahead of Anti-Smog Season: The anti-smog season is set to begin on October 15, yet air pollution levels in Islamabad, Rawalpindi, and Murree are already rising, with the Air Quality Index (AQI) reaching hazardous levels. Islamabad recorded an AQI of 85, Rawalpindi 98, and Murree 148. Neighboring districts in the Rawalpindi division also reported high AQI levels: Attock at 154, Chakwal at 155, and Jhelum at 154. [ET]
- Pakistan Disappointed by Flood Aid Response: Pakistan expressed disappointment over the limited international support for post-2022 flood recovery, which caused over $30 billion in damages. International agencies estimated damages at over $14.9 billion and losses exceeding $15.2 billion, warning of severe economic and social challenges without further assistance. [Dawn]
- Petroleum Consumption Rises 20%: Petroleum product consumption grew by 20% in September FY25, reaching 1.27 million tonnes, driven by higher sales of petrol and high-speed diesel (HSD). HSD sales rose by 25% to 0.49 million tonnes, while petrol sales increased by 22% to 0.63 million tonnes, attributed to anti-smuggling measures and a recovery in economic activity. [Dawn] [The News]
- K-Electric Launches Rewards Program: K-Electric has launched the 'KE Star Rewards' initiative to reward customers who consistently pay their bills on time, aiming to enhance customer relationships and alleviate financial pressure. The program offers various discounts across lifestyle, healthcare, food, and entertainment to incentivize timely payments. [The News]
- Kohala Hydropower Project Extension Approved: The PPIB has approved a three-year extension for the financial closing of the 1,124 MW Kohala Hydropower Project, a key CPEC project, without an extension fee. This decision, made in a meeting led by Secretary Power Division Dr. Fakhar Alam Irfan, supports foreign direct investment in the project on the River Jhelum in AJ&K. [BR]
- Airlink Ventures into Electric Cars: Airlink Communications plans to launch an electric car in partnership with Xiaomi, aiming to compete with major players like BYD and Tesla. This venture represents a strategic move to diversify beyond smartphones and enhance Pakistan's export potential, marking a significant milestone for both Airlink and the country's economy. [The News]
- Show-Cause Notices for Sukkur Barrage Officials: The irrigation department is seeking approval from the chief minister and chief secretary to issue show-cause notices to three former chief engineers and other officers linked to the Sukkur Barrage, following damage to its gates on June 20. The notices have been prepared and require approval due to the officers' current positions in BS-19 and BS-20. [Dawn]
PAKISTAN - ECONOMICS, POLITICS & SECURITY
- Supreme Court Tensions Rise Over Justice's Refusal: Tensions in the Supreme Court increased as Justice Syed Mansoor Ali Shah refused to attend a meeting of the three-judge committee under the Supreme Court Practice and Procedure Act 2023. He also declined to join a larger bench reviewing a petition on Article 63-A. In response, Chief Justice Qazi Faez Isa added another judge to the bench. [ET]
- New Tax Filing Restrictions Announced: Finance Minister Muhammad Aurangzeb announced restrictions for non-tax filers on buying property, vehicles, and opening bank accounts to expand Pakistan's tax network. The government plans to include wholesalers, retailers, and the real estate sector in the tax system, reduce subsidies on wheat and sugarcane, and ensure tax uniformity across provinces while adding 500,000 new filers this year. [BR]
- IMF Directs FBR on Revenue Disclosure: The IMF has instructed Pakistani authorities to withhold provisional revenue collection figures for the first quarter from the media, requiring the FBR to share them with the IMF first. The FBR is expected to provide these figures on Tuesday night, with public release scheduled for Wednesday or Thursday. [The News]
- Pakistan's Inflation Rate Drops to 6.93%: Pakistan's headline inflation rate fell to 6.93% in September 2024, the lowest in 44 months, marking the second consecutive month of single-digit inflation. This decline comes after a peak of 38% in May 2023 and follows the IMF's approval of a $7 billion Extended Fund Facility, which projects inflation to decrease to 9.2% in the current fiscal year. [Dawn] [ET] [The News]
- Government to Borrow Rs 10.10 Trillion: The government plans to borrow Rs 10.10 trillion from banks in the second quarter of FY2025 through the sale of treasury bills and bonds to address its budget deficit and repay old debt. It aims to raise Rs 5.2 trillion through Market Treasury Bills and Rs 4.9 trillion through Pakistan Investment Bonds with various maturities. [The News]
- Sindh CM Invites Chinese Investment: Sindh Chief Minister Syed Murad Ali Shah invited Chinese firms to invest in Karachi through direct investments or public-private partnerships. In a meeting with Belt & Road Group chairman Wan Xiaowu, it was mentioned that over 12 Chinese companies are interested in projects like waste-to-energy, wastewater treatment, desalination, electric bus manufacturing, and sewerage system reconstruction. [Dawn]
- Banks Offer Loans at 3% Amid Surplus: Banks in Pakistan are facing a liquidity surplus, prompting them to offer loans at rates as low as 3% to avoid taxes on the Advance-to-Deposit Ratio (ADR) due by the end of 2024. The government, which previously borrowed heavily, has stopped short-term treasury bill borrowing and repurchased Rs 351 billion at a 16% rate to ease repayment burdens of Rs 4 trillion due by December, leading banks to increase lending. [Dawn]
