PAR News - Tues, 21st March 2023

TOPLINE

• Price of a 20-kg bag of wheat flour in Karachi has reached Rs 3,100. Punjab govt has started the distribution of free flour to deserving families under the Ramadan package, while in KP a Rs 19.77 billion flour subsidy scheme was announced during Ramadan. Flour prices have increased countrywide except in Punjab due to the subsidy.
• Ex-Wapda DISCOs and K-Electric are seeking to charge an additional fuel cost of about Rs 8.5 billion in April. Electricity generation in Pakistan has been decreasing YoY for 9 months, which has never happened in at least 20 years.
• A strong westerly wave will enter Pakistan on March 21 and it will impact most parts of the country from March 22 onwards with heavy rainfall and hail storms forecast.
• Bilawal Bhutto-Zardari has rejected the EC's decision to hold local govt by-elections during Ramadan, while civil and military leaders in Pakistan have agreed that elections to all assemblies should be held simultaneously.
• The chances of finalizing the ninth review of the troubled $6.5 billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF) soon got bleak after the global lender on Monday raised questions over the government’s new fuel subsidy scheme.
• President Vladimir Putin told Xi Jinping that Russia was open to discussing China’s proposals to end the fighting in Ukraine during their meeting in Russia. Xi is expected to meet with Ukranian President after his Russia visit.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Football Exports: Rs 4.36 billion was the export value of footballs in Feb 2023, up 16.6% compared to Rs 3.7 billion in Feb 2022, according to the Pakistan Bureau of Statistics. [ET]
• Dates Shortage Expected in Ramadan: The demand for dates increases during the holy month of Ramadan as it is traditionally used to break the fast, but this year the local crop has been destroyed by floods in Sindh and Balochistan, and imports have been hampered by a decrease in foreign exchange reserves. [ET]
• Free Flour Distribution in Punjab: The Punjab government has started the distribution of free flour to deserving families under the Ramadan package, with 19 points set up for this purpose. The Deputy Commissioner of Bahawalpur visited the free flour points and emphasized the importance of proper distribution and discipline at the points, with 2.164 million bags of 10 kg flour to be distributed among 721,000 families. [The Nation] [Dawn]
• Flour Subsidy Scheme Announced in KPK: The Khyber Pakhtunkhwa caretaker government on Monday announced a Rs 19.77 billion flour subsidy scheme during the month of Ramadan saying the initiative will benefit over five million poor and deserving families in the province. [BR] [Dawn]
• KP Seeks Flour Delivery: The caretaker government of Khyber-Pakhtunkhwa has requested the Punjab government to remove the ban on flour delivery and other obstacles. They have also started implementing a Ramazan package worth Rs 19.77 billion, which will provide 30 kg flour to 5.7 million households registered under the Benazir Income Support Programme in the province. [ET]
• High Wheat Flour Prices: The price of a 20-kg bag of wheat flour in Karachi and other parts of Pakistan has reached a historic high of Rs 3,100, forcing citizens to pay up to Rs 155 per kilogram. The government's lack of check and balance system has caused citizens to suffer from the worst economic crisis, with prices increasing by up to Rs 200 in Multan, Rs 100 in Peshawar, Rs 80 in Hyderabad, and Rs 30 in Quetta in just one week, although a government subsidy has kept prices lower in Punjab. [BR]
• Sindh Adviser Rejects Cotton Price: Manzoor Wassan, Sindh chief minister’s adviser on agriculture, announced on Monday that the provincial government had rejected the central government's decision to set the buying rate of cotton at Rs 8,500 per 40kg, and suggested that it should be between Rs 10,000 to Rs 12,000 per 40kg. Wassan made the statement during a balloting event for the distribution of laser land levelers in Hyderabad. [ET]
• Agriculture Growth in Pakistan: The State Bank of Pakistan (SBP)’s recently published Agriculture report 2023, launched by Pakistan Business Council (PBC) and Pakistan Agricultural Coalition (PAC), showed that agriculture growth during the last 15 years in Pakistan has been restricted within the range of 2.2 to 2.6% per annum as the industry and services have driven the country’s economic growth. [ET]
• Opinion: Falling Exports & Imports - “The relevant authorities also need to ensure that in weeks and months to come there are no shortages in essential items like petroleum products, wheat, cotton and medicines. Otherwise, the economy will also come to a grinding halt and the living conditions of the people will be badly affected.” - By Dr Hafiz A Pasha [BR]
• Seaweed's Climate Potential: Seaweed is becoming a valuable commodity due to its potential to tackle climate change, and is attracting new investments and attention from various industries globally. The growth in popularity of seaweed is driven by its ability to address some of the risks associated with the modern world. [NYT]

