PAR News - Mon, 15 Apr 2024

TOPLINE

• The Pakistani government, under pressure from sugar mill owners, is expected to approve a controlled sugar export strategy, initially allowing 250,000 metric tonnes for export contrary to PSMA’s request for 1 million metric tonnes.
• Pakistan expects a record-breaking wheat harvest of around 15 million metric tons of biofortified, zinc-enriched wheat for the 2024 season, largely due to the widespread adoption of the Akbar 2019 variety which is covering 42% of wheat area.
• The National Disaster Management Authority (NDMA) has issued a warning for rain, dust storms, thunderstorms, hailstorms, and heat waves across Pakistan during April due to the El-Nino impacts.
• Energy Minister Awais Leghari announced a reduction in April's electricity prices, with the per-unit price dropping by Rs 3.83 due to adjustments in fuel and quarterly charges. Petrol and Diesel is likely to increase for the next fortnight; as petrol prices may rise by Rs 2.50 per liter and high-speed diesel by Rs 8.50 per liter on April 15.
• In the first 9 months of FY24, the federal government borrowed a record Rs 4.8 trillion from scheduled banks, up 138% from FY23. The ADB projects Pakistan's real GDP to grow by 1.9% in FY24. Pakistan’s economic team is set to meet with the IMF team. A Saudi team is visiting Pakistan for 2 days hoping to increase their investments in Pakistan.
• Hundreds of drones and missiles launched by Iran over the weekend marked a new and concerning escalation in retaliation to the embassy destroyed by Israel as the direct specter of war has been raised between Israel and Iran.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Sugar Export Strategy Approved: The government, under pressure from sugar mill owners, is expected to approve a controlled sugar export strategy, initially allowing 250,000 metric tonnes for export, contrary to the Pakistan Sugar Mills Association's request for one million metric tonnes. [The News]
• Punjab Aims for 4 Million Acres of Cotton Cultivation: The Punjab Agriculture Department aims to cultivate cotton on 4 million acres of land in the province this year. Secretary Agriculture, Punjab Iftikhar Ali Sahoo revealed this during a meeting on the current cotton situation, emphasizing directives to relevant field formations to maximize cotton cultivation. [BR]
• Pakistan Anticipates Record Wheat Harvest: Pakistan expects a record-breaking wheat harvest of around 15 million metric tons of biofortified, zinc-enriched wheat for the 2024 season, largely due to the widespread adoption of the Akbar 2019 variety. This success, covering 42% of the wheat cropping area, is credited to a decade-long partnership with HarvestPlus, according to Javed Ahmad, Director at the Wheat Research Institute in Faisalabad. [BR]
• Peshawar Tomato Prices Hit Rs 500/kg Post-Eid: Tomato prices soared to Rs 500 per kilogram in Peshawar's retail market, potentially due to limited supplies during Eidul Fitr. Despite the usual post-holiday decline in prices, rates have risen significantly. Retailers suggest restricted supply during Eid as the main reason for the hike. [ET]
• Punjab Launches Bardana App for Online Gunny Bag Applications: Farmers can apply for gunny bags online via the Bardana app starting today for this year's wheat procurement season, commencing on April 22. Applications are open until April 17 through the app developed by the Punjab Information Technology Board (PITB), as per a Punjab food department spokesperson. [ET]
• Tobacco Exports Surge: Tobacco exports for the first eight months of the 2023-24 financial year rose by 32.09%, totaling $60.581 million, compared to $45.863 million in the same period last year. Quantity-wise, exports increased by 3.80%, from 16,742 metric tons to 17,378 metric tons, according to the Pakistan Bureau of Statistics (PBS). [The Nation]
• Customs Raises Values for Imported Potato Chips: The Directorate General of Customs Valuation Karachi has increased the customs values for various branded potato chips imported from all origins. This adjustment, outlined in valuation ruling number 1870 of 2024, affects brands like Pringles, Ligo, Chizzpa, Jacker Potato, Kracks, Hunter’s, Mister Chips, Tiffany, Kettle, Poppin, and others. [BR]
• Meat Export: Rs 12.7 billion was the export value of meat and meat preparations in Feb 2024, up 61.8% compared to Rs 7.85 billion in Feb 2023. [ET]
