Sugar Export & OMC Claims, Punjab Agri Budget, Petrol Reduced, IPPs Installation, Tax Measures, Israeli Genocide.

TOPLINE

• The ECC approved exporting 0.15 million MTs of surplus sugar, conditional on retail price stability, and authorized Rs 9 billion to clear outstanding claims of Oil Marketing Companies, including PSO.
• In the fiscal year 2024–25, the Punjab government plans to allocate over Rs 64.6 billion for the agricultural sector. This includes funding for 20 ongoing developmental schemes and 8 new schemes, such as the "green tractor" and "Kissan card" initiatives.
• After a tax-heavy budget presentation, the government plans to reduce petrol prices by Rs 9.28 per liter to Rs 259.08 and high-speed diesel (HSD) by Rs 4.02 per liter to Rs 266.20, effective from June 16.
• Despite a ballooning circular debt of Rs. 2.6 Trillion in the power sector, the Pakistan Economic Survey 2023-24 reveals the government's plan to install additional IPPs. Five multi-fuel IPPs with a total capacity of 1,066MW are expected by 2024-25.
• Finance Minister Muhammad Aurangzeb defended the budget's tax measures, aiming to increase the tax-to-GDP ratio from 10% to 13% in two to three years. He mentioned a phased approach to potentially raising the petroleum levy to Rs 80 per liter based on international oil prices. The FBR recently accelerated retailer registrations.
• Israeli helicopters struck Gaza’s Rafah Thursday, residents said, with Hamas militants reporting street battles in the southern city after top US diplomat Antony Blinken said a truce was still possible.? But the war raged on, and tensions soared on Israel’s northern border with more attacks by Lebanon’s Iran-backed Hezbollah forces targeting military positions.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• ECC Approves Sugar Export: The ECC approved exporting 0.15 million MTs of surplus sugar, conditional on retail price stability, and authorized Rs 9 billion to clear outstanding claims of Oil Marketing Companies, including PSO. These approvals were made during a meeting chaired by Finance Minister Muhammad Aurangzeb. [BR]
• Cotton & Phutti Prices in Pakistan: Cotton Analyst Naseem Usman reported that in Sindh, new cotton prices range from Rs 20,000 to Rs 20,500 per maund, and Phutti prices are between Rs 9,000 to Rs 10,000 per 40 kg. In Punjab, cotton prices are Rs 20,500 to Rs 21,500 per maund, with Phutti prices ranging from Rs 10,000 to Rs 12,000 per 40 kg. The Spot Rate for cotton remains unchanged at Rs 19,700 per maund, and polyester fiber is priced at Rs 367 per kg. [BR]
• Balochistan Court Reserves Judgment on Wheat Procurement: The Balochistan High Court reserved judgement on a case about irregularities in wheat procurement and gunny sack distribution. Chief Minister Sarfaraz Bugti stated that 150,000 gunny bags were distributed for Rs 42 million and requested permission to procure 150,000 bags of wheat, suggesting remaining funds be used for welfare initiatives. [Dawn]
• Rice Exporters Oppose Tax Regime Change: Rice exporters have opposed the federal government's proposal to transition them from a fixed tax regime to a normal tax regime. In a letter to Prime Minister Shahbaz Sharif, Rafique Suleman, EC member of FPCCI and Chairman of the East Africa Committee REAP, highlighted concerns about the proposed tax change, emphasizing its potential impact on exporters, especially those in the rice sector. [BR]
• Punjab Allocates Rs 64.6 Billion for Agriculture: In the fiscal year 2024–25, the Punjab government plans to allocate over Rs 64.6 billion for the agricultural sector. This includes funding for 20 ongoing developmental schemes and 8 new schemes, such as the "green tractor" and "Kissan card" initiatives. Of the total amount, Rs 19.25 billion is allocated for ongoing projects, while Rs 45.35 billion is for new initiatives. [BR] [ET] [The News]
• New Camel Market Surges in Peshawar: In Peshawar's Nasirpur area, a new camel market has been established alongside traditional markets for sacrificial animals. Camel prices have surged by at least Rs 1 lakh compared to last year, deterring potential buyers. Traders from remote areas of Khyber-Pakhtunkhwa and Balochistan bring their camels, enduring heat while awaiting customers amidst long queues along the roadsides. [ET]
