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December 17, 2018: Economic Coordination Committee of the Cabinet in its meeting in Islamabad on Monday approved price of imported urea Rs.1712 per bag.
Finance Minister Asad Umar in the chair.
The Committee decided to determine the price of imported urea.
December 17, 2018 (MLN): Overall foreign investment amounted to $551 million from July to November, demonstrating a fall of 54 percent
On the other hand, foreign direct investment dropped by 35.2% to $881 million during the same period.
Outflow from stock market amounted to $330 million.
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December 17, 2018 (MLN): Due to lack of triggers in capital markets, KSE - 100 index remained within the red region in today’s trade, closing the session 276 points below yesterday’s closing value. The trading floors witnessed pessimism amongst investors, as the benchmark index recoiled to a closing of 38,309 points.
Moving within the range of 382 points, the index touched an intraday high of 38,585 points and an intraday low of 38,203 points.
Companies listed within KSE – 100 index witnessed a trade of 46 million shares through the day, at PKR 2.2 billion.
Of all the companies whose shares were traded, the share price of 29 companies soared while 56 companies experienced a decline.
The sectors that led the benchmark index into losses today comprise Commercial Banks and Oil & Gas Exploration Companies, as the two collectively took away over 160 points from the index.
In particular, losses on the scrips of HBL (-3.33%) weighed down KSE – 100 index the most heavily.
On the other hand, the broader KSE All Share Index shed 144 points today, concluding the day’s trade at 28,182 points.
Maximum volume of shares traded today amounted to 66.8 million, at a value of PKR 2.8 billion.
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December 17, 2018 (MLN): PKR has depreciated by 12.5 percent against USD in the current fiscal year i.e. FY19, as compared to depreciation of 13.7 percent during FY18. As on December 07, 2018, PKR-US$ exchange rate closed at PKR 138.89 per US$ compared to PKR 121.50 per US$ as on June 30, 2018.
According to a report by Ministry of Finance, this depreciation of PKR against US dollar reflects the demand-supply gap in the foreign exchange market resulting from large current account deficit.
The main issue is the strong domestic demand, which is clearly visible from the twin deficits (fiscal and external current accounts) over the last two years, especially in FY2017-18. External account posted deficit due to high volume of imports. Beside other factors, increase in international oil prices contributed towards increase in import bill. The country’s exports are less than half of the total imports. Remittances, another source of financing for imports, grew slowly while the income and services account registered excess payments over inflows. Foreign direct investment (FDI) flows have remained limited.
Due to limited private financial flows, the current account deficit is largely financed through government’s multilateral or bilateral loans (which result in debt accumulation) or by using the country’s foreign exchange reserves. The falling reserves along with external account imbalances are exerting pressure on Pak Rupee.
It may be noted that regional currencies have also witnessed depreciating trend against US dollar. This depreciation in regional currencies had an adverse effect on Pakistan’s export competitiveness. The recent depreciation in PKR exchange rate would not only help contain external current account deficit, but also maintain the country’s export competitiveness.
With healthy global demand, improving domestic supply conditions, and continuation of GSP plus status by EU, the recent PKR depreciation would support exports to continue its current upward momentum. This, along with projected deceleration in import growth translates into lesser pressure on countries foreign exchange position in the coming period.
The recent PBS trade data indicate the imports marginally declined by 0.1 percent in JULY to October FY2018-19 as compared to 21.7 percent growth during the same period last year.
Regarding the impact on prices, it is to be noted that the CPI inflation has remained low in recent years. Specifically, CPI inflation was well below its annual target for the fourth consecutive year in FY2017-18. Average CPI inflation stood at 3.9 percent in FY17-18 lower than 4.2 percent during FY16-17. However, inflationary pressures stated to emerge in 2018-19 and average CPI inflation is 5.9 percent during July-October FY18.19. Furthermore, tightening of monetary policy as evident from 275 bps increase in the policy rate during January to September 2018 would help contain inflationary impact of the recent PKR depreciation.
