PAR News - Mon, 29 Apr 2024

TOPLINE

• Prime Minister Shehbaz Sharif has increased the federal wheat procurement target from 1.4 lakh to 1.8 lakh metric tonnes in response to farmer grievances, urging PASCO to expedite purchases.
• Mill owners in Pakistan have decreased the prices of various flour types by Rs 4 per kg, reflecting the impact of a significant influx of inexpensive imported wheat. Despite these reductions, the full benefit of the lower wholesale prices has not been completely passed on to consumers by retailers.
• Pakistan's rice exports reached an unprecedented $3 billion in the first nine months of fiscal year 2024, setting a new record and primarily driven by India's ban on rice exports.
• Prime Minister Shehbaz Sharif is currently in Riyadh for the World Economic Forum's Special Meeting, discussing trade, investment, and sustainable growth from April 28-29, 2024.
• The Steering Committee, led by Finance Minister Muhammad Aurangzeb, approved McKinsey and Company's proposal for the digitalization of the Federal Board of Revenue (FBR).
• Diplomatic efforts are underway for a truce and hostage-release in Gaza, with Hamas set to deliver its response to Israel's latest proposal in Egypt.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Flour Price Cuts: Pakistan's Dilemma - Mill owners in Pakistan have decreased the prices of various flour types by Rs 4 per kg, reflecting the impact of a significant influx of inexpensive imported wheat. Despite these reductions, the full benefit of the lower wholesale prices has not been completely passed on to consumers by retailers, as reported by a former chairman of the Pakistan Flour Mills Association. [Dawn]
• Pakistan's Rice Export Boom: Pakistan's rice exports reached an unprecedented $3 billion in the first nine months of fiscal year 2024, setting a new record and primarily driven by India's ban on rice exports. This represents an 83% increase in rice export earnings, from $1.6 billion during the same period last year to $2.939 billion, surpassing the total rice export earnings of $2.1 billion in FY23. [BR]
• Cotton Price Plunge Concerns: Cotton prices in Pakistan have fallen by Rs 800 per maund this week, influenced by a global decline, with expectations of low prices continuing into the next season. The textile sector is in crisis, prompting the Pakistan Business Forum to urge the government to set a support price for cotton to boost farmer morale and stabilize the market. [BR]
• Pakistan Boosts Wheat Procurement: Prime Minister Shehbaz Sharif has increased the federal wheat procurement target from 1.4 lakh to 1.8 lakh metric tonnes in response to farmer grievances, urging PASCO to expedite purchases. Meanwhile, farmers are threatening protests over falling wheat prices and exploitation by private buyers, particularly criticizing the Punjab government's delay in entering the market. [Samaa] [The News]
• Mixed Food Price Trends: This week, prices of essential food commodities varied, with live chicken dropping from Rs 520 to Rs 440 per kg and eggs from Rs 280 to Rs 260 per dozen. Meanwhile, cow meat exceeded official rates at Rs 900 per kg with bone and Rs 800 without, and mutton beef increased to Rs 2200-2400 per kg from Rs 2200 previously. [BR]
• Pakistan's Mobile Import Surge: During the first nine months of fiscal year 2023-24, Pakistan's mobile phone imports surged to $1.301 billion, marking a 181.26% increase from the previous year. Despite a month-on-month decrease in March 2024, year-on-year imports for that month soared by 930.92%. [BR] [ET]
• Pakistan's IT Export Milestone: In March 2024, Pakistan's IT exports reached a record $306 million, driven by improved business policies and stronger international ties, particularly in the Middle East. This marks a significant increase from $225 million in March 2023 and surpasses the previous record of $303 million set in December 2023. [The Nation]
• Spices Import: Rs 4.87 billion was the import value of spices in March 2024, up 44.8% compared to Rs 3.36 billion in March 2023. [ET]
• Football Export: Rs 6.78 billion was the export value of footballs in March 2024, up 8.54% compared to Rs 6.25 billion in March 2023, according to the PBS. [ET]
• Vegetable Export: Rs 16.6 billion was the export value of vegetables in March 2024, up 61.7% compared to Rs 10.24 billion in March 2023, according to the Pakistan Bureau of Statistics. [ET]