• Textile Material Import: Rs 10.6 billion was the import value of synthetic fiber in Feb 2024, up 41.8% compared to Rs 7.47 billion in Feb 2023. [ET]
• Dairy Items Import: Rs 1.71 billion was the import value of milk, cream and milk food for infants in Feb 2024, down 51.2% compared to Rs 3.51 billion in Feb 2023. [ET]
• Opinion: Managing Cotton Crop During Drought Conditions - “Drought stress can trigger a wilt attack in cotton plants, causing them to appear limp and withered — a condition known as Parawilt. Unlike typical fungal diseases, Parawilt stems from water scarcity in the field, leading to dehydration and eventual drying of the plants, particularly under high temperatures. If left unchecked, this can result in extensive damage across the entire field.” - By Sajid Mahmood [BR]

ENERGY - WEATHER, WATER & POWER

• NDMA Warns of April Weather Hazards Across Pakistan: The National Disaster Management Authority (NDMA) has issued a warning for rain, dust storms, thunderstorms, hailstorms, and heat waves across Pakistan during April. The NDMA Tech Team and the Pakistan Meteorological Department (PMD) predicted near-normal rainfall in most parts of the country, based on a 30-year average from 1991 to 2020. [ET] [BR]
• Petrol, Diesel Prices May Rise: Middle East Tensions - Due to Middle East tensions, petrol prices may rise by Rs 2.50 per liter and high-speed diesel by Rs 8.50 per liter on April 15. International market prices for petrol and diesel have increased by about $4 and $4.50 per barrel, respectively, over the last fortnight. Final calculations suggest petrol prices may increase by Rs 2.50 to Rs 2.80, and HSD by Rs 8 to Rs 8.50 per liter. [Dawn]
• World Bank Backs Dasu: The World Bank plans to provide a $1 billion loan for Pakistan's Dasu hydropower project, aimed at integrating cheaper electricity and showcasing resilience against adversaries. This marks the third major financing for the project, with approval expected in June, slightly delayed from the initial schedule. [ET]
• Electricity Price Drop: Energy Minister Awais Leghari announced a reduction in April's electricity prices, with the per-unit price dropping by Rs 3.83 due to adjustments in fuel and quarterly charges. This translates to a decrease of Rs 1.68 in electricity bills compared to the previous month. [The News]
• Incentivizing Energy Production: Oil and gas exploration firms are urging the new government to incentivize increased production from existing fields to enhance energy security. They highlight the potential for deploying advanced technology to overcome Pakistan's energy shortfall. [ET]
• FFC Raises Urea Prices: FFC increased urea prices by Rs 634 to Rs 4,286 per 50kg bag, nearing competitors' rates amid potential government gas tariff hikes. This adjustment follows the government's tariff increase to Rs 1,597/mmBtu for other manufacturers receiving gas from Sui Southern Gas Company and Sui Northern Gas Pipelines Limited. [ET]
• Electric Vehicles Market: BYD Group of China joins Pakistan's passenger vehicle market with Mega Conglomerate Pvt Ltd, as the nation embraces hybrid and electric vehicles. Additionally, used car dealers advocate for government permission to import cars up to 10 years old and SUVs up to 20 years to boost revenue and affordability. [Dawn] [Dawn]
• PAJCCI Commends Pakistan Railways: PAJCCI praised Pakistan Railways for its record-high annual revenue of Rs 66 billion in the first nine months of the year. They suggested launching cargo trains to increase earnings further. PAJCCI KP Coordinator Zia-ul-Haq Sarhadi lauded Pakistan Railways for the achievement. [BR]
• Pakistan, Kazakhstan Expand Rail Link: Pakistan and Kazakhstan plan to expand the Trans-Afghan rail link to boost transit and regional trade. This was discussed in a meeting between Pakistan Railways officials and the Ambassador of Kazakhstan, aiming to enhance shared development goals. The expanded rail line will support both passenger and freight services, fostering regional economic growth. [BR]
• NEPRA Links High Electricity Costs to Pakistan's Low Growth: Nepra disclosed that high electricity costs contributed to Pakistan's low economic growth rate of 0.29% in the fiscal year 2022-23. In its 'State of the Industry Report 2023,' the power regulator highlighted that elevated electricity rates were a significant factor affecting economic development and the decline in GDP. [ET]
