PAR News - Tues, 23rd May 2023

TOPLINE

●      $4 billion exports worth during 10months of the current financial year while Rs 1.81 billion was the export valueof spices in April 2023, up 51.93% compared to April 2022.

●     SargodhaDistrict has successfully achieved 100% of its wheat procurement target of107,867 metric tonnes during the campaign. 14 tons of smuggled wheat wereintercepted and seized on the Lahore-Islamabad motorway. The Attock fooddepartment soiled numerous attempts to smuggle wheat in the past two months.

●     Severalshortcomings in the supply of subsidized RLNG to EOUs have been identified dueto a lack of monitoring mechanisms, while petroleum imports declined by 17.96%during the July-April period of FY23, compared to the previous year. Moreover,emerging OMCs have expressed concerns about OGRA and its handling of smuggledIranian products.

●     PTIhas filed a petition with the SC, challenging the trial of civilians inmilitary courts and the deployment of armed forces under Article 245 of theConstitution. Imran Khan was granted bail in 8 cases related to May 9 violence.

●     Pakistan'sinflation is projected to rise by 1.07% on a monthly basis, reaching a peak of37.27% in May while the Pakistani rupee declined by 1.31% against the dollar,reaching Rs 305.

●     JoeBiden expressed optimism about reaching a deal to avert a default as he began ameeting with House Speaker Kevin McCarthy on the debt limit. Increasinginterest rates may also be on the cards.

●     Over23,000 people in northeast Italy are displaced a week after heavy rainstriggered severe flooding and resulted in 14 deaths as rescue operations continue.

COMMODITIES - CROPS, LIVESTOCK &HORTICULTURE

●     FY’23 Exports: $4 billion is the worth of exportsduring 10 months of the current financial year. [ET]

●     Spices Export: Rs 1.81 billion was the export value ofspices in April 2023, up 51.93% compared to Rs 1.19 billion in April 2022,according to the Pakistan Bureau of Statistics. [ET]

●     Sargodha Reaches 100% Procurement Target:The District of Sargodha in Pakistan has successfully achieved its 100% wheatprocurement target of 107,867 metric tonnes during the campaign. The districtoutperformed others in the division, with Khushab securing the second positionwith 90% completion, Bhakkar in third place with 52%, and Mianwali rankingfourth with 41% completion of their respective wheat procurement targets. [PO]

●     Motorway Police Seizes Smuggled Wheat:The National Highways and Motorway Police intercepted a dumper on theLahore-Islamabad Motorway and seized 14 tons of smuggled wheat. The wheat,along with the driver of the dumper, was handed over to the District FoodInspector in Rawalpindi after the necessary legal procedures. [The Nation]

●     Wheat Smuggling Curbed:The food department in Attock, Pakistan, has successfully prevented numerousattempts to smuggle wheat and wheat products from Punjab to Khyber Pakhtunkhwa(KP) in the past two months. They confiscated a total of 3,546.50 metric tonsof wheat and 296.86 metric tons of wheat products, including flour, during theoperations. [PO]

●     Meeting on Cotton Sowing:Punjab Chief Minister Syed Mohsin Naqvi chaired a meeting to assess theprogress of cotton crop sowing in the province. He directed the concerneddepartments to ensure that sowing and production targets were met, offeringcash prizes to growers achieving maximum production and commending officialsfor their efforts. The meeting emphasized the need to protect the crop, takeaction against water theft, supply necessary resources to cotton growers, andcombat the sale of counterfeit pesticides and seeds. [PO]

●     Challenges for Pakistan's Textile Sector:Pakistan's textile and clothing industry faced a significant setback with a14.22% year-on-year decline, reaching $13.7 billion in the first 10 months ofthe current fiscal year. The decrease in production, driven by risingproduction costs, contributed to this downturn, as reflected in the alarming29.11% decline in export figures for April, dropping from $1.73 billion to$1.23 billion compared to the same period last year. [Dawn]

●     Agricultural Collaboration:The Shanghai Academy of Agricultural Sciences (SAAS) and the University ofAgriculture, Faisalabad (UAF) have signed a Letter of Intent (LoI) tocollaborate on agricultural science and technology between China and Pakistan.The agreement aims to strengthen cooperation in areas such as post-harvesttreatment, pest management, molecular mechanisms, germplasm evaluation, andspecialty maize hybrids. [ET]

