Textile Market, IPPs, RLNG Rescheduling, HSD Sales, Loans from China & ADB, Ukraine Aid & IMF on BRICS.

TOPLINE

• A decline in cotton prices is expected despite improved business volume, with production estimated at 6 million bales and the need to import 5 million bales. APTMA is seeking a 4% interest rate cut to protect its $10 billion investment, as over 1 million families are facing poverty and the textile export industry is stalled due to reduced gas supply.
• 10 Independent Power Producers (IPPs), have approached PM Sharif with conditions for ending their sovereign agreements under the 2002 Policy. The IPPs cited government and media claims that their capacity payments have contributed to high consumer tariffs. 8 IPPs were renegotiated and agreements with 5 IPPs were terminated.
• Pakistan has officially requested Qatar to reschedule 5 LNG cargoes planned for 2025 to 2026 due to a reduction in RLNG consumption. Authorities are considering canceling 13 additional LNG cargoes set for 2025, as monthly consumption has dropped by 150 million cubic feet, due to lower GDP growth and decreased industrial activities.
• OGRA announced that high-speed diesel (HSD) sales have surged by 21% in October 2024, depleting previously adequate refinery stocks to only 19 days' worth of national consumption. The increase in sales is linked to the federal government's anti-smuggling efforts and the beginning of the agricultural season.
• Pakistan requested a 10 billion yuan ($1.4 billion) loan from China to address ongoing external financing challenges. Finance Minister Aurangzeb, met with China's Vice Minister of Finance, Liao Min, asked to increase the Currency Swap Agreement limit. Pakistan is expected to receive $2.75 billion in budget support from the ADB over 4 years.
• G7 leaders have finalized a $50 billion loan package for Ukraine, funded by profits from frozen Russian sovereign assets, with disbursement expected by year-end to support Ukraine's budget, military, and reconstruction efforts. The IMF is seeking more information about a cross-border payments system discussed by the BRICS countries aimed at increasing non-dollar transactions.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Cotton Prices Expected to Fall: A decline in cotton prices is expected despite improved business volume, with production estimated at 6 million bales and the need to import 5 million bales. APTMA is seeking a 4% interest rate cut to protect its $10 billion investment, as over 1 million families are facing poverty and the textile export industry is stalled due to reduced gas supply. [BR]
• Textile Sector Calls for Long-Term Policy: The textile sector is urging the government to create a long-term textile policy in consultation with industry stakeholders to double exports and boost foreign exchange earnings. Ijaz Khokar, former Chairman of PRGMEA, suggested finalizing a comprehensive five-year policy titled "Textile Destination of the World" during Texpo 2024 to achieve these goals. [BR]
• PTEA Condemns Gas Cut for CPPs: The Pakistan Textile Exporters Association (PTEA) has condemned the government's decision to cut gas supply to captive power plants (CPPs) from January 1, 2025. They highlighted that the textile industry has invested billions in these plants, which are crucial for ensuring stable power and preventing operational fluctuations. [Dawn]
• Climate March Highlights Activism: "Save the Earth, save the generations" was the main chant at Frere Hall during a Climate March organized by the Maholiyati Tahaffuz Movement and the Climate Action Centre on Sunday, 27 October. Yasir Darya expressed optimism about the growing commitment to climate activism with musical performances. [Dawn]
• Punjab Projects Higher Crop Yields: Punjab CM Maryam anticipates a significant increase in wheat and rice production, with rice exports projected to rise from $4 billion to $5 billion this year. She announced mandatory wheat cultivation on under-utilized government land and reported that off-season tomato cultivation has been completed on 1,762 acres. [ET]
• Ibrahim Fibers Reports Profit: Rs 1.73 billion was the profit reported by Ibrahim Fibers for nine months ended Sept 30, 2024, down 4.9% compared to a profit of Rs 1.82 billion last year. [ET]
• Rafhan Maize Profit Rises 37%: Rs 1.85 billion was the profit reported by Rafhan Maize Products for three months ended Sept 30, 2024, up 37% from a profit of Rs 1.35 billion last year. [ET]

ENERGY - WEATHER, WATER & POWER

• HSD Sales Surge Amid Shortages: OGRA announced that high-speed diesel (HSD) sales have surged by 21% in October 2024, depleting previously adequate refinery stocks to only 19 days' worth of national consumption. The increase in sales is linked to the federal government's anti-smuggling efforts and the beginning of the agricultural season, countering claims of healthy HSD stock levels. [The News]
