June 23, 2019 (MLN): The outgoing week observed a series of different events that reveal the current standing of Pakistan's economy.
To begin with, the activities recorded within equity market were not really cheer-worthy, as the benchmark index lost around 448 points over the week, to the not-really-poor-friendly budget announcement. The week was thereby concluded at 35,125 points.
On the other hand, the upside that balanced out the negative impact to some extent stemmed from the fall in country’s current account deficit, as well the news regarding European Union’s intent to help Pakistan escape from the Financial Action Task Force’s grey list.
Within the interbank market, PKR closed the week at 156.83 per USD thereby losing 98 paisa against the greenback, as the previous week was concluded at PKR 155.85 per USD.
Apart from this, the following events of importance took place this week:
- Asian Development Bank discarded the statement given by Hafeez Sheikh regarding the provision of $3.4 billion by former in budgetary support to help with reforms and stabilization of Pakistan’s economy.
- Governor of Central Bank Mr. Reza Baqir held a press conference where he announced that the government will not borrow funds from the State Bank of Pakistan (SBP) in upcoming fiscal year 2019-2020.
- Pakistan and China agreed to expedite work on Eastern Corridor from Sukkur to Hyderabad in build, operate, and transfer mode for its early completion.
- At a meeting of the Board of Directors of the Searle Company Limited, the management had brought to the attention of the Board of a potential opportunity to invest in / acquire OBS Pakistan (Private) Limited.
- The World Bank signed a loan agreement worth $918 million with Pakistan, which comprised of $400 million for Pakistan’s Revenue Program, $400 million for Higher Education Development in Pakistan and $118 million for Khyber Pakhtunkhwa Revenue Mobilization and Resource Management Program.
- The Securities and Exchange Commission of Pakistan (SECP), held a roundtable to discuss measures to reduce outflow of foreign exchange pertaining to reinsurance business through optimizing local risk retention.
- The State Bank of Pakistan released the Auction Targets for Pakistan Investment Bonds (PIB)’s and Market Treasury Bills (MTB)’s for June 2019 – August 2019, as per which the cumulative auction target for PIB’s at fixed rate for 3, 5, 10 and 20 years was slated at Rs.300 billion, distributed based on fixed coupon rates of 7.25% for 3 year bond, 8% for 5 year bond, 8.75% for 10 year bond and 10.75% for the 20 year bond.
- International Steels Limited and Aisha Steel Mills Limited increased the prices of its steel products, with immediate effect from 19 June 2019, in order to pass the impact of persistent devaluation of local currency on to the consumers. ISL also discontinued the discount it was offering earlier on Galvanized Coil.
- Federal Board of Revenue Chairman Syed Shabbar Zaidi said that the government will not extend the deadline of amnesty scheme.
- The federal government has decided to issue Pakistan Energy Sukuk worth Rs 200 billion in order to pay off the arrears in the power sector
- Federal Board of Revenue gave extension in regularization of Rs 40,000 prize bonds.
- The Board of Directors of Attock Cement Pakistan Limited has approved the installation of Captive Solar Power Plant of 7 MW at its existing factory premises.
- Abdul Hafeez Sheikh constituted a high powered committee to rectify anomalies in the federal budget for addressing the legitimate grievances of the business community boosting up the economic and trade, besides ease of doing business.
- The Securities and Exchange Commission of Pakistan (SECP) registered 1,323 new companies in May. As compared to the corresponding month of last financial year, it represents a 21 percent growth, raising the number of registered companies to 100,532, a landmark achievement.
- Gold prices surged around 10 percent in June and an ounce cost $1,405 in Asian trade, its highest since September 2013.
- The latest Market Treasury Bill auction failed to get any serious attention from market participants as the SBP only managed to sell T-Bills worth Rs.27.407 Billion for 3 months against an auction target of Rs.600 Billion.
- In response to the latest round of Rupee devaluation, Honda Atlas Cars (Pakistan) Limited has decided to increase the prices of its cars with effect from June 24, 2019.
- FATF will undertake the next review of Pakistan’s Progress in October 2019. While the Plenary Meeting of Financial Action Task Force (FATF), which took place at Orlando USA from June 16-21 2019, acknowledged the steps taken by Pakistan to improve its AML/CFT regime it highlighted the need for further actions for implementing the Action Plan.
Meanwhile, the following economic data was released over the course of last week:
- Pakistan's outstanding debts as of May 31, 2019 stand at Rs.19.45 trillion whereas total debt at the end of prior month was Rs.18.94 trillion, meaning that around Rs.511.12 billion were additionally borrowed during this month alone.
- Pakistan’s trade deficit in services for the month of May 2019 has broadened by 52.2%, when compared to the deficit recorded last month, as the figure shot up from $464 million to $706 million.
- Current account deficit (CAD) has narrowed considerably by 29% to $12.67 billion in the first 11 month of the current fiscal year, i.e. July-May (2019).
- Forex Reserves decreased by USD 187.80 Million or 1.27% and the total liquid foreign reserves held by the country stood at USD 14,639.10 Million on Jun 14, 2019.
- Trade deficit for 11 months (July-May) FY19 was USD 29.21 billion compared to a deficit of USD 33.81 billion from the corresponding period from FY18.
- Pakistan’s Foreign Direct investment (FDI) has incurred a 49% decline during the 11 months of ongoing fiscal year 2019, as the figure for July – May period stands at $1.6 billion.
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