June 20, 2021 (MLN): The highlights of the important economic and business events that took place during the last week are in order so as to become acquainted with the recent developments in Pakistan’s economic and public policy.
The government decided to withdraw the increase in general sales tax (GST) on dairy products and assign zero-rating to the dairy sector.
In order to promote financial literacy amongst the youth, State Bank of Pakistan (SBP) and JazzCash signed a Memorandum of Understanding (MoU).
On Friday, The World Bank’s Board of Executive Directors approved $442 million to improve access to water and sanitation services for the rural communities in Punjab province.
On the energy front, Power tariff for the consumers of Ex-Wapda Distribution Companies (Discos) may come down by about 12 paisa per unit.
Electricity generation in May rose by 8.3% year-on-year to 13,010 GWh.
In order to combat excessive load shedding in Karachi, federal government provided additional 500 Megawatt electricity.
On the same day, Indus River System Authority (IRSA) released 272,200 cusecs water from various rim stations with inflow of 288,000 cusecs.
Government announced a hike in prices of petroleum products for the next fifteen days.
Another IPO is going to hit the trading floor as Pakistan Aluminium Beverage Cans Ltd (PABC), is all set to issue 93,888,000, 26% of Paid-up Capital.
On the upside, Pakistan’s domestic tractor assembling witnessed 65.36% growth during 10MFY21.
Pakistan Mortgage Refinance Company (PMRC) announced the closing of yet another Sukuk worth Rs1billion, with HBL Islamic Banking.
The Securities and Exchange Commission of Pakistan (SECP) issued guidelines for the issuance of green bonds in Pakistan.
During the week, Coca-Cola Beverages Pakistan Limited (CCI Pakistan) announced to invest $50million in a Greenfield project.
The book-building process of Citi Pharma’s Initial Public Offer (IPO) concluded with an oversubscription of 2 times.
The State Bank of Pakistan (SBP) directed banks to provide free-of-cost digital fund transfer services up to, at least, a minimum aggregate sending limit of Rs25,000 per month per account/wallet.
On the technology side, the government has doubled the budgetary allocation for science and technology sector.
During the departed week, Pakistan lifted a rule barring the use of AstraZeneca's COVID-19 vaccine for people below 40 years old.
The Board of Investment (BOI) launched the Pakistan Regulatory Modernization Initiative Strategy (PRMI), Special Economic Zone Management System (SEZMIS), and Investor Relationship Management System (IRMS) with Public & Private partnership.
The group of 20 countries (G-20) suspended Pakistan's debt payments of $3.17bn by the end of this year.
Federal Board of Revenue has been allowed to conduct third-party audits against the persons who are deliberately trying to hide their taxable money.
The total electricity consumption by Industrial sector during November- March FY21 increased by 15% YoY compared to the same period last year.
Pakistan and Russia agreed to make joint efforts for enhancing bilateral trade volume.
Economic Coordination Committee of the Cabinet approved the launch of second phase of the Ehsaas Emergency Cash.
On the equity front, Fecto Cement Limited commissioned the commercial operation of a 5 MW captive solar power plant at its factory located at Sangjani, Islamabad.
Panther Tyres Limited (PTL) entered into a contract with Al-Ghazi Tractors Limited for a regular supply of tractor tyres.
Bawany Air Products Limited (BAPL) informed that the company has received a withdrawal of Public Announcement of Intention from Fossil Energy Private Limited.
Flying Cement Company Limited (FLYNG) announced that the company has successfully completed the installation of the new captive power plant of 12 MW in District Khushab.
Pak Brunei Investment Company Limited completed the acquisition of ten percent (10%) of KASBM's issued Modaraba certificates.
The Board of Directors of Byco Petroleum Pakistan Limited has considered and approved a change in the Company's name.
During the departed week, Reanda Consulting Private Limited submitted a Public Announcement of Intention (PAI) to acquire 35% of total voting ordinary shares and 63.08% of preference shares of Saudi Pak Leasing Company.
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July 19, 2021 (MLN): After attracting indignation from livestock farmers, bodies representing the livestock sector, and food experts, the government have decided to withdraw the increase in general sales tax (GST) on dairy products and assign zero-rating to the sector, media reports claimed on Saturday.
The government has also changed the dairy sector’s status to zero-rating on persistent demand from the livestock farmers.
“With inflation a threat to growth, we welcome government’s decision to zero-rate milk and reduce GST on other dairy items,” the Pakistan Business Council said while lauding the announcement. “[It] shows prime minister, finance minister, Advisor Commerce and the Federal Board of Revenue’s desire to provide affordable nutrition, formalize and develop this [dairy] sector.”
The government had increased sales tax on dairy products from 10% to 17% in the FY2021-22 budget in view of raking in additional revenue. However, the move was widely criticized by all stakeholders in the dairy product value chain warning the move could cause inflation in the coming months.
Finance Minister Shaukat Tareen’s announcement shocked dairy producers who said the move would be counterproductive and would lead to a reduction in dairy consumption in the already malnourished country.
Analysts had also warned that the increase in ST on dairy products will eventually result in an increase in National CPI over the upcoming months as dairy and related products account for nearly 10% in the food group index of CPI.