AGRI-INPUTS, WEATHER, WATER & POWER

• Upcoming Westerly Wave in Pakistan: PDMA Director General Imran Qureshi has warned that a strong westerly wave will enter Pakistan on March 21 and it will impact most parts of the country from March 22 onwards with heavy rainfall and hail storms forecast. [Dawn]
• Extraction of Stones from Keenjhar Lake: The Directorate General of Mines & Mineral Development has asked the court, the district’s revenue department and police to take immediate action to help it stop the highly destructive practice of lifting stones and boulders from the dykes of Keenjhar Lake and stone-pitched ramparts of Indus Highway. [Dawn]
• Petrol Subsidy for Poor in Pakistan: The Pakistani government will provide petrol at Rs 100 less than the official rate for motorbikes and cars up to 800cc, aiming to help the majority of poor people in the country, said State Minister for Petroleum Dr Musadik Malik. This announcement follows the previous day's announcement of a Rs 50 subsidy on each liter of petrol for the 'less privileged', and petrol for vehicles over 800cc will be costlier. [Dawn] [ET]
• Govt Prioritizes Clean Air: The government is giving priority to the adoption of Euro 5 and 6 fuel quality standards under the proposed National Clean Air Policy (NCAP) in a bid to reduce pollution and improve the environment. [ET]
• Ex-Wapda & K-Electric Seek Tariff Increase: Ex-Wapda distribution companies and K-Electric are seeking approval to charge an additional fuel cost of about Rs 8.5 billion to their consumers in April. If approved, the proposed tariff increase would result in an additional amount of about Rs 6.5 billion and Rs 1.86 billion for Discos and K-Electric, respectively. [Dawn] [ET]
• Gas Subsidy for Fertilizers Ends: The Economic Coordination Committee (ECC) of the Cabinet has decided to do away with subsidized gas to fertilizer plants after May 31, 2023, well informed sources told Business Recorder.  The decision was taken at a recent meeting of the ECC when supply of subsidized gas to two urea fertilizer plants in Punjab came under discussion. [BR]
• Pakistan's Electricity Generation Drops: Electricity generation in Pakistan has been decreasing year-on-year for nine months, which has never happened in at least 20 years. Reduced purchasing power and deliberate attempts to save fuel could both be contributing factors, but detailed analysis is needed to determine the cause. Coal-based generation for February was at its lowest level in five years. [BR]
• Water Crisis Worsens in Karachi: During a conference held on World Water Day, speakers criticized the delay in completing the K-IV water project and highlighted the significant water loss in Karachi due to system drawbacks and theft. They stressed the need for an overhaul of the network, the establishment of an urban water regulatory authority, building check dams, and making rainwater harvesting and water recycling mandatory in large buildings. [Dawn]
• Dams Fueling Water Conflict: With half the world experiencing water scarcity for at least part of the year, the huge dams being built by some countries to boost their power supplies while their neighbours go parched are a growing source of potential conflict. [ET]
• Pak-Iran Electricity Agreement: Pakistan and Iran have signed an agreement to supply 100 MW of electricity to Gwadar and Gwadar Port at a tariff range of Rs 8.4 to 12.4 per unit, instead of the previously negotiated tariff of Cents 9.9 to 15.3 per unit. The agreement will apply to both the new Polan-Gabd electricity transmission line and the existing Jakigur-Mand interconnection line until December 31, 2024. [ET]

