PAR News Bulletin - Wed, 10 Aug, 2022

TOPLINE

• Amid falling international wheat prices, the ECC has decided to link the opening of tender for the import of wheat from Russia with a lower price of $390 per tonne.
• Pakistan is expected to produce a record-breaking 9+ million tonnes of rice against all odds in the current fiscal year, against the 8.9 million tonnes produced in 2021-22.
• The rupee jumped by another Rs 2.14 against the dollar in the interbank market on Wednesday — an uptrend that has continued for nearly 2 weeks, now at Rs 221 in interbank.
• Several areas of Karachi received heavy to light showers on Wednesday, with the Pakistan Meteorological Department (PMD) predicting the latest spell to last till the weekend.
• The electricity shortfall across the country has again reached 6,439 megawatts, causing power outages of six to eight hours in cities and 10 to 12 hours in rural areas.
• A ‘future-ready food security information system’ is being developed at the Ministry of National Food Security & Research (MNFSR) to monitor the supply, demand, and prices of essential agricultural food commodities and their seasonal availability for policy feedback and decision-making.
• Blasts rocked a Russian air base near seaside resorts in the annexed Crimean peninsula on Thursday, injuring five people according to local authorities in what Moscow attributed to detonations in ammunition stores.
• China's foreign ministry announced sanctions against US House Speaker Pelosi on Friday, after her visit to Taiwan this week prompted shows of military force from Beijing. Further, China’s largest-ever military exercises surrounding Taiwan were drawing to a close on Sunday following a controversial visit by US House Speaker Nancy Pelosi.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Wheat Imports: Amid falling international wheat prices, the Economic Coordination Committee (ECC) of the cabinet has decided to link the opening of tender for the import of wheat from Russia with a lower price of $390 per tonne. [Dawn] [BR]
• Cotton Spot rate: The spot rate decreased by Rs 500 per maund on Friday, and closed at Rs 17,000 per maund. The rate of cotton in Sindh is in between Rs 15,500 to Rs 16,000 per maund. The rate of cotton in Punjab is in between Rs 17,500 to Rs 18,000 per maund. The rate of Phutti in Sindh is between Rs 6,000 to Rs 7,000 per 40 kg. The rate of Phutti in Punjab is between Rs 7,500 to Rs 8,500 per 40 k1g. The rate of cotton in Balochistan is in between Rs 16,000 to Rs 16,500 per maund. [BR]
• Rice Exports: Pakistan is expected to produce a record-breaking 9+ million tonnes of rice against all odds in the current fiscal year, against the 8.9 million tonnes produced in 2021-22. [Dawn]
• PKR Gains: The rupee jumped by another Rs 2.14 against the dollar in the interbank market on Wednesday — an uptrend that has continued for nearly 2 weeks. [Dawn] [BR]
• Pakistan Tea Sector: “Pakistan has huge potential to become self-sufficient in the tea sector. If we plant tea on an additional 2,000 hectares of land offered by the government and invested by private companies, we can meet 95% of our national demand,” said Dr Abdul Waheed, Director of National Tea and High-Value Crop Research Institute, PARC in an interview with China Economic Net (CEN). [ET]
• Oilseed Export: Rs 41 million was the export value of oilseeds, nuts and kernels in June 2022, down 52% compared with Rs 880 million in June 2021, according to the Pakistan Bureau of Statistics. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Monsoon Spells: Several areas of Karachi received heavy to light showers on Wednesday, with the Pakistan Meteorological Department (PMD) predicting the latest spell to last till the weekend. At least 3 more deaths were reported across Pakistan on Saturday as a result of the monsoon downpour, taking the total number of deaths to 552 during the ongoing spell. [Dawn] [BR] [Dawn] [ET]
• Agriculture Sector Losses: The ongoing monsoon rains have caused around Rs 50 billion worth of losses to the agriculture sector in Sindh, a representative body of growers said on Sunday. [ET]
• Flood Relief: Prime Minister Shehbaz Sharif has directed the Ministry of Finance to release Rs 5 billion to the National Disaster Management Authority (NDMA) immediately for flood relief across the country. [BR] [Dawn]
• Dam Breaches in Balochistan: After at least 12 dams in the province were breached as a result of flash floods caused by heavy rains, the Balochistan government, on Friday, dispelled the impression that sub-standard construction and alleged corruption was the reason for the breaches. [Dawn]
• Power to Zero-Rated Sectors: The federal government is to either cut its expenditure or increase revenue to ‘appease’ the already incentivised 5 zero-rated sectors by supplying electricity at cents 9 per unit throughout FY23, which requires an additional subsidy of over Rs 80 billion. [BR]
• Power Shortfall: The electricity shortfall across the country has again reached 6,439 megawatts, causing power outages of six to eight hours in cities and 10 to 12 hours in rural areas. [ET]