• Petrol, Diesel Prices Set to Drop: Petrol and high-speed diesel (HSD) prices in Pakistan are expected to drop by Rs 2-Rs 3/liter from November 1 due to a reduction in global prices. International petrol prices fell by about $1.5-$76/barrel, while HSD decreased by $2.5-$84/barrel. The projected decrease is Rs 3 for petrol and Rs 2.30 for HSD, pending final exchange rate calculations. [Dawn]
• IPPs Seek Contract Resolution: Ten Independent Power Producers (IPPs), frustrated by the government’s stance on their contracts, have approached PM Sharif with conditions for ending their sovereign agreements under the 2002 Generation Policy. In a joint letter, the IPPs cited government and media claims that their capacity payments have contributed to high consumer tariffs. The National Assembly was informed that contracts with eight IPPs were renegotiated and agreements with five IPPs were terminated to reduce capacity payments and address rising electricity tariffs, especially for those using over 200 units. Minister Attaullah Tarar noted an 86 paisas/unit reduction in fuel cost adjustment, highlighting the prime minister’s commitment to lower electricity costs. [BR] [BR]
• Nepra Approves K-Electric Tariff Hike: Nepra has approved a Rs 3/unit increase in K-Electric’s tariff under the Fuel Charges Adjustment (FCA) to recover Rs 6.105 billion for July 2024, with recovery set for December bills. K-Electric cited its higher costs, lacking nuclear, hydro plants, and sufficient indigenous gas, as factors in its September FCA petition. [BR]
• Thar Coal Gas Potential Revealed: A new report suggests that gas from Thar coal could be cheaper than imported LNG, potentially lowering fuel and electricity prices for consumers. Currently, Thar coal is used for electricity, but tests show it can also be gasified for use in industries like fertilizers and steel. The study, led by Dr. Farid Malik, will be submitted to the Sindh government. [Dawn]
• Pakistan Seeks LNG Cargo Rescheduling: Pakistan has officially requested Qatar to reschedule 5 LNG cargoes planned for 2025 to 2026 due to a reduction in RLNG consumption. Authorities are also considering canceling 13 additional LNG cargoes set for 2025, as monthly consumption has dropped by 150 million cubic feet, primarily due to lower GDP growth and decreased industrial activities. [The News]
• JSM Protests Water Projects in Sindh: The Jeay Sindh Mahaz (JSM) staged a sit-in, blocking the National Highway in Matiari district for several hours to protest plans for 6 new canals and dams on the Indus River. JSM leaders accused Punjab of failing to uphold water-sharing agreements and blamed the federal government for neglecting the 1991 Water Accord, contributing to water shortages in Sindh's coastal areas. [ET]
• $50M Climate Project Approved: The Green Climate Fund has approved a $50 million project for Pakistan to develop local climate solutions through its startup ecosystem. In partnership with the National Rural Support Programme, the fund will support a venture accelerator and invest in the Climaventures Fund. [Dawn]
• Sindh Faces Extreme Heat Wave: Sindh province is experiencing hot and dry weather, with temperatures reaching 40 degrees Celsius in cities like Karachi, and Nawabshah and Hyderabad peaking at 42°C. The Met department forecasts that these high temperatures will persist for the next three to four days, with daytime highs in lower Sindh expected to remain between 37-39 degrees Celsius. [Dawn]
• Lahore Records Severe Air Pollution: On Sunday, Lahore recorded an Air Quality Index (AQI) of 707, making it the most polluted city globally. The city remained shrouded in smog, with AQI readings of 696 at 7 AM and 700 at 9 AM. It dropped to 348 by 10 PM. Lahore's PM2.5 concentration was 249μg/m3, far exceeding WHO guidelines. New Delhi had an AQI of 294, peaking at 499. [Dawn] [Dawn] [ET]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• IMF Highlights Pakistan's Reform Agenda: IMF's Jihad Azour announced that Pakistan's reform package aims to achieve fiscal sustainability by addressing long standing fiscal issues. The package seeks to enhance macroeconomic stability, reduce financing risks, and implement reforms in key sectors such as energy and state-owned enterprises while improving the overall business environment. [BR]
• Aurangzeb Pursues Credit Upgrade Talks: Finance Minister Aurangzeb met with S&P Global to discuss Pakistan's macroeconomic improvements and expressed hope for a credit rating upgrade. He also briefed U.S. Assistant Secretary of State Geoffery Pyatt on energy sector challenges and thanked the U.S. for its support in transitioning to renewable energy. [BR]
• Ruling Coalition Plans 27th Amendment: Following discussions between Prime Minister Shehbaz Sharif and PPP Chairperson Bilawal Bhutto-Zardari, the ruling coalition plans to introduce the 27th Amendment to reform local governments and address issues overlooked in previous legislation. This initiative comes after the 26th Amendment and aims to enhance local governance. [Dawn] [ET]