• Bank Alfalah Launches Digital Agriculture Financing: Bank Alfalah has introduced Pakistan’s first Digital Agriculture Financing product, making an initial disbursement of Rs 100 million for animal procurement. This initiative aims to empower small-scale farmers and entrepreneurs in the agriculture sector by offering dairy and equipment financing through a streamlined digital process, marking a significant advancement in Pakistan’s financial services. [BR]
• APTMA Criticizes FY25 Budget: The All Pakistan Textile Mills Association (APTMA) has strongly criticized the FY25 budget, describing it as highly regressive and warning that it could lead to the collapse of the textile sector and its exports. Textile exports, which reached $19.3 billion in FY22, dropped to around $16.5 billion in FY23 and continued to decline in FY24, falling consistently below the industry's capacity by over $600 million per month. [BR]
• Carpet Exports Down 25.8%: Rs 1.44 billion was the export value of carpets, rugs and mats in April 2024, down 25.8% compared to Rs 1.94 billion in April 2023, according to the PBS. [ET]

ENERGY - WEATHER, WATER & POWER

• Airport Outsourcing Meeting Update: Deputy Prime Minister Mohammad Ishaq Dar chaired the 10th meeting on outsourcing Islamabad, Karachi, and Lahore airports, where the IFC reported expected strong competition among investor consortiums for Islamabad International Airport, with bids closing on July 15, 2024. [The News]
• Government Cuts Petrol Prices: After a tax-heavy budget presentation, the government plans to reduce petrol prices by Rs 9.28 per liter to Rs 259.08 and high-speed diesel (HSD) by Rs 4.02 per liter to Rs 266.20, effective from June 16. This adjustment follows declining international oil prices post-Israel-Iran conflict and decreased Houthi attacks, marking the fourth consecutive price cut since May 1. [Dawn] [ET] [The News]
• US Treasury Delegation Visits Islamabad: A US Treasury Department delegation, led by Assistant Secretary Brent Neiman, visited Islamabad to discuss Pakistan's power sector issues, especially the circular debt crisis. They also evaluated Pakistan's economic situation, potential IMF program, and overall business climate, highlighting concerns over tariff disputes in wind projects between Washington and Islamabad. [BR]
• NPCC Reduces RLNG Demand: The National Power Control Centre (NPCC) has reduced RLNG demand for power generation from July to September 2024 due to lower recent load patterns, amidst ongoing significant load shedding across the country. NPCC's General Manager noted tentative RLNG requirements of 670 MMCFD, 600 MMCFD, and 456 MMCFD for July, August, and September 2024 respectively, in a letter to the Director General (Gas). [BR]
• PLPMA Warns of LPG Price Hike: The Pakistan LPG Marketers Association (PLPMA) predicts a potential Rs 30 per kg increase in LPG prices due to a significant rise in the petroleum development levy and an additional 18% sales tax on imported LPG. Vice-Chairman Ali Haider urged an immediate review of these policy changes, warning they would severely impact the industry and consumers. [Dawn]
• Hyderabad LPG Distributors Appeal to Reopen: Members of the All Hyderabad LPG Distributors Association in Sindh are appealing to the government and district administration to allow them to reopen their businesses. They held a press conference stating that over 150 LPG cylinder filling shops were closed after the May 30 incident in Paretabad, leaving many livelihoods without income. [Dawn] [ET]
• Refineries Criticize Ogra Over HSD Imports: The refining sector criticized Ogra for permitting the import of 15,000 tonnes of high-speed diesel (HSD) despite adequate local stocks. In a letter to Ogra Chairperson Mansoor Khan, the country's five refineries highlighted their previous communication in May about challenges in product off-takes due to Oil Marketing Companies (OMCs) failing to uplift committed quantities of HSD and MOGAS over the past two months. [BR] [ET] [The News]
• Pakistan Plans New IPPs Despite Circular Debt: Despite a ballooning circular debt in the power sector, the Pakistan Economic Survey 2023-24 reveals the government's plan to install additional IPPs. Five multi-fuel IPPs with a total capacity of 1,066MW are expected by 2024-25, despite concerns about the country's Rs 2.6 trillion circular debt burden and flawed policies that have led to excessive IPP proliferation. [The News]
