May 26, 2019 (MLN): After a long period of jolts, the domestic stock market posted a strong recovery when optimistic investors rushed to accumulate stocks on back of attractive valuations, market support fund and deferred oil facility by Saudi Arabia, mitigating the impact of the State Bank’s decision to increase the policy rate by 150bps.

During the week, KSE-100 index moved positive by 7.7%WoW (2,537points) and closed at 35,704 points levels, recovering previous week’s loss of 1,550 points. On the sector front, fertilizers gained the most points followed by commercial banks, cements and OMCs.

In addition to this, the various economic and policy-oriented developments that took place during the departed week include:

On Saturday, Advisor to Prime Minister on Finance Abdul Hafeez Shaikh informed that the government was setting the revenue collection target of Rs 5.5 trillion for next financial year of 2019-20. He further said, in order to collect the additional revenues, more people and commercial companies would be brought in to tax net and no extra burden would be put on those who were already paying taxes.

Meanwhile, as per the document released by the government on Friday, the government set a 4% economic growth target for fiscal year 2019-2020.

The same day, Prime Minister's Advisor on Finance Dr. Abdul Hafeez Shaikh chaired a meeting to review the budget framework for the next fiscal year in which he gave direction to concerned Wings of Finance Ministry to timely complete the budget process which will be presented in the National Assembly on 11th of the next month.

On Thursday, The International Monetary Fund (IMF), during a press briefing said that its recent extension of financial support to Pakistan is aimed at improving Pakistan's public finances, reducing public debt and helping the country get back on the path to a sustainable, more inclusive growth.

On Wednesday, the State Bank of Pakistan (SBP) conducted an auction in which it sold treasury bills worth Rs.3,230 Billion for 3 and 6 months. Auction target was Rs.600 Billion against a maturing amount of Rs.500.663 Billion.

The same day, Advisor to Prime Minister on Finance Abdul Hafeez Shaikh informed that the deferred petroleum products payment facility offered by Saudi Arabia to Pakistan will activate from July 01, 2019. The facility will be up to USD 275 Million per month which will amount to USD 3.2 Billion over three years which will strengthen Pakistan's Balance of Payment position.

On Monday, the State Bank of Pakistan raised its key interest rate to 12.25 percent. In a response to this rate hike, Fitch Solutions wrote in their note that the “aggressive pre-emptive hike will help to cool inflationary pressures over the coming months and will also likely have downside effects on credit growth as well as economic activity.”

Moreover, the research house forecasted that the State Bank of Pakistan will maintain its benchmark interest rate at 12.25% throughout the rest of 2019.

Beside these developments, the statistical data released this week apprising the economic standing of the country are listed below:

• The State Bank of Pakistan announced further contraction in Monetary Policy for the month of June and July, thus bringing it up by 150 basis points (bps) to 12.25%.
• Pakistan's non-government sector borrowed another net sum of Rs.16.74 billion during the week ended May 17, 2019, which brings the cumulative net borrowing for ongoing year to Rs.876.85 billion.
• The government of Pakistan accumulated an additional net debt of Rs.66.17 billion during the week ended May 17, 2019, which brings its total net borrowing for ongoing fiscal year (FY19) to Rs.1.14 trillion.
• DAP offtakes for April 2019 were recorded at 86.2 thousand tonnes, which shows a 25% growth in demand over the year and brings this fiscal year’s total sales to 1.8 million tonnes.
• A total of 292.4 thousand tonnes of urea was sold in the first month of Kharif 2019, i.e. April 2019, which bring this fiscal year’s total urea sales to a hefty total of 4.7 million tonnes.
• Pakistan's Forex Reserves decreased by USD 767.90 Million or 4.83% and the total liquid foreign reserves held by the country stood at USD 15,126.50 Million on May 17, 2019.
• The net sale of securities for the week ended May 17, 2019 clocked in at Rs.306.87 million, whereas last week, the accounts observed a net purchase of Rs.2.12 billion.
• Imports into Pakistan during the month of April 2019 amounted to Rs. 670,895 million, as against Rs. 578,273 million in March-19 and Rs. 586,224 million during April-18, showing an increase of 16.02% MoM and 14.44% YoY.
• exports from Pakistan during the month of April-19 amounted to Rs. 295,541 million as against Rs. 275,384 million in March-19 (up, 7.32%) and Rs. 245,478 million during April-18 (up, 20.39%).
• The Foreign Direct investment (FDI) in Pakistan plunged by 51.7% to $1.376 billion during the first 10 months of current fiscal year, i.e. July to April, as compared to FDI of $2.849 billion reported in the corresponding period last year.
• Total foreign investment in the country stood at $968 million during July-April 2019, showing a decline of 64% as compared to the same period last year.
• Pakistan’s outstanding debts at the end of April 2019 stood at a heaping sum of Rs.18.93 trillion which means around Rs.1.7 trillion were cumulatively accumulated during the ten months (July 2018 – April 2019) of ongoing fiscal year (FY19).
• Fiscal deficit during July to March FY19 widened by Rs 442 billion to Rs 1.9 trillion. Fiscal deficit increased to 5% of GDP from 4.3% in the corresponding period of last year.
• Pakistan’s trade deficit in services broadened by 52% in April 2019, when compared to the deficit recorded last month as the figure shot up by $151.9 million from $289.2 million to $441.12 million.
• The Debt and liabilities of state-run companies have reached Rs. 1,593 billion as of March 2019, indicating an increase of 33.1% as compared to the Debt and liabilities of Rs. 1,196 billion reported in March 2018.
• Pakistan’s current account deficit (CAD) narrowed considerably by 27% to $12.07 billion in first ten months (July-April) of the current fiscal year.

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