PAR News - Thurs, 16 Nov 2023

TOPLINE

• The IMF and Pakistan have reached a staff-level agreement on the first review of a $3 billion bailout. Following approval from the IMF's Executive Board, Pakistan is set to receive $700 million.
• Based on the Federal Board of Revenue's recommendation, the caretaker federal cabinet has approved a 40% tax on windfall profits earned by banks from foreign exchange transactions in 2021 and 2022.
• In September, Large-scale manufacturing (LSM) in Pakistan expanded for the second consecutive month, showing a year-on-year growth of 1.01%, reversing 14 months of contraction.
• The ECC of the Cabinet, led by Dr. Shamshad Akhtar, has opted to explore the import of 200,000 metric tons (KMTs) of urea fertilizer for the Rabi season through a government-to-government arrangement.
• The POL price cuts saw a reduction of Rs 2.04 per liter from Rs 283.38 to Rs 281.34 per liter for petrol, Rs 6.47 per liter from Rs 303.18 per liter to Rs 296.71 per liter for high-speed diesel (HSD), Rs 6.05 per liter for kerosene oil (SKO), and Rs 9.01 per liter for light diesel oil (LDO), while maintaining rates for petroleum levy (PL) and general sales tax (GST).
• US President Joe Biden and Chinese President Xi Jinping met near San Francisco, highlighting the need to re-engage and de-escalate tensions. Biden emphasized preventing competition from becoming conflict, while Xi stated that turning their backs on each other was not an option. The summit covered various complex issues, including conflicts in Ukraine, the Middle East, military talks, a hotline and the Fentanyl Crisis in the US.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Markhor Population Surges in Khyber-Pakhtunkhwa: Now Counted at 5,621 - The Markhor, Pakistan's national animal, has experienced a notable population increase in the province of Khyber-Pakhtunkhwa (K-P). With distinctive large spiral horns, long winter coats, and agility, Markhors primarily inhabit the mountains of Chitral, Kohistan, and Kalam in K-P. According to recent Wildlife Department findings, the Markhor population in K-P has surged significantly, reaching a count of 5,621. [ET] [BOL]
• Karachi Cotton Association Elections: Six members from the licensed Cotton Brokers of Naseem Usman Panel have been elected to the Brokers Advisory Committee of Karachi Cotton Association for 2023-2024. The elected members include Muhammad Naseem Usman as Chairman, with other positions filled by members of the panel. The Chairman of the KCA Broker Forum expressed gratitude to all 320 licensed cotton brokers for their trust. [BR]
• Sugar Mills Applaud Anti-Smuggling, Caution Against Market Disruption: The Pakistan Sugar Mills Association (Punjab Zone) appreciates government actions against sugar smuggling but warns against restricting the inland movement of sugar, stating it adversely affects the market and millers. The association emphasizes the effectiveness of anti-smuggling measures in curbing price hikes and ensuring sufficient domestic sugar supply. [Dawn]
• Revitalized Growth: Pakistan's September Manufacturing Surge - In September, Large-scale manufacturing (LSM) in Pakistan expanded for the second consecutive month, showing a year-on-year growth of 1.01%, reversing 14 months of contraction, according to data from the Pakistan Bureau of Statistics. This expansion is primarily attributed to government measures facilitating the opening of letters of credit (LCs), including the removal of import restrictions, clearance of outstanding LCs, and increased dollar liquidity in the markets due to a rise in State Bank of Pakistan foreign reserves. [BR] [Dawn]