• Auto Parts Export: $ 7.18 million was the export value of rubber tyres and tubes in Feb 2024, up 96.9% compared to $ 3.65 million in Feb 2023, according to the Pakistan Bureau of Statistics. [ET]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Government Borrowing Surges: In the first nine months of FY24, the federal government borrowed a record Rs 4.8 trillion from scheduled banks, up 138% from FY23, primarily to finance the fiscal deficit. The Asian Development Bank (ADB) projects Pakistan's real GDP to grow by 1.9% in FY24, driven by private sector investment rebound, but private sector borrowing remains low, indicating subdued economic participation amidst high risks and uncertainty. [BR] [BR] [Dawn]
• Pakistan Tops Asia in Living Costs, ADB Report Shows: Pakistan faces the highest living cost in Asia, with a 25% inflation rate, and is expected to have the fourth lowest economic growth rate in the region at 1.9%, according to a new Asian Development Bank (ADB) report. Released on Thursday, the report projects a 15% inflation rate and a 2.8% growth rate for the next fiscal year, further highlighting economic challenges. [ET]
• Pakistan's Economic Team Heads to IMF: Pakistan's economic team, headed by Finance Minister Muhammad Aurangzeb, departed for Washington on Sunday as Pakistan is discussing a potential follow-up program with the IMF after its nine-month, $3 billion stand-by arrangement. IMF Chief Kristalina Georgieva noted that Pakistan is successfully completing its existing program, with the economy showing some improvement and reserves being built up. [BR] [BR]
• Saudi Delegation Visits Pakistan: A Saudi delegation, led by Foreign Minister Faisal bin Farhan, arrives for a two-day visit ahead of a potential visit by Iranian President Ebrahim Raisi on April 22. The delegation includes key officials from various ministries and investment funds. Riyadh and Islamabad have agreed to increase Saudi deposits in the State Bank of Pakistan (SBP) by $2 billion, raising them from $3 billion to $5 billion. [BR] [ET]
• Bank Alfalah Eyes Samba: Arif Habib Limited (AHL) has been appointed as the manager for Bank Alfalah Limited's intention to acquire around 84.51% shares of Samba Bank Limited. AHL submitted the announcement to the Pakistan Stock Exchange in accordance with regulatory requirements. [BR]
• Pakistan Repays $1 Billion Bond: Pakistan has timely repaid a $1 billion international bond despite foreign exchange challenges, according to the State Bank of Pakistan. The payment, covering principal and interest, was made on April 12 for a 10-year Eurobond launched in 2014 and matured in April 2024. [BR]
• IT Exports Decline in January 2024: In January 2024, IT exports experienced a concerning decline of 12.4% to $265 million compared to December 2023's $303 million, according to leading IT exporter Noman Said. Said emphasized the need to acknowledge challenges within the industry, hindering efforts to maximize IT export potential. [BR]
• Government Exceeds Sukuk Target: The government raised Rs 12.732 billion from Ijarah Sukuk bonds, exceeding its target by over 27%. The auction attracted bids worth Rs 23.7 billion, indicating strong investor interest, with the Pakistan Stock Exchange conducting auctions for various Sukuk types, including one-year fixed-rate discounted (FRD) Sukuk. [The News]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israel Genocide: The recent direct attack on Israel by Iran has heightened fears of a larger conflict among Israelis. While accustomed to warnings of attacks from Iranian-backed Hamas, the hundreds of drones and missiles launched by Iran over the weekend marked a new and concerning escalation in retaliation to the embassy destroyed by Israel. Israel reported modest damage after intercepting most of the drones and missiles launched by Iran. [BR] [BR] [ET] [ET]
• Turkey Imposes Trade Restrictions on Israel: Turkey imposed trade restrictions on Israel, citing the Gaza conflict. The measures include limits on products like cement and steel. This follows Israel's blocking of Turkey's aid drop to Gaza. Restrictions will stay until Israel declares a ceasefire and ensures uninterrupted aid flow into Gaza, Turkey's trade ministry stated. [BR]