●     Shehbaz Sharif's Anti-Smuggling Drive:Prime Minister Shehbaz Sharif has issued urgent orders to combat the smugglingof wheat, sugar, and urea fertilizer to Afghanistan, aiming to address thecountry's economic crisis. He formed a steering committee, with himself as thehead, to implement measures and expressed determination to tackle smugglingissues, ensuring an uninterrupted supply of fertilizer to farmers andincreasing wheat production to make Pakistan a wheat-exporting nation again. [The Nation]

●     IFA Crackdown: The Islamabad Food Authority (IFA)conducted inspections in various areas and confiscated over 388 kgs of expiredand substandard food items, including expired food, stored leftovers, MSG/sugarsalt, and gutka. Prompt action was taken to dispose of the seized products,reaffirming the IFA's commitment to providing safe and healthy food to theresidents of Islamabad. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

●     Flood Victims' Struggles:Despite government assurances of timely monetary assistance to flood victims,many families affected by last year's floods are still struggling to rebuildtheir homes and live in makeshift tents without basic amenities. The scorchingheat wave adds to their difficulties, leaving them uncertain about theirsurvival in the coming months. [ET]

●     Cracking Down on Water Theft:The Punjab government has decided to take strict measures to prevent the theftof canal water across the province. Commissioner Multan division, EngineerAamir Khattak, directed the administration and police to crack down on waterpilferers, with the formation of committees and the registration of criminalcases against offenders. Additionally, special teams from the Agriculturedepartment have been established to combat fake pesticides and raise awarenessamong growers about the risks associated with substandard and non-registeredseeds. [ET][The Nation]

●     Small Dams in Sindh's Kohistan Belt:Small dams in the Kohistan belt of Sindh, Pakistan, have had positive effectssuch as reducing salinity levels in groundwater, mitigating flash floods,recharging aquifers, and providing ample drinking water for communities andagriculture. A World Bank climate change expert highlighted the significantimpact of these dams on the lives, livelihoods, and ecology of the area duringa visit to small dam sites in Kohistan. [Dawn]

●     Shortcomings in Subsidized RLNG Supply:The Directorate General of Audit Petroleum and Natural Resources has identifiedseveral shortcomings in the supply of subsidized RLNG to Export Oriented Units(EOUs) due to a lack of monitoring mechanisms by the Ministry of Commerce andthe Federal Board of Revenue. The report highlighted the absence of set targetsfor exports and remittances, failure to analyze the current export levels, andinsufficient measures to prevent misuse or unauthorized use of subsidized gas. [BR][The News]

●     Pakistan's Petroleum Imports Plummet:During the July-April period of FY23, imports of the petroleum group inPakistan experienced a significant decline of 17.96% compared to the previousyear. This decrease can be attributed to a slowing economy, high inflationarypressures, and record-high fuel prices, resulting in reduced consumption. Localproduction and export of petroleum products also suffered negative growth,worsening the overall situation. [Dawn]

●     OMCs Urge OGRA to Tackle Smuggling:Emerging oil marketing companies (OMCs) in Pakistan have expressed concernsabout the Oil & Gas Regulatory Authority (OGRA) and its handling of thesmuggling of Iranian petroleum products in the country. In a letter, the OilMarketing Association of Pakistan (OMAP) accused OGRA of showing "criminalrestraint" and failing to take proactive action against the smuggling,which they believe is causing severe damage to the national economy and puttinglegal businesses at a disadvantage. OMAP emphasized the responsibility of OGRAto curb these illegal activities and create a viable business environment forlegally operating OMCs. [The News]

●     Reimbursement for Damaged Road Network:The Pakistani government has approved the reimbursement of Rs 1.666 billion tothe National Highways Authority (NHA) for repairing the provincial road networkdamaged during the 2022 flood. The ECC granted this approval, allowing the NHAto be reimbursed through their road maintenance accounts, and the decision wascontingent upon the federal cabinet's approval of the supplementary maintenancegrant. The unprecedented rainfall during the flood caused extensive damage tocommunication infrastructure, prompting the NHA to cooperate and mobilizeresources to restore roads and infrastructure in various provinces. [BR]