Before the budget, stakeholders were urging the government to assign zero-rating to the dairy sector in order to ensure that the general public’s nutritional needs were filled without making them costlier.
It is estimated that the government will bear a revenue loss of Rs5 billion from reduction in GST.
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July 19, 2021 (MLN): Pakistan's trade deficit for 11months (July-May) FY21 was USD27.463 billion compared to a deficit of USD21.054 billion from the corresponding period from FY20, depicting a growth of 30% YoY.
According to data released by the Pakistan Bureau of Statistics (PBS), the trade deficit for the month of May 2021 was recorded at USD3.63 billion compared to a deficit of USD3.024 billion from April 2021 showing an improvement of 20.27 percent.
Compared to the May 2020 deficit of USD1.46 billion, the trade deficit jumped by a whopping 148.94%.
Exports decreased by 24.6 percent to USD1.67 billion compared to USD2.28 billion in April 2021. While on yearly basis, the exports exhibited a growth of 19.7 percent from $1.39 billion in May 2020.
Imports in May 2021 decreased marginally by 1.26 percent, clocking in at USD5.308 billion compared to USD5.242 billion in April 2021. Compared to the corresponding period last month, the imports showed a significant increase of 85.79 percent from $2.857 reported in May 2020.
Overall, the 11month exports stood at USD22.57 billion compared to USD19.79 billion from the corresponding period of last year, showing an increase of 14.05 percent. Similarly, Imports during the period increased by 22.5 percent to USD50.039 billion compared to USD40.849 billion from the same period of FY20.
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July 19, 2021 (MLN): Electricity generation in May rose by 8.3% year-on-year to 13,010 GWh, the latest data released by the National Electric Power Regulatory Authority (Nepra) showed on Saturday.
On a month-on-month basis, generation in May increased by 24% compared to 10,481 GWh in April.
Cumulatively, total electricity generation during the 11MFY21 stood increased by 7% to 115,862 GWH with hydel contributing 29.8%, RLNG 21%, coal 21.5% and gas at 11.3%.
Despite higher production, various cities across Pakistan are experiencing massive load shedding. The incumbent government has said that the outages are primarily a result of the weak transmission and distribution system.
Minister for Energy Hammad Azhar said the country was experiencing load-shedding due to transmission faults.
He said that although, revenue-based load-shedding in high theft areas and any infrastructure/transmission breakdown in localities will continue however forced load-shedding has now been stopped.
The government has allocated Rs596 billion in subsidies for FY22 in order to insulate consumers from higher consumer tariffs.
Of the total sum, Rs245bn has been set aside for Water and Power Development Authority/Pakistan Electric Power Company, Rs85bn for the K-Electric, and Rs266bn for Power Holding Private Ltd/Independent Power Producers (IPPs).
Earlier this month, the government also released the first tranche of Rs89bn in three equal chunks of cash, 10-year Pakistan Investment Bonds, and five-year sukuks to clear long-standing dues of IPPs.
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June 19, 2021: National Institute of Banking and Finance (NIBAF) – a subsidiary of the State Bank of Pakistan (SBP), and JazzCash, Pakistan’s leading FinTech Company, have signed a Memorandum of Understanding for increasing financial literacy amongst the youth of Pakistan.
The two parties aim to jointly promote financial literacy through the engaging and interactive game called “PomPak – Learn to Earn” developed under SBP’s project, National Financial Literacy Program for Youth (NFLP-Y).
PomPak utilizes a story-based narrative by following the journey of two families who set up a small entrepreneurial venture. This helps to keep the players engaged while effectively inculcating ethical behavior and financial skills such as budgeting, saving, and banking. PomPak is available in both English and Urdu for three age groups: children (9-12); adolescents (13-17); and youth (18-29). Anyone who completes the course is awarded a certificate of financial literacy jointly from NIBAF and NFLP-Y. It can be played on a desktop computer or can be downloaded from Google Play and the App Store for other devices.
JazzCash, under its partnership, is going to provide SBP access to more than 26 million Pakistanis by promoting the PomPak application on its platform. This will help the application reach a wider audience, thus increasing its usage and eventually promoting the financial literacy of the nation resulting in a highly positive socio-economic impact.
Riaz Nazarali Chunara, Managing Director, NIBAF stressed the role of increased financial literacy in promoting financial inclusion. He said that being Pakistan’s first e-learning financial literacy game, PomPak has revolutionized the way financial education is delivered. He went on to add that NIBAF is really proud of what PomPak has achieved since its launch and this partnership with JazzCash will contribute majorly towards our commitment to provide free-of-cost financial education to all.
While emphasizing the significance of the MOU, Mr. Erwan Gelebart, Chief Executive Officer JazzCash, said that there is ample scope for financial enablement and education through JazzCash. Creating a strong business and building a better Pakistan in parallel are key contributors to long-term success for JazzCash. This agreement will contribute to achieving the aforesaid objectives as we look forward to upskilling the youngsters of Pakistan, he said.
Under the guidance of SBP, NIBAF is implementing National Financial Literacy Program for Youth to impart essential financial education to Pakistani youth and school-going children. In the last three years, the project has successfully reached more than 45 districts of Pakistan making over 750 thousand financial literates in this category.