AGRI-INPUTS, WEATHER, WATER & POWER

• Significant Fuel Price Reduction: The interim government has announced a substantial reduction in the ex-depot prices of petroleum products, effective from November 16, 2023. The price cuts include a reduction of Rs 2.04 per liter from Rs 283.38 to Rs 281.34 per liter for petrol, Rs 6.47 per liter from Rs 303.18 per liter to Rs 296.71 per liter for high-speed diesel (HSD), Rs 6.05 per liter for kerosene oil (SKO), and Rs 9.01 per liter for light diesel oil (LDO), while maintaining unchanged rates for petroleum levy (PL) and general sales tax (GST). [BR] [Dawn] [ET]
• ECC Initiates Urea Import: G2G Deal for Rabi Season - The Economic Coordination Committee (ECC) of the Cabinet, led by Finance Minister Dr. Shamshad Akhtar, has opted to explore the import of 200,000 metric tons (KMTs) of urea fertilizer for the Rabi season through a government-to-government arrangement. The ECC has further decided to transfer the Entire Cash Credit Limit, along with accrued markup, to the National Fertilizer Marketing Limited (NFML), with the provinces taking on the responsibility of covering the costs associated with the import. [BR]
• PEL Secures Court Stay: Legal Battle Over Alleged Illegal Gas Sales - M/s Petroleum Exploration (PEL) has secured a court stay order against the Ministry of Energy's attempt to stop its illegal gas sales to an unlicensed third party, violating its agreement with Sui Southern Gas Company Limited (SSGC). PEL's actions, allegedly causing a loss of over Rs4 billion, involve selling around 600 mmscfd of gas since January 2022, leading SSGC to increase reliance on costly LNG to address the gas deficit. [BR]
• Government Permits SSGC LPG Import Without Bidding, Despite Criticism: The government is permitting Sui Southern Gas Company's (SSGC) LPG subsidiary to import gas without bidding, despite past criticism. Last year, the Pakistan Democratic Movement (PDM) government faced backlash for exempting SSGC's LPG subsidiary from procurement rules, leading to increased prices and criticism from the industry and dealers' association. [ET]
• OMAP Calls for Review of Exchange Rate Methodology Impacting OMCs: The Oil Marketing Association of Pakistan (OMAP) is urging a review of the exchange rate calculation methodology, citing substantial losses for private Oil Marketing Companies (OMCs) due to currency fluctuations. [ET]
• Anti-Dacoit Operation Pause: Preparations for the anticipated operation against dacoit gangs in the riverine areas of Sindh and Punjab are still pending, with police chiefs from both provinces and Balochistan yet to finalize plans. Sindh and Punjab Chief Ministers have reportedly decided to wait for a decrease in the water level in the Indus River before launching the operation against dacoits. [Dawn]
• Punjab Shuts Schools, Offices for 3 Days Amidst Severe Air Pollution: The Punjab caretaker government has decided to close schools and offices for 3 days this week due to a severe increase in air pollution levels. The move comes as the Air Quality Index (AQI) in the metropolis reached the alarming level of 500, the highest globally. The interim Chief Minister of Punjab announced the closure of schools and offices in Lahore on Thursday, Friday, and Saturday. [ET] [PO]