• Yahya Afridi Becomes Chief Justice: Justice Yahya Afridi was sworn in as the 30th Chief Justice of Pakistan by President Asif Ali Zardari, with top officials attending the ceremony. His first move as Chief Justice was reconstituting the three-judge committee that forms benches, reinstating Justice Munib Akhtar to the committee. [Dawn] [ET]
• Pakistan Seeks $1.4 Billion Loan: Pakistan has requested an additional 10 billion yuan ($1.4 billion) loan from China to address ongoing external financing challenges. Finance Minister Muhammad Aurangzeb, during a meeting with China's Vice Minister of Finance, Liao Min, asked to increase the Currency Swap Agreement limit from CNY 30 billion ($4.3 billion) to CNY 40 billion, which would bring the total facility to approximately $5.7 billion. [ET]
• IMF Sees Inflation Drop, Growth Boost: The IMF forecasts Pakistan's inflation will drop to 10.6% by 2025, with the economy growing by 3.2% in the 2024-25 fiscal year. Jihad Azour emphasized that the reform package focuses on achieving fiscal stability, boosting revenue, and reforming state-owned enterprises to attract foreign investment and enhance export potential. [ET]
• ADB Boosts Pakistan's Budget Support: Following a $7 billion loan from the IMF, Pakistan is expected to receive $2.75 billion in budget support from the ADB over four years, including $800 million this fiscal year and $650 million annually from 2025-26 to 2027-28, signaling better financing prospects from international financial institutions. [The News]
• Trade Deficit Grows 62% in Q1: Pakistan's trade deficit with nine neighboring countries increased by 62% to $2.917 billion in the first quarter, driven by higher imports from China, India, and Afghanistan. This ongoing deficit mirrors last year's figures, raising concerns for policymakers as the total for FY24 reached $9.506 billion, a 49% rise from the previous year. [Dawn]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israeli Genocide: Israel's airstrikes on Hezbollah and Hamas targets in Lebanon and Gaza continued on Sunday, resulting in 45 Palestinian deaths, primarily in northern Gaza. The Israeli military claimed to have killed 70 Hezbollah fighters and struck 120 targets, including weapons facilities in southern Beirut. Five Israeli soldiers were killed in Lebanon, increasing the military death toll to 37 since the ground offensive began on September 30. Ceasefire negotiations are ongoing in Qatar. [Dawn] [Dawn] [Dawn] [ET]
• RSF Kills 124 in Sudan Attack: Sudan's paramilitary Rapid Support Forces (RSF) killed at least 124 people in a village in El Gezira State on Friday, marking one of the deadliest incidents in the ongoing 18-month conflict. Following the surrender of a high-ranking RSF officer, activists report that the RSF has conducted revenge attacks, resulting in civilian deaths, detentions, and widespread displacement in the region. [Dawn]
• China Grants Tariff-Free Access to Taliban: China will grant the Taliban tariff-free access to its construction, energy, and consumer sectors, as announced by Beijing's envoy to Afghanistan. This policy, effective December 1, allows goods from least developed countries with diplomatic ties to China to enter its economy without import duties. [Dawn]
• G7 Approves $50B Loan for Ukraine: G7 leaders have finalized a $50 billion loan package for Ukraine, funded by profits from frozen Russian sovereign assets, with disbursement expected by year-end to support Ukraine's budget, military, and reconstruction efforts. They emphasized solidarity among G7 partners and called on Moscow to end its war and compensate Ukraine for damages. [Dawn] [ET]
• Harris, Trump Campaign in Swing States: Kamala Harris and Donald Trump campaigned in key swing states over the final weekend before the election, with Michelle Obama joining Harris and Trump hosting a rally in New York. As polls indicate a tight race, with over 38 million early ballots cast, voters are deciding between electing the first woman president or the oldest commander in chief by November 5. [Dawn]
• IMF Probes BRICS Payment System: The IMF is seeking more information about a cross-border payments system discussed by the BRICS countries aimed at increasing non-dollar transactions, according to the Fund’s managing director. This discussion occurred during the BRICS meeting in Kazan, Russia, coinciding with the annual meetings of the IMF and World Bank in Washington. [BR]
• Provinces Agree on Fisheries Subsidies: All provinces have agreed to implement phase one of the WTO's Agreement on Fisheries Subsidies, addressing illegal fishing and overfished stocks. The commerce ministry confirmed that relevant stakeholders have endorsed the ratification and are ready for implementation. [ET]