AGRI UPDATES & PAKISTAN POLICY

• State-Owned Enterprises: Finance Minister Miftah Ismail has directed that a meeting be held immediately to consider the matter of state-owned enterprises (SOEs) declaring healthy dividends as it would “result in income and taxation revenue for the government”, according to a statement by the Pakistan Stock Exchange (PSX) on Tuesday. [BR]
• Toshokhana Reference: The PML-N is confident that the PTI Chairman Imran Khan is going to be disqualified in the Toshakhana reference, as he has not declared in his assets the amount he received from the sale of state gifts. [Dawn]
• ARY News CEO Arrested: Karachi police have registered a first information report (FIR) against ARY Chief Executive Officer (CEO) Salman Iqbal and others in connection with some controversial remarks made by PTI leader Shahbaz Gill during a news programme, it emerged on Wednesday. [Dawn]
• Tax Relief to Banks: Finance Minister Miftah Ismail said on Friday that banks won’t have to pay higher tax rates for maintaining a low advances-to-deposits ratio (ADR) on their earnings from 2021. [Dawn]
• Agri Info System: A ‘future-ready food security information system’ is being developed at the Ministry of National Food Security & Research (MNFSR) to monitor the supply, demand, and prices of essential agricultural food commodities and their seasonal availability for policy feedback and decision-making. [Dawn]
• Account Deficit: Pakistan’s current account deficit is expected to be lower at $8.7 billion or 2.3% of GDP during the current fiscal year (FY23) as compared to CAD of $17.4 billion or 4.5% of GDP in FY22, experts said. [BR]
• PTI Funding Case: Just a day after the Federal Investigation Agency (FIA) constituted a panel to supervise teams in its respective zones investigation into the matter pertaining to the Election Commission of Pakistan (ECP) order in the PTI prohibited funding case, the agency’s provincial chapters summoned senior leaders of the party for next week to join the inquiry. [Dawn]
• Ashura Processions: The city’s main Alam procession of 9th Muharram culminated peacefully on Monday. Also, arrangements finalized for the Youm-e-Ashur, the 10th of Muharram-ul-Haram, was observed on Tuesday (Aug 9). [BR]
• Exports to Italy: Pakistan Furniture Council (PFC) CEO, Mian Kashif Ashfaq, on Monday, said that Pakistan exports to Italy can exceed $5 billion annually from the existing level, with the active participation of the private sector by fully exploiting their potentials in a timely manner. [BR]
• Cash Margins on Imports: In order to provide relief to importers, the State Bank of Pakistan (SBP) has significantly reduced cash margin requirements on items being imported on deferred payments. As per new directives, cash margin will be 0% for import payments beyond 180 days instead of the previous requirement of 100%. [BR]
• Fixed Tax Regime Reversal: The government would suffer a revenue loss of over Rs 40 billion after the reversal of the fixed tax regime on electricity bills for traders, in case the Federal Board of Revenue (FBR) does not restore the old scheme through the upcoming Presidential Ordinance. [BR]
• Lucky Cement Limited: On a consolidated basis, Lucky Cement Limited once again reported its highest-ever profit after tax of Rs 36.42 billion for the year ended June 30, 2022, of which Rs 6.93 billion is attributable to the non-controlling interests. [BR]
• UAE Investment: Prime Minister Shehbaz Sharif on Tuesday welcomed the recent announcement by the United Arab Emirates to invest $1 billion in various economic and investment sectors in Pakistan. [Dawn]
• State Oriented Enterprises: The Ministry of Finance has started the process for hiring a Central Monitoring Unit (CMU), which will be responsible for preparing the SOEs performance reports based on the analysis of data to support the government in adopting data-driven strategies for their management. [BR]
• ICI Investments: The Board of Directors of ICI Pakistan Limited has authorised a partial divestment of approximately 26.5% of the issued and paid-up share capital of its subsidiary NutriCo Morinaga (Private) Limited (NMPL) to Morinaga Milk Industry Co. Ltd, a Japanese dairy giant, at an aggregate sale price of $45.08 million, which translates into approximately $2.07 per share. [BR]
• PML-N Return: The Pakistan Muslim League-Nawaz (PML-N) government is considering relevant legislation to ease the return of its supreme leader Nawaz Sharif, who is in a self-imposed exile in London on medical grounds, to Pakistan. [Dawn]
• New Cabinet: Punjab Governor Balighur Rehman on Saturday administered oath to the 21-member cabinet of the PTI-PML-Q coalition government that later went into its maiden meeting taking up the agendas of ensuring fool-proof security during Ashura and relief for flood-hit people. [Dawn]
• Rawal Dam STPs: The estimated cost of the proposed sewage treatment plants (STPs) project for Rawal Dam’s catchment area has seen an increase of around Rs 2 billion. [Dawn]
• Sri Lanka Parallels: Pakistan is often thought to follow Sri Lanka into a sovereign debt default situation and exhibit dismal economic output this year, but the comparison is unwarranted. [ET]
• Trade Deficits: Pakistan’s exports to 9 regional countries rose 16.97% while imports grew by nearly 28.84% in FY22 from a year ago, according to SBP data. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Rice Exports at Risk: Adverse weather across top rice suppliers in Asia, including the biggest exporter, India, is threatening to reduce the output of the world’s most important food staple and stoke food inflation that is already near record highs. [Dawn]
• Hazara Explosion: A bomb attached to a handcart exploded in Kabul on Friday, officials said, killing 8 civilians in an area largely inhabited by Afghanistan’s Shia community. [Dawn] [Dawn]
• Russia & Turkey: President Vladimir Putin and Turkish leader Recep Tayyip Erdogan on Friday adopted a statement pledging to boost political and economic cooperation including in energy and trade. [Dawn]
• Israel Gaza Strikes: Israel pounded Gaza with air strikes on Friday, killing more than 15 people, including a top commander of the Palestinian Islamic Jihad movement, and triggering a barrage of retaliatory rocket fire from the territory. [Dawn]
• Crimea Blasts: Blasts rocked a Russian air base near seaside resorts in the annexed Crimean peninsula on Thursday, injuring five people according to local authorities in what Moscow attributed to detonations in ammunition stores. [BR]
• Russia Vs. Ukraine: Russian shelling killed 11 people in Ukraine’s central Dnipropetrovsk region overnight, governor Valentyn Reznychenko said on Wednesday, as Britain said Russia had “almost certainly” established a major new ground force to support its war. [BR]
• Taiwan-China Tensions: China's foreign ministry announced sanctions against US House Speaker Nancy Pelosi on Friday, after her visit to Taiwan this week prompted fury and shows of military force from Beijing. China’s largest-ever military exercises surrounding Taiwan were drawing to a close on Sunday following a controversial visit last week to the self-ruled island by US House Speaker Nancy Pelosi. [BR] [Dawn]
• Tesla Shares: Tesla CEO Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker, saying the funds could be used to finance a potential Twitter deal if he loses a legal battle with the social media platform. [Dawn] [BR]
• Kabul Explosion: An explosion in a Shia residential area in Afghanistan’s capital Kabul on Friday killed eight people and wounded 18 more, police said. “The explosion happened in a crowded place,” said Khalid Zadran, the city’s police spokesman. Video shared on social media purportedly of the blast site showed men rushing to help the injured after the incident. [BR]
• Taiwan Defence Ministry Deputy: The deputy head of the Taiwan defence ministry’s research and development unit was found dead on Saturday morning in a hotel room, according to the official Central News Agency. [Dawn]