December 17, 2018 (MLN): Engro Polymer and Chemicals Limited (EPCL) has appointed Ms. Mehreen Ibrahim Khan as Company Secretary, in place of Mr. Hussain Hasanali, with effect from December 17, 2018.
The announcement was made in an official press release issued to the Pakistan Stock Exchange (PSX), today.
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December 17, 2018 (MLN): The Sui Northern Gas Pipelines Limited (SNGPL) has so far collected an approximated amount of Rs4.7 billion on account of urgent gas connection fee since it launched the Fast Track System in 2014 after approval of Oil and Gas Regulatory Authority (OGRA).
“Under the scheme, the company provides gas connection against urgent fee of Rs 25,000. As many as 190,000 such applications have so far been received, out of which 170,000 connections have been provided across the SNGPL network,” official sources said.
A number of applications for gas connection on fast track basis could not be processed due to various reasons including submission of applications against open plot, disputed property, banned localities, illegal network, absence of residents, non-existence of gas network, non-installation of house line, commercial purpose and house locked.
However, the sources assured that remaining connections would be provided to the ‘feasible/online cases’ after completion of requisite formalities by the consumers, adding that the company was making all-out efforts to provide gas connections against the fast track scheme in shortest possible time.
Replying to a question about procedure of getting urgent gas connection, they said the SNGPL issues a demand notice six weeks after receiving the application and asking the applicant to deposit the fee, following which the gas connection is approved and gas meter is installed at consumer’s premises, after completing all required formalities.
Replying to another question, the sources said the company had received overall around 2.4 million applications for domestic connections during the last two years, while company was working on a target to add 0.6 million new consumers during the current fiscal year.
They said the company was providing gas connections to consumers on the basis of first come first serve. “All the information regarding new gas connection is available at the website of the company,” he added.
About the connection in the Islamabad territory, the sources, the company was entertaining the applications submitted by June 30, 2017, adding that both SNGPL and Sui Southern Gas Company Limited (SSGCL) companies were likely to provide over one million new gas connections in their respective areas during the fiscal year 2018-19.
December 17, 2018:The country's export of goods to China during first quarter of fiscal year 2018-19 increased by 17.75 percent to US $430.3 million against the export of goods worth $353.892 million in same period of the preceding year.
The import of goods from China also witnessed an increase of 10.3 percent as it rose to $10.384 billion in first quarter of current fiscal year from $9.314 billion in July-September (2017-18), said latest data released by State Bank of Pakistan (SBP).
On yearly basis, the export of goods to China increased to $139.7 million in September 2018, against the exports of $116.83 million in same month of previous year, showing an increase of 16.37 percent.
The imports also witnessed an increase of 1.38 percent which rose to $1.01 billion in September 2018 against the imports worth of $996 million in same month of last year.
The export of services to China during the period under review, decreased by 2.644 percent to $52.04 billion during July-September (2018-19) against export of services worth $53.416 million during same period of last year.
Total import of services from China during the corresponding year increased by 5.6 percent to $1.01 billion from $953 million during same period of the preceding year.
On yearly basis, the export of services declined from $22.8 million in September 2017 to $12.16 million in same month of current year, showing a decline of 10.64 percent.
Similarly, the import of services from China witnessed a decrease of 7.7 percent to $88.95 million in September 2018 from $95.8 million in same month of previous year.
December 17, 2018: Indus River System Authority (IRSA) Monday released 60,500 cusecs water from various rim stations with inflow of 40,700 cusecs.
According to the data released by IRSA, water level in the Indus River at Tarbela Dam was 1,417.92 feet, which was 31.19 feet higher than its dead level of 1,386 feet. Water inflow in the dam was recorded as 19,600 cusecs and outflow as 28,000 cusecs.
The water level in the Jhelum River at Mangla Dam was 1,117.00 feet, which was 77.00 feet higher than its dead level of 1,040 feet whereas the inflow and outflow of water was recorded as 9,600 cusecs and 21,000 cusecs respectively.