• Gold Hits Record $2,758: Gold has reached a record $2,758/ounce, gaining over a third in value in the past year as a safe haven for investors. While a rally toward $2,800-3,000 is expected in 2025, a correction of $300-500 may occur in early 2025, with some profit-taking before year-end 2024. [ET]

OPINION(S) & REMAINDERS

• Few Companies Drive Tax Revenue: Only 5,000 large companies in Pakistan are compliant taxpayers, contributing 90% of the total corporate income tax collected by the FBR, despite nearly 125,000 companies being registered with the SECP. Among these, 50,000 file income tax returns, but half of them submit nil-returns, indicating that only a small fraction of active companies are paying significant taxes. [BR]
• 15 Security Personnel Killed in KP Attacks: At least 15 security personnel were martyred in militant attacks across Khyber Pakhtunkhwa, with 10 Frontier Constabulary members killed in Dera Ismail Khan during a checkpoint assault. The Interior Ministry confirmed the attack occurred on Thursday night, injuring three others. [Dawn]
• Suicide Bombing Kills 8 in Waziristan: A suicide bomb blast at a checkpoint in North Waziristan killed at least eight people, including four policemen and two security officials, and injured several others. The bomber, riding in a rickshaw, detonated the explosives during a vehicle inspection at the Aslam checkpoint, with the injured taken to hospitals in Miranshah and Bannu. [Dawn]
• Opinion: Weeding Out a Crop Killer - “The widespread growth of Parthenium weed is emerging in Pakistan as a major threat to the country's food security, as well as human and animal health. It is estimated that the three major food crops wheat, rice and maize alone suffer yield losses of 16% globally due to invasive weeds, costing approximately $96 billion annually. For a country like Pakistan, with 60% of the economy dependent on agriculture, this issue is incredibly serious.” - By Nasir Jamal [Dawn]
• Opinion: Climate Change Crops Production at Risk - “In FY24, Pakistan's agriculture sector achieved a notable 6.25 per cent growth, while its crop sub-sector posted an impressive 16.82pc increase. Recent climate changes, characterized by erratic rainfall patterns, increased frequency and intensity of heatwaves, and rising temperatures with the 2010s being the hottest decade and 2023 the hottest year on record have made crop performance further unpredictable and turned farming into an increasingly risky venture. In fact, it has further worsened the challenges for farmers, who are already grappling with rising production costs and falling crop prices.” - By Khalid Saeed Wattoo & Dr Waqar Ahmad [Dawn]
• Opinion: Consumer Goods Industry & Farmers' Income - “The economy has been passing through a stagnant phase where the Large-scale Manufacturing Index decelerated by 0.20% in the first two months of fiscal year 2025. Similarly, the agriculture sector has been facing acute challenges since last year. The government fixed the support price of wheat at Rs 3,900/40 kg. Large influential farmers could sell their wheat stock around the support price, medium farmers had to rely on the market where they initially sold wheat at around Rs 3,300/40 kg while small farmers had to sell their stock to merchants and got around Rs 3,000/40 kg.” - By Dr Fahd Rehman [ET]
• Opinion: Dates of Despair - “Urgent reforms can help Balochistan’s date farmers unlock the full potential of growing this superfood. The demand for dates in Balochistan skyrockets during Ramadan, as they are a popular and nutritious way to break the fast. With their high sugar content, dates provide a quick energy boost and are a traditional part of the Iftar meal. This increased demand naturally leads to higher prices. “Our dates are purely organic and we do not use pesticide sprays, chemicals and urea,” says Phullan while offering me various samples to taste. Harvesting, drying, sorting, storage, and marketing dates to different places is done at Phullan’s farm.” - By Shakeel Phullan [ET]
• Opinion: Population Boom or Bust - “Pakistan's economy is at a critical juncture, and the country's first-ever Digital Population and Housing Census presents a unique opportunity for policymakers to recalibrate economic priorities. This comprehensive national exercise offers vital data for informed decision-making, providing insights that could significantly shape the economic, financial, and business landscape.” - By Sara Danial [Dawn]
• Opinion: Pakistan's SDGs Challenge - “Pakistan was the first country to officially adopt the United Nations' Sustainable Development Goals (SDGs) at the federal level, incorporating them into its national agenda and budgeting and setting up SDGs Service Delivery Units in federal and provincial headquarters. Despite these efforts, the country ranks 137th out of 167 nations, signaling a significant gap between policy and practice.” - By Dr Shahid Hussain Kamboyo [ET]