• Pakistan Launches 550 MW Floating Solar Project: Pakistan launched its first 550 MW floating solar energy project in Sindh, among the world's largest. Sindh Energy Minister Nasir Hussain Shah highlighted its significance for affordable electricity, in line with PPP Chairman Bilawal Bhutto's vision, with a memorandum signed between the Department of Energy and Go Energy (Private) Limited for Keenjhar Lake. [BR] [Dawn]
• Federal Budget 2024-25: Power Sector Priorities: The Federal Budget 2024-25 for the power sector emphasized familiar goals like DISCOs' privatization, network upgrades, and promoting renewable energy, alongside a notable increase in subsidies. However, it did not address expectations regarding rooftop solar systems and net metering, despite their growing popularity due to supply surpluses and price reductions. [BR]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Finance Minister Defends Budget Tax Measures: Finance Minister Muhammad Aurangzeb defended the budget's tax measures, aiming to increase the tax-to-GDP ratio from 10% to 13% in two to three years. He mentioned a phased approach to potentially raising the petroleum levy to Rs 80 per liter based on international oil prices. The FBR recently accelerated retailer registrations, with 31,000 registrations in May after a slow start in April, ahead of tax collection starting in July. The Finance Bill 2024-25 proposes stringent penalties and imprisonment for tax fraud. [BR] [Dawn] [ET] [The News] [The News]
• Punjab Budget 2024-25 Details: The Punjab government presented a budget for 2024-25 with a total outlay of Rs 5,446 billion in the Assembly. It includes Rs 842 billion for the Annual Development Programme, a 28% increase from the current year. Income estimates are Rs 4,643 billion, with 30% allocated to development, 29% to infrastructure, 13% to production, and 5% to services. [BR] [Dawn] [ET]
• Punjab Allocates Rs 539.1 Billion for Health: The Punjab government has allocated Rs 539.1 billion for the health sector in the 2024-25 budget, a 24% increase from the previous year. Key allocations include Rs 55 billion for free medicines in public hospital OPDs and Rs 54 billion for Universal Health Coverage, with Rs 410.5 billion for non-development and Rs 128.6 billion for development schemes. [Dawn]
• Govt Appeals IHC Acquittal of Imran Khan: Certainly! The federal government has filed appeals with the Supreme Court challenging the Islamabad High Court's decision to acquit former Prime Minister Imran Khan and ex-Foreign Minister Shah Mehmood Qureshi in the cipher case. The appeals seek to overturn the IHC's June 3 order that acquitted the PTI leaders after accepting their appeals against their convictions. [Dawn] [ET]
• Pakistan Exceeds T-bill Auction Target: The recent T-bill auction raised Rs 1.208 trillion, surpassing its Rs 780 billion target and covering Rs 810 billion in maturing bills. Yields on three-, six-, and 12-month bonds fell sharply by 85 bps, 103 bps, and 115 bps to 20.15%, 19.97%, and 18.95% respectively. In the 2024-25 budget, Pakistan plans to launch a $1 billion+ international Eurobond and seek $4 billion from foreign commercial bank loans, with no Saudi oil facility projected despite previous requests. [The News] [The News]
• Pakistan's Forex Reserves Update: Pakistan's central bank forex reserves fell slightly to $9.103 billion, while total reserves, including commercial banks, increased to $14.384 billion. Finance Minister Muhammad Aurangzeb noted during the Economic Survey unveiling that the country's forex reserves now exceed $9 billion, covering two months' worth of imports and providing a strong foundation for the upcoming fiscal year. [Dawn] [The News]
• Pakistan Plans $1 Billion International Bond: Pakistan aims to raise $1 billion through international bonds in the 2025/26 fiscal year, with $250-300 million planned from China's panda bond market as the first step. Finance Minister Muhammad Aurangzeb noted future plans to tap European and other markets as Pakistan's investment ratings improve. He presented the budget for the upcoming fiscal year through June 2025 on Wednesday. [BR] [ET]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israel Genocide: Israeli helicopters struck Gaza’s Rafah Thursday, residents said, with Hamas militants reporting street battles in the southern city after top US diplomat Antony Blinken said a truce was still possible.? But the war raged on, and tensions soared on Israel’s northern border with more attacks by Lebanon’s Iran-backed Hezbollah forces targeting military positions.? Israel, which has traded near-daily fire with Hamas ally Hezbollah since the start of the Gaza war, said it would respond “with force”. [BR] [Dawn]