The release of water at Kalabagh, Taunsa and Sukkur was recorded as 44,200 cusecs, 28,300 cusecs and 1,200 cusecs respectively.
Similarly from the Kabul River, 4,400 cusecs of water was released at Nowshera and 3,000 cusecs from the Chenab River at Marala.
December 17, 2018: A Chinese delegation met with Finance Minister Khyber Pakhtunkhwa Taimur Saleem Khan Jhagra to discuss investment opportunities in various sectors of the province on Monday.
During the meeting, the delegation led by Zhao Yongping expressed its interest in pumping investment in mines and mineral department and tourism sector of the province.
The delegation informed that the company intends to set up a steel plant and invest up to $300 million worth investment in Pakistan, adding that the visit would help explore opportunities in KP in this regard.
Given high interest for investment in different sectors, the departments would hold workshop for the company to discuss investment prospects, opportunities and fine tune programmes.
The provincial finance minister said that there is an investment-friendly environment for investors to capitalize on vast opportunities in various sectors of the province.
December 17, 2018 (MLN): The recent policy rate hike announced by SBP to 10% and CPI trend has brought discussions regarding Pakistan’s near entry into International Monetary Fund (IMF) program in the limelight.
The November 30 increase in the policy rate preceded by the rupee’s fall to a new low of 139.06 to a dollar signaled to the financial markets that uncertainty about going to the IMF has end now. These events indicate that political positioning and posturing aside, Pakistan is now serious in seeking a fresh IMF loan.
After taking loans from other friendly allies, why is it indispensable for the government to seek for IMF bail-out?
In order to fulfil immediate economic needs, a country must have some stand by arrangements, for Pakistan IMF- bailout is one of those.
Since, Saudi Arabia has transferred another $1 billion to Pakistan as the second tranche of total bailout package worth $3 billion.
However, the aid from Saudi Arabia may provide breathing space to the government for dealing with economic challenges but would not be enough to avoid the IMF facility. It will provide only much needed short-term support to our Balance of Payment (BOP) crisis, it cannot substitute a comprehensive bailout package. But it is believed that improved foreign exchange reserves would strengthen Pakistan’s negotiating position in talks with the Fund.
Additionally, the aid from china is undisclosed but it is expected that China will not offer a relief package equivalent to the Saudi’s commitments. However, given that they are a significant creditor, occasional rescheduling of payments owed and several projects under industrial cooperation framework, which are part of CPEC can help us meet our net foreign exchange reserves targets.
Moreover, the impact of USD 6bln bail-out package from Saudi Arabia, of which USD 3bln of deferred oil payments that are available to the country from January 2019 onwards on the SBP’s depleting Forex reserves is uncertain. Whereas, if we assume the full impact of USD 3 bln, our reserves are still in red zone. This “Defer Oil Payments Relief’ by Saudi Arabia is actually a business deal to sell the oil on easy conditions and extended period of payment, in other words a help in goods rather than cash.
Although Pakistan appears unwilling to accept several of IMF’s terms and conditions, given that recently Finance Minister Asad Umar said that Pakistan is in no hurry to strike a deal with the Fund to cope with its Balance of Payments (BOP) crisis, funding from “friendly countries” would help shore up the economy over the remainder of the current financial year.
It is nothing more than denial of reality, given the fact that these funding will only provide short-term relief, they are not sufficient to improve foreign exchange reserves enough to tackle BOP crisis. It is now apparently clear that the vulnerability of foreign reserves will likely dominate IMF conditions.
Moreover, Fitch rating agency recently stated in its report that in the absence of an IMF programme, Pakistan’s liquid foreign exchange reserves would continue to fall and inflation is expected to rise.
Following this, the uncertainty regarding the currency will remain in the market because in order to meet IMF demand, Pakistan must achieve 3 months of import cover and increase in their net foreign reserves. Therefore, to meet this target, further devaluation in the rupee is expected until the imports are sufficiently curtailed.
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