PAKISTAN - REMAINDERS

• Pelosi’s Taiwan visit: ‘egregious provocation’ - Defying President Joe Biden’s advice and provoking President Xi Jinping’s stark warning, the US House of Representatives Speaker Nancy Pelosi arrived in Taiwan Tuesday night to “express solidarity with Taiwan”, disregarding the fact that the US-China relationship has been strained for years over issues such as Taiwan and the world economy. [BR]
• The need to prioritize agricultural development: Pakistan’s agriculture performance has generally been mediocre. Growth has averaged 2-3% over the last few decades as compared to a 4-5% growth needed to meet overall economic targets. Crop and livestock yields are lower than other comparable countries. The output of several key products are below domestic needs and necessitate imports while exports are well below potential. - By Daud Khan [ET]
• We may not default, but this crisis exposes how vulnerable we are: Default occurs when you are unable to pay what is coming due (on debt) after all usual trade and services’ receipts and payments are met. It is all about inflows versus outflows of money at different points in time. If your outflows are well-met with your inflows at any point in time, and you have a good buffer (reserves) in hand for an unforeseen mismatch, you are set. Pakistan’s foreign exchange reserves are low, at less than two months of imports, as against global standards of at least 3 to a comfortable 6 months. We also have debt repayments coming due within a year. [BR]

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