ENERGY - WEATHER, WATER & POWER

• Storms Stir Mixed Reactions: Heavy rains and hailstorms across parts of the country have led to flooding, property damage, and crop concerns. In Bajaur, seven people were trapped under rubble after a roof collapse, while in Khyber Pakhtunkhwa, although the rains cooled temperatures and cheered locals, farmers worried about potential damage to wheat crops. [BR]
• Pakistan Seeks DSRA Relief: Facing foreign exchange reserve constraints, the State Bank of Pakistan has requested Thar Coal Block-1 Power Generation Company Limited, a Chinese firm, to negotiate with its lenders to reduce the requirements for maintaining a Debt Service Reserve Account (DSRA). This follows discussions about the company’s foreign exchange needs during a meeting on April 19, 2024. [BR]
• Pakistan Approves FBR Digitalization: The Steering Committee, led by Finance Minister Muhammad Aurangzeb, approved McKinsey and Company's proposal for the digitalization of the Federal Board of Revenue (FBR). The decision, made during a Friday meeting, aims to enhance the efficiency and transparency of the country's tax administration. [BR]
• Pakistan's Power Consumption Plan: The government is considering strategies to boost electricity consumption after noting a 7.5% decrease in March 2024. This was discussed by CPPA-G CEO Rihan Akhtar during a NEPRA hearing on a proposed price hike of Rs 2.94 per unit to recover an extra Rs 22.8 billion from consumers. [BR]
• Solar Tax Clarification: The Power Division has denied reports of a government plan to impose a fixed tax on solar power generation, clarifying that no such proposal has been made. They highlighted that the growing use of solar panels by wealthier individuals leads to increased subsidy costs, which could raise electricity prices for poorer consumers by at least Rs 3.35 per unit. [BR]
• Crackdown on Power Overbilling: The Federal Investigation Agency (FIA) is addressing nationwide electricity overbilling issues, having inspected 38,929 meters and identifying 256 overbilled cases. They've initiated 23 inquiries, filed 5 lawsuits against distribution companies, and recovered significant amounts, correcting an excess charge of Rs 34.29 billion in just the last month. [The News]
• Urea Price Hike Controversy: The government has confronted Fatima Fertilizer Limited regarding their unjustified Rs 561 increase per bag of Sarsabz Urea, despite no rise in input costs. The Ministry of Industries and Production has demanded an explanation, warning of potential regulatory action, while Federal Minister Rana Tanveer Hussain has called for the company to retract the hike. [The News]
• Pakistan Balances Diplomatic Ties: The Pakistani Foreign Office responded to potential US sanctions regarding the Iran-Pakistan Gas Pipeline by emphasizing on Friday that enhancing relations with one country should not adversely affect ties with another. This statement followed the recent visit of Iranian President Ebrahim Raisi and subsequent agreements between Pakistan and Iran. [BR]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Sharif's Strategic Saudi Talks: Prime Minister Shehbaz Sharif is currently in Riyadh for the World Economic Forum's Special Meeting, discussing trade, investment, and sustainable growth from April 28-29, 2024. He held discussions with key Saudi ministers about mutual interests and, during the forum, Finance Minister Aurangzeb highlighted Pakistan's interest in exploring digital currency adoption. [BR] [BR] [BR] [BR]
• Imran Khan Approves Talks: Imran Khan, the jailed former Prime Minister of Pakistan, has allowed senior leaders of his party to initiate dialogue with the ruling Pakistan Muslim League-Nawaz coalition and military leaders, provided the discussions adhere to constitutional and legal norms. This development represents a significant move towards mending previously strained relationships. [BR]
• Sunni Ittehad Gains Assembly Seat: The Sunni Ittehad Council (SIC) has been recognized as the second largest political party in Pakistan's National Assembly, with Faisal Amin Khan Gandapur confirmed as its first Member of National Assembly (MNA) following an official notification from the Election Commission of Pakistan. [BR]
• Boosting IDB-Pakistan Projects: Prime Minister Muhammad Shehbaz Sharif and IDB President Dr. Muhammad Sulaiman Al Jasser agreed to accelerate IDB-funded development projects in Pakistan during a meeting at the World Economic Forum. The Prime Minister thanked the IDB for its previous $1 billion investment in Pakistan's uplift projects. [BR]
• Probe into Tax Officials' Role in TTS Delay: The Prime Minister has tasked the Secretary of the Ministry of Finance with investigating whether tax officials are causing delays in the implementation of the track-and-trace system (TTS) in certain sectors. This follows dissatisfaction with a report that failed to identify responsible Federal Board of Revenue (FBR) officials. [BR]
• Pakistan's Economic Turnaround: State Bank of Pakistan Governor Jameel Ahmad stated that concerted efforts by the government and the SBP have led to notable economic improvements despite past challenges like high inflation and unstable exchange rates. He discussed this during his speech at the ICMA Pakistan Convocation. [BR]
• Military Backs Pakistan's Prosperity: At the Green Pakistan Initiative Conference, Chief of Army Staff General Asim Munir stressed that economic stability is crucial for true independence and assured the military's support for Pakistan's prosperity. He also noted that any form of instability would not be tolerated. The event was attended by prominent civil and military officials. [BR]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Diplomacy for Gaza Truce Advances: Diplomatic efforts are underway for a truce and hostage-release in Gaza, with Hamas set to deliver its response to Israel's latest proposal in Egypt. This follows intense pressure on the Israeli government from global allies and domestic protesters after the October 7 attack that sparked the conflict. A Hamas delegation is expected in Egypt on Monday to discuss the terms. [BR]
• Saudi Adjusts Vision 2030: At the World Economic Forum in Riyadh, Saudi Finance Minister Mohammed Al Jadaan announced adjustments to the Vision 2030 plan, indicating a need to scale back some projects while accelerating others to focus on the quality of economic growth and adapt to new challenges. [BR]
• Fed's Rate Decision Looms: The US Federal Reserve is likely to keep interest rates unchanged this week due to a recent inflation rise to 2.7% annually, surpassing their 2% target. This uptick in inflation reduces the likelihood of rate cuts starting this summer, amidst slowing economic growth but a strong labor market. [BR]
• Sri Lanka Leases Troubled Airport: Sri Lanka has leased a financially burdensome airport built with Chinese loans to a joint venture between India’s Shaurya Aeronautics and Russia’s Airports of Regions Management Company for 30 years. This move is part of the government's efforts to offload loss-making assets amid bankruptcy. [BR]
• India-Oman Trade Pact Looms: India and Oman are expected to sign a trade deal in the coming months, aiming to strengthen India's strategic access to vital trade routes in the Middle East. This partnership is significant as Oman provides key access to the Strait of Hormuz, a major global oil transit point, and currently, the annual trade between the two nations is under $13 billion. [BR]

OPINION(S) & REMAINDERS

• Opinion: Political Stability Critical to Attaining Sustainable External Account Stability - “One could assume that reduced inward remittances offset capital flight. Many wealthy individuals this writer has spoken to have sent substantial savings abroad over the last two years, fearing economic default and socioeconomic deterioration. The heightened fear and risk stem from political uncertainty, which has a more significant impact on ground realities than fair values based on economic fundamentals.” - By Ali Khizar [BR]