AGRI UPDATES & PAKISTAN POLICY

• Bilawal Rejects Election Schedule: Bilawal Bhutto-Zardari, the Pakistan Peoples Party chairman and Foreign Minister, rejected the Election Commission of Pakistan's decision to hold local government by-elections during Ramadan. He urged the provincial government to take legal action against the schedule, which includes 93 Union Councils in 26 districts of Sindh, with by-elections set for April 18, including 11 UCs in Karachi where elections were not held due to the death of candidates.Civil and military leaders in Pakistan have agreed that elections to all assemblies should be held simultaneously. A joint session of parliament on March 22 will take decisions to "ensure state writ". [Dawn]  [Dawn] [ET] [DT]
• IMF Raises Subsidy Questions: The chances of finalizing the ninth review of the troubled $6.5 billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF) soon got bleak after the global lender on Monday raised questions over the government’s new fuel subsidy scheme. [ET]
• Decrease in Government Borrowing: The government has borrowed $7.407 billion from multiple financing sources, including $900 million from foreign commercial banks, during the first eight months (July-February) of 2022-23 compared to $12.178 billion borrowed during the same period of last fiscal year. [BR]
• FBR Denies Refund Stoppage: The Federal Board of Revenue (FBR) in Pakistan clarified that the payment of sales tax refunds under the FASTER system was not stopped in January and February 2023, although processing was slow. Despite difficulties with the system's upgrading, the FBR paid Rs 45 billion to exporters, and the refund claims' issues have since been resolved. [BR]
• Pakistan Bans Subsidies: The Finance Ministry has reportedly banned supplementary grants and subsidies due to limited fiscal space and expenditure caps, according to sources. This message was conveyed during a meeting about Pakistan State Oil's financial issues, with the Petroleum Division noting that PSO was importing LNG to meet the country's energy needs and that SNGPL was purchasing most of it for onward sale to consumers. [BR]
• FDI in Pakistan Increases: Despite economic and political challenges, foreign direct investment (FDI) in Pakistan increased by 10% in February compared to the same month last year. However, the overall FDI inflows for the first eight months of the current financial year decreased by over 40%, which is attributed to economic vulnerabilities and political uncertainties. The data was released by the State Bank of Pakistan on Monday. [Dawn]
• Pakistan's February CAD Drops: Pakistan's current account deficit (CAD) dropped by 86% to $74 million in February, missing the market's expectations of turning the deficit into a surplus. This was 68% lower than the $230 million recorded in January 2023 and the lowest in two years. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Putin-Xi Meet: President Vladimir Putin told his Chinese counterpart Xi Jinping on Monday that Russia was open to discussing China’s proposals to end the fighting in Ukraine at the start of high-stakes talks in the Kremlin. “We are always open to negotiations,” Putin told Xi, who was on his first visit to Moscow since the start of Russia’s military intervention in Ukraine last year. Putin said Russia had “carefully studied” and would discuss China’s proposals, laid out in a cease-fire paper which was quickly dismissed by the US upon its publication. The trip to Moscow marks Xi’s most ambitious attempt yet to play peacemaker as he seeks to broker an end to Russia’s war in Ukraine. After his talks in Moscow, Xi is expected to speak with President Volodymyr Zelenskiy.  [Dawn] [ET] [Al Jazeera] [The Guardian] [BS] [Bloomberg] [Bloomberg] [Bloomberg]
• No-Confidence Motion Defeated: President Emmanuel Macron’s government narrowly survived a no-confidence motion in the National Assembly on Monday, after bypassing the lower house to push through a deeply unpopular change to the pension system. [Dawn] [CNBC] [CNN] [DW]
• Turkey Earthquakes Damage: The damage caused by the recent earthquakes in Turkey is estimated to exceed $100 billion, according to a United Nations Development Programme official. This announcement was made ahead of a donor conference next week, with calculations suggesting that the figure supported by international partners will surpass the $100 billion mark. [ET] [Al Jazeera]
• Kim Jong Un Conducts Military Drills: North Korean leader Kim Jong Un led two days of military drills “simulating a nuclear counterattack”, including the launch of a ballistic missile, state media reported on Monday. Kim expressed satisfaction over the weekend drills, which were held to “let relevant units get familiar with the procedures and processes for implementing their tactical nuclear attack missions”, said the report by the official Korean Central News Agency (KCNA). [Dawn] [Al Jazeera]
• Opinion: China’s Surging Soft Power - “When the Chinese leadership became confident that it has the political and economic clout, it ventured on diplomatic initiatives challenging the Western influence by presenting Ukrainian peace plan and mediating between Saudi Arabia and Iran. The 12-point peace plan on Ukraine reflected Chinese resolve to manage a deadly conflict which has over the last one year led to the rupture in the supply chain of food and fuel and is a major threat to the world order. Yet, the West failed to give a positive response to the Chinese peace plan suspecting that Beijing, under the cover of its diplomatic move, aims to attack and occupy Taiwan.” - By Dr Moonis Ahmar [ET]

PAKISTAN - REMAINDERS

• Indian Occupied Jammu & Kashmir Gets First Foreign Investment from Emaar. [BR]
• US Investment Coming to Pakistan More & More Every Year, US Ambassador Donald Blome. [Dawn]
• Opinion: Much More is Needed - “The article discusses the issue of sovereign default and its relevance to Pakistan, but argues that a more important question is why Pakistan is facing default. The author points out that Pakistan's current account deficit has been significant, and the country has relied heavily on borrowing to finance its external deficit since foreign investment has not been sufficient. As foreign creditors are now reluctant to continue lending, Pakistan's external sector is becoming unsustainable.” - By Mushtaq Khan [Dawn]

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