- S&P Global Predicts Rate Cuts Amid Inflation Drop: S&P Global forecasts multiple policy rate cuts for Pakistan this year after inflation dropped to 6.9%, the lowest in 44 months. However, it warns that inflation may remain in double digits due to IMF-mandated policies, including higher taxes and potential increases in gas and electricity rates. [Dawn]
INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT
- Iran Launches Missile Attack on Israel: Iran launched over 180 ballistic missiles at Israel in retaliation for Israeli actions against Hezbollah in Lebanon, triggering alarms in major cities, including Tel Aviv and Jerusalem. Israeli air defenses intercepted some missiles, and US Navy warships also responded. The strikes raised concerns of further escalation, with reports suggesting some missiles targeted settlements in the occupied West Bank, though no immediate casualties were reported. Israeli airstrikes in Gaza on Tuesday resulted in at least 37 fatalities, including women and children, as military actions intensified in both Gaza and Lebanon. Palestinian health officials reported that strikes on homes in Nuseirat killed at least 13 people, while another strike on a school sheltering displaced families in Gaza City killed at least seven. Additional attacks in Rafah and the Zeitoun suburb also claimed five more lives. [BR] [Dawn] [ET] [Dawn]
- Houthi Rebels Target Ships Off Yemen: Two ships were damaged off Yemen on Tuesday, with one hit by a sea drone and another by a missile, as confirmed by the UK Maritime Trade Operations. Yemen's Iran-backed Houthi rebels claimed responsibility, targeting the vessels as part of their support for Palestinians during the Israel-Hamas conflict. [BR]
- Russian Troops Enter Vuhledar Center: Russian troops have reached the center of Vuhledar, a strategic location in eastern Ukraine's Donbas region that had resisted attacks since the full-scale invasion. A Ukrainian official confirmed this, and social media footage showed Russian soldiers waving flags from bombed buildings in the area. [Reuters] [ET]
- Taiwan Prepares for Super Typhoon Krathon: Taiwan closed schools and evacuated thousands in the south ahead of Super Typhoon Krathong, which is expected to make landfall Wednesday near Kaohsiung. The typhoon has sustained winds of 198 km/h (123 mph) and gusts up to 245 km/h, prompting the president to warn of potential "catastrophic damage." [Phys.org] [ET]
- Fire Halts Production at Tata Group Plant: A fire at Tata Group's Apple iPhone component plant in southern India has caused an indefinite production halt, impacting supplies ahead of the festive season. The blaze may force suppliers to source parts from China, with estimates suggesting Apple could struggle to meet up to 15% of the expected demand for 1.5 million iPhone 14 and 15 units during this period. [BR]
- European Shares Fall on Tensions: European shares closed 0.4% lower on Tuesday, reversing initial gains due to rising geopolitical tensions over Iran's potential attack on Israel, with eurozone banks leading the declines at 2.8%. Meanwhile, Wall Street's main indexes also fell sharply, with the S&P 500 hitting a week-long low; the Dow dropped 133.26 points (0.31%) to 42,196.89, the S&P 500 fell 55.91 points (0.97%) to 5,706.57, and the Nasdaq declined 312.63 points (1.72%) to 17,876.54. [BR] [BR]
- Saudi Arabia Forecasts 2.3% Budget Deficit: Saudi Arabia expects a budget deficit of 2.3% of GDP for 2025, likely continuing for the next two years. This deficit is linked to increased government spending and declining oil revenues, reflecting the kingdom's economic reforms to reduce reliance on oil and boost tourism and business sectors, as stated by the finance ministry. [BR]
- Oil Prices Rise Following Missile Attack: Oil prices jumped about 3% on Tuesday after Iran's missile attack on Israel, with Brent futures up $1.86 at $73.56 per barrel and US West Texas Intermediate (WTI) crude rising $1.66 to $69.83. Meanwhile, Malaysian palm oil futures increased 1.72% to 4,075 ringgit ($978.63) per metric ton on Wednesday, buoyed by higher crude prices, stronger Chicago soyoil, and a weaker ringgit. [BR] [BR] [Dawn]
- Management Plan for Astola Island Finalized: Key stakeholders finalized the management plan for Astola Island's marine protected area at an IUCN Pakistan workshop. Participants included government officials, local communities, and civil society. IUCN's Mahmood Akhtar Cheema highlighted efforts leading to Astola Island's designation as Pakistan's first MPA in 2017. [Dawn]
- Opinion: The Untapped Value of Water - “The absence of economic water pricing means that there is no financial penalty for excessive water usage, allowing unsustainable practices to continue unchecked. Farmers often resort to water-intensive cropping patterns and inefficient irrigation methods. This strains the country’s water resources and contributes to long-term environmental degradation. Therefore, without addressing this issue, the wasteful consumption cycle will likely continue.” - By Dr Muhammad Faisal Ali [BR]
- Opinion: Rich in Resources, Poor in Management - “Pakistan is a nation blessed with abundant natural resources, from vast reserves of coal, crude oil and natural gas to picturesque landscapes that could sustain a flourishing tourism industry. However, wealth mismanagement has repeatedly hampered the country's ability to unlock its full promise and improve the quality of life for its citizens.” - By Mujeeb Ali [ET]