●     Seminar Advocates Bio-Pesticides:During a seminar held to commemorate Farmers' Day, speakers emphasized theimportance of using bio-pesticides as an affordable, environmentally friendly,and crop-safe alternative for farmers. The event, organized by the Universityof Agriculture Faisalabad, addressed the concerns of guava growers in Larkanadistrict who have been facing significant damage from mealybugs, leading to adecline in plantations. The project to eradicate the mealybug outbreak wasapproved with gratitude to the University's Vice-Chancellor. [Dawn]

●     Simplified Pesticide Import:Pakistan Single Window (PSW) has introduced a new service that streamlines theimport and clearance process for pesticides in Pakistan. This service includesthe unified registration system, which enables electronic registration ofpesticide products and premises, facilitating real-time validation and customsclearance. Additionally, the system allows for the electronic communication ofinspection certificates between PSI companies and PSW, ensuring regulatorycompliance and verification by relevant departments. [BR] [ET]

AGRI UPDATES & PAKISTAN POLICY

●     PTI Challenges Military Court Trials:PTI Chairman Imran Khan has arrived at the National Accountability Bureau’s(NAB) office in Islamabad and has been granted bail in 8 cases regarding theMay 9 Federal Judicial Complex violence. The PakistanTehreek-e-Insaf (PTI) party has filed a petition with the Supreme Court,challenging the trial of civilians in military courts and the deployment ofarmed forces under Article 245 of the Constitution. The petition argues thatthe deployment of armed forces is being used to politically target the PTI andthat trying civilians in military courts violates due process and internationallaws. It also claims that the requisition of armed forces to suppress politicalopponents is a violation of constitutional rights and that civilian forces werecapable of handling the situation without military involvement. [Dawn][Dawn][The News]

●     Inflation Surges: Pakistan's inflationis projected to rise by 1.07% on a monthly basis, reaching a peak of 37.27% inMay, primarily driven by increased food prices. The inflation rate is expectedto ease from June onwards, potentially leading to a reduction in the centralbank's interest rate in the second half of fiscal year 2024, as theyear-on-year trend softens due to the base effect. [ET]

●     Govt of Pakistan Maintains 18% GST Rate:The government of Pakistan plans to maintain the standard rate of General SalesTax (GST) at 18% in the upcoming budget for 2023-24. Instead of reducing theGST rate, the government intends to increase withholding taxes to generate moretax revenue. Additionally, the government is considering measures to bringretailers into the tax net and exploring options for implementing Minimum AssetTax (MAT) on movable and immovable assets. The Finance Ministry discussed thesebudgetary proposals with the Federal Board of Revenue (FBR) to achieve a targettax collection of Rs 9 to Rs 9.2 trillion. [The News]

●     Pakistani Rupee Plummets to Record Low:The Pakistani currency, the rupee, reached a new all-time low against the USdollar, declining by 1.31% in a single day to reach Rs305. This downward trendhas persisted over the past four working days, resulting in a total drop ofapproximately 4%. The interbank market also experienced a continued decline,reaching an 11-day low of Rs 286.55/$, widening the gap between the interbankand open market exchange rates to Rs18, which used to be much smaller in recentdays. [ET][The News]

●     Sharp Decline in Private Sector Lending:Net lending by banks to the private sector in Pakistan has plummeted by 90%during the first 10 months of the current fiscal year, reflecting a significanteconomic slowdown. The high inflation and record-high interest rates, coupledwith political and economic uncertainties, have made banks reluctant to extendloans to struggling businesses, opting instead to lend to the government atabnormally high-profit rates. Conventional banks' lending to the private sectorsaw an 84.4% decline, further indicating the impact of political and economicchallenges on the lending environment. [Dawn]

●     SBP Urges Tax Cuts for IT Sector Growth:The State Bank of Pakistan (SBP) has called for a reduction in duties and taxeson internet and IT devices to promote the rapid growth of the IT sector. TheSBP emphasizes the need for consistent efforts led by the Prime Minister'soffice or a dedicated ministry to coordinate between public and privateinstitutions to support the evolving IT industry. Despite significant growth inIT exports and tech start-ups in recent years, Pakistan's share in the globalexport of computer services remains low at only 0.3%. [BR]

●     Higher Tax Collection for FY 2023-24:The Federal Board of Revenue (FBR) is planning to set a tax collection targetranging from Rs 9 trillion to Rs 9.2 trillion for the fiscal year 2023-24,taking into account the significant revenue shortfall experienced in theprevious year. In order to meet the target, the FBR is considering increasingcertain withholding taxes, sales tax, and excise duty rates, as well asimplementing measures for the documentation of the economy and taxation ofassets. [BR]