• G7 Agrees $50 Billion Ukraine Loan: Leaders of the Group of Seven (G7) agreed on Thursday to provide Ukraine with $50 billion in loans using interest from frozen Russian sovereign assets, marking a significant outcome of their annual summit in southern Italy. Ukrainian President Volodymyr Zelenskiy attended the summit for the second consecutive year. [BR] [Dawn]
• French Right-Wing Parties in Turmoil: French right-wing parties are grappling with internal conflicts amid intensified campaigning for snap elections called by President Emmanuel Macron. Macron's decision, coming two years after failing to secure a parliamentary majority, risks strengthening the far-right National Rally (RN) while creating disarray among traditional conservatives. [BR]
• Labour's Economic Manifesto Ahead of Election: Britain's Labour party launched a "wealth creation" manifesto, aiming to revive the economy if elected after 14 years in opposition. Led by Keir Starmer, Labour holds a strong lead over Rishi Sunak's Conservatives, positioning Starmer as a potential next prime minister. Starmer, 61, emphasized economic growth as their top priority ahead of the July 4 election. [BR]

OPINION(S) & REMAINDERS

• Hajj Pilgrims Begin Journey to Mina: A large number of pilgrims completed the Tawwaf around the holy Kaaba ahead of their journey to Mina today, marking the start of the Hajj pilgrimage. The peaceful valley of Mina is preparing to host 2.5 million pilgrims, including 160,000 from Pakistan, who have gathered for this spiritual journey culminating in the Eid Ul Azha celebrations. [ET]
• FICEC Expands to Ten Cities: Faysal Islami Currency Exchange Company (FICEC), a subsidiary of Faysal Bank Ltd (FBL), has started operations in ten cities, marking a significant development in Pakistan's financial sector. With an initial capital of Rs 1 billion, FICEC reinforces FBL's position as a leading Islamic bank in Pakistan, supported by State Bank's backing. [The News]
• GSMA Criticizes Pakistan's Digital Strategy: Julian Gorman of GSMA criticized Pakistan for lacking a clear digitalization strategy despite its potential in the digital economy due to a large, skilled youth population. He emphasized the need for improved government services and e-governance adoption to leverage this potential effectively. [BR]
• Tax Leakage in Pakistan Disclosed: Finance Minister Muhammad Aurangzeb informed the Senate Standing Committee on Finance that Pakistan experiences an annual tax leakage ranging from Rs 5,000 billion to Rs 6,000 billion. He disclosed this during the first day of the Finance Bill 2024 review at the Parliament House, attending the committee's morning session before a post-budget press conference. [BR]
• Opinion: Making Money via Climate Financing - “Climate change is a global problem which has no regard for national borders. Much must be done to deal with the causes and consequences of climate-related threats in the global north. Yet, addressing climate challenges is particularly complicated for the global south, due to resource constraints, and other simultaneously pressing needs of achieving economic development, and energy security.” - By Syed Mohammad Ali [ET]
• Opinion: The Misdeed of Seeking ‘Intervention’ - “Imran Khan wants to talk to the establishment. What is the establishment in Pakistan’s political parlance? Is it the Pakistan army? But why does Imran want to talk to the army? Does he not believe in democracy? Does he not talk incessantly about the democratic process being allowed to run its course in Pakistan? he is also blamed for being a product of the establishment. For that matter, every political party is considered a product of the establishment. Even PPP, which was built on a purely ideological ground, sought the establishment’s shadow for survival post-Benazir assassination.” - By Durdana Najam [ET]