AGRI UPDATES & PAKISTAN POLICY

• $700 Million Boost After Successful IMF First Review - The IMF and Pakistan have reached a staff-level agreement on the first review of a $3 billion bailout. Following approval from the IMF's Executive Board, Pakistan is set to receive $700 million. The initial standby arrangement (SBA) was approved in June, providing immediate disbursement of $1.2 billion, with the remainder subject to quarterly reviews. [BR] [Dawn] [ET]
• Windfall Tax Approved - 40% Levy on Banks' Forex Profits: Based on the Federal Board of Revenue's recommendation, the caretaker federal cabinet has approved a 40% tax on windfall profits earned by banks from foreign exchange transactions in 2021 and 2022. [BR]
• Investment Treaties & Hajj Policy Changes: The Federal Cabinet approved the negotiation of bilateral investment treaties with Saudi Arabia and Qatar, based on the Investment Board's recommendation. Amendments to the Hajj Policy 2024 were passed, enabling the return of unused sponsorship quotas to the Saudi Arabian government. [Dawn] [MG]
• Pakistani Rupee Declines for 17th Session Amidst Global Dollar Weakness: The Pakistani rupee continued its decline against the US dollar for the 17th consecutive session, depreciating by 0.09% in the inter-bank market and settling at 288.14, a decrease of Rs0.27, according to the State Bank of Pakistan (SBP). The trend coincided with a broader weakening of the US dollar internationally, following a softer-than-expected US inflation reading, which fueled speculation that the Federal Reserve might have concluded its monetary tightening cycle. [BR]
• Call for Reform: Sindh Minister Urges Unbundling of K-Electric for Fair Pricing - Sindh Commerce Minister Muhammad Younus Dagha stated that Karachi residents pay an extra Rs3-5 per unit to K-Electric due to fuel cost adjustments, highlighting the need to unbundle K-Electric's outdated power generation plants. He noted that K-Electric is unique in generating and distributing electricity. Dagha also emphasized the importance of presenting the case of increased winter electricity consumption to the IMF to address circular debt concerns. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Biden-Xi Meeting: US President Joe Biden and Chinese President Xi Jinping met near San Francisco, highlighting the need to re-engage and de-escalate tensions. Biden emphasized preventing competition from turning into conflict, while Xi stated that turning their backs on each other was not an option. The summit covered various complex issues, including conflicts in Ukraine, the Middle East and the Fentanyl Crisis in the US. Biden aims to leverage China's influence with Iran for Gaza conflict de-escalation and urges Xi to use his leverage to halt North Korea's arms supply to Russia. A hotline was established and the possibility of military talks was also discussed.  [Dawn] [ET] [Reuters] [WP] [CNBC] [FT] [TOI] [ABC] [WION] [FP]
• Erdogan Labels Israel 'Terror State,' Accuses of War Crimes in Gaza: Turkish President Tayyip Erdogan has characterized Israel as a "terror state," accusing it of committing war crimes and violating international law in Gaza. Erdogan, who is scheduled to meet with German Chancellor Olaf Scholz, claimed that Israel's military actions against Hamas received "unlimited" support from the West. [BR] [Reuters] [Al Jazeera] [TOI] [i24news]
• Record Greenhouse Gases Globally: EU Reports Emission Drop - The World Meteorological Organisation (WMO) revealed that greenhouse gas concentrations hit a record high last year, with "no end in sight" to this concerning trend. Despite warnings and climate conferences, the world is still heading in the wrong direction, according to WMO Secretary-General Petteri Taalas. However, there's a positive note as Eurostat reported a notable over five percent decrease in greenhouse gas emissions in the European Union during the second quarter of 2023. [Dawn] [Reuters] [Europa] [Statista] [Weforum]
• Lancet Report: 5-Fold Increase in Heat Deaths Without Climate Action - An international team of experts warns that nearly 5 times more people could die from extreme heat in the coming decades, posing a grave risk to human health without action on climate change. The Lancet Countdown's annual assessment highlights lethal heat as just one consequence of the world's ongoing use of fossil fuels, with additional threats including droughts, the spread of infectious diseases by mosquitoes, and strain on health systems. [ET] [GN] [Lancet]
• Oil Prices Drop on US Inventory Surge; Malaysian Palm Oil Extends Gains: Oil prices fell on Wednesday due to a larger-than-expected increase in US crude inventories and concerns about demand in Asia. Brent futures dropped to $81.47 per barrel, down 97 cents, while US WTI crude fell to $76.94, down $1.31. Conversely, Malaysian palm oil futures gained for a third consecutive session, with the benchmark contract for January delivery rising 1.92% to 3,979 ringgit per metric ton. [BR] [BR] [Reuters] [Oil Price] [Nasdaq] [Yahoo]

PAKISTAN - REMAINDERS

• HBL, Bank of China Ink MoU for Regional Economic Collaboration. [BR]
• Meezan Exchange Gets SECP Nod, Awaits SBP License to Operate. [MG]
• Tharparkar Biodiversity Study Reveals 149 Plants, 205 Birds, & Diverse Wildlife: The findings include three critically endangered birds and one plant species, two endangered birds and one plant species, six vulnerable birds, and 10 near-threatened birds, along with one near-threatened mammal and reptile species. [Dawn]
• SECP-Led Committee to Streamline Government Securities Trading on PSX. [BR]
• IHC Reinstates Imran Khan's Bail in Toshakhana Case, Dismisses £190 Million Petition. [BR]
• Opinion: Creating Market for Rice Stubble - “Rice stubble has a mass and energy. It is not useless. It should be made a commodity—a saleable commodity. It can be employed in a number of uses in industries, specifically, in producing energy. And there has to be a use and customer for that energy. There are three market areas” - By Syed Akhtar Ali [BR]