●     Expansive Budget Projected:The government is expected to present a fiscally expansionary budget for thefiscal year 2023-24, with a significant increase of around 50% compared to theprevious year's approved budget. The budget deficit is estimated to beapproximately 7.4% of the GDP, with a major portion of the budget allocated torecord-high interest payments. [ET]

INTERNATIONAL – OVERVIEW & MARKETOUTLOOK

●     US Default Countdown:US President Joe Biden expressed optimism about reaching a deal to avert adefault as he began a Monday evening meeting with House Speaker Kevin McCarthyon the debt limit. The two sat down at the White House after Treasury SecretaryJanet Yellen warned it’s now “highly likely” her department will run out ofsufficient cash — and that a default could come as soon as June 1. Elsewhere inthe US, two Federal Reserve hawks said they saw the need to raise interestrates further this year, days after Chair Jerome Powell signaled a pause inJune. [Bloomberg] [Bloomberg]

●     G20 Meeting in Kashmir Faces Boycotts:The G20 meeting taking place in India-held Kashmir has faced boycotts fromChina, Turkey and Saudi Arabia. The meeting has been criticized for violatinginternational laws and United Nations Security Council resolutions in thedisputed region. [BR][Dawn][CNN]

●     Sri Lanka Signs Fuel Deal with China's Sinopec:Cash-strapped Sri Lanka has signed a deal with China's Sinopec, allowing thecompany to enter the domestic fuel market and compete with an Indian oil firmand a local state-owned retailer. The agreement aims to ensure a steady anduninterrupted fuel supply for the nation, following months of fuel rationingand shortages triggered by a foreign exchange crisis. [BR][Reuters][Zawya][Economic Times]

●     Armenian PM's Proposal:Armenian Prime Minister Nikol Pashinyan stated that Armenia is willing torecognize Nagorno-Karabakh as part of Azerbaijan if Baku ensures the securityof its ethnic Armenian population. Pashinyan expressed the possibility ofaccepting Azerbaijan's internationally recognized borders in exchange forguarantees for the rights of Armenians in Nagorno-Karabakh, emphasizing theneed for a peace treaty. [Dawn][TRT][Reuters]

●     Meta Faces Record Fine:Meta, formerly known as Facebook, has been hit with a record 1.2 billion euro($1.3 billion) fine by Ireland's Data Protection Commissioner (DPC) over itshandling of user data and its failure to comply with EU-US data transferregulations. The DPC has given Meta five months to cease transferring user datato the United States. Meta plans to appeal the ruling and the accompanyingfine, emphasizing the potential dangers and precedents set by the decision. [Dawn][Reuters][Al Jazeera]

●     Erdogan Gains Endorsement:Turkish President Recep Tayyip Erdogan has received the endorsement of Sinan Ogan,an ultra-nationalist candidate who secured 5.2% of the vote in the recentgeneral election, leading to the first-ever runoff in Turkey's history. Oganhas pledged support for Erdogan in the runoff and urged his supporters to backthe president, emphasizing his alignment with Turkish nationalism and toughstance on issues such as immigration and terrorism. [Dawn][France 24][DW][Barron’s]

●     Severe Flooding in Northeast Italy:Over 23,000 people in northeast Italy are still displaced a week after heavyrains triggered severe flooding and resulted in 14 deaths. While many affectedindividuals are staying with friends or family, around 2,700 individuals arebeing accommodated in hotels, schools, gyms, and other centers provided bylocal authorities. [BR] [ET][The National]

●     Fuel Shortage Challenges Bangladesh:Bangladesh is facing difficulties in paying for imported fuel due to a shortageof dollars, resulting in the state petroleum company owing over $300 millionand a significant decrease in fuel reserves. The country's reliance on energyimports has led to power cuts and impacted its garments industry, with fuelsuppliers reducing shipments or threatening to halt supplies. BangladeshPetroleum Corp has requested permission for commercial banks to settle dueswith India in rupees, as dollar reserves have declined. [ET][Reuters]

PAKISTAN - REMAINDERS

●     Pakistan's population has reached 249.566 million in thelatest count. [BR]

●     The Pakistan Bureau of Statistics to continue to carry outcensus in areas hit by law & order.[Dawn]

●     Sindh Assembly asks the Election Commission to hold mayoralelections before the budget. [Dawn]

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