• G20 Emerging Economies Influence Growth: Emerging economies within the G20 are increasingly affecting growth in advanced economies due to domestic shocks. Countries like China and Argentina, deeply integrated into global trade and commodity chains, are now influencing global shocks rather than just receiving their impacts. [BR]
• Thai Rice Prices Rise on Indonesian Demand: Rice prices from Thailand increased this week due to robust demand from Indonesia, with Thailand's 5% broken rice prices rising to $585 to $590 per ton from last week's $570. Meanwhile, Indian rates remained near a two-month low due to subdued demand. [BR]
• Niger Signs $400 Million Oil Deal with CNPC: Niger signed a $400 million memorandum of understanding with China National Petroleum Corp (CNPC) for the sale of crude oil from its Agadem oilfield, as reported by state television RTN. Details were not provided, and comments from Niger's military authorities and CNPC were unavailable. [BR]
• US Sanctions Strand Russian Oil at Sea: Fresh Iran-related sanctions imposed by the United States have stranded Russian oil and products on 4 tankers at sea, as per LSEG data. This underscores increased cooperation between Moscow and Tehran amid growing Western sanctions, while the West aims to reduce loopholes and revenue flow. [BR]
• Gold Hits Record High Amidst Middle East Tensions: Gold prices soared to a record peak on Friday as investors sought safe-haven assets amidst tensions in the Middle East and economic challenges in China. Spot gold rose 1% to $2,397.84 per ounce, hitting a record high of $2,400.35, with prices up nearly 3% for the week. Meanwhile, US gold futures climbed 1.8% to $2,414.80. [BR]
• Oil Prices Surge Amid Iran-Israel Tensions: Oil prices hit a six-month high on Friday and are expected to rise further after Iran's weekend attack on Israel, analysts say. Iran's launch of explosive drones and missiles, in retaliation for a suspected Israeli attack in Syria, marks the first direct assault on Israeli territory, raising concerns of broader regional conflict. [BR]

OPINION(S) & REMAINDERS

• Thall-Parachinar Road Closure Disrupts Eid Plans: The closure of Thall-Parachinar Road due to security concerns kept Upper Kurram residents from spending Eid ul Fitr with their families. This followed a violent incident on April 7, where two individuals were killed and four injured by unidentified gunmen on the Parachinar bypass road. [BR]
• Pakistan's Growth Lags India's: OCM Infographics - Optimus Capital Management (OCM) shared infographics during Eid holidays comparing Pakistan and India's economic growth. Pakistan's growth surpassed India's until the early 1990s but has since declined, averaging 3.4% in the past 15 years. Projections indicate further slowdown to 2% over the next five years, contrasting with India's consistent growth over the past 27 years. [ET]
• Ministry to Halt ERRA Funding: The Ministry of Planning, Development, and Special Initiatives has decided to prohibit the allocation of funds for the Earthquake Reconstruction and Rehabilitation Authority (ERRA) from the development budget in the future, according to sources. [BR]
• Branchless Banking Booms: Pakistan's branchless banking sector saw remarkable growth in Q4 2023, with transactions surpassing 1 billion for the first time, totaling over Rs 5 billion. SBP data indicates a 12% increase in both volume and value compared to the previous year, with 22% of transactions for bill payments and mobile top-ups, and 43% for fund transfers. [The News]
• Opinion: Prioritizing Sustainable, Small-Scale Farming - “Climate change, a reality acknowledged by science, poses a significant threat to Pakistan’s food security. As the world grapples with this global challenge, Pakistan, a nation particularly vulnerable to extreme weather events, must find solutions to ensure food security in the coming decade.” - By Syed Yousuf Raza [BR]
• Opinion: Rising Temperatures, Rising Urgency - “According to projections by the World Bank, Pakistan ranks among the top 10 countries most vulnerable to climate change, with a trajectory pointing towards a surge in extreme heat days by 2050. Left unaddressed, this trajectory could unleash a cascade of adverse consequences, including heightened poverty rates, diminished economic output, and exacerbated inequality.” - By Sajid Mehmood Qazi [BR]