Weekly Economic Roundup

September 27, 2020 (MLN): A brief account of the latest financial data releases and economic developments over the course of the week is highlighted below:

• The Weekly Sensitive Price Indicator (SPI) for the Combined Group increased by 0.32% during the week ended Sept 24, 2020 while the SPI increased by 8.86% compared to the corresponding period from last year.

• The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) in its meeting held on September 21, 2020 in Karachi, has decided to maintain the Policy Rate at 7 percent.

• Pakistan's Forex Reserves decreased by USD 55.30 Million or 0.28% and the total liquid foreign reserves held by the country stood at USD 19,903.70 Million on Sep 18, 2020.

• According to a weekly report on SCRA released by the State Bank of Pakistan, the total purchase of securities stood at Rs.17.8 billion during the week ended September 18, 2020, which is 113.4 percent higher than the prior week.

• Pakistan has received foreign aid worth $2.248 billion during the first two months of the fiscal year 2020-21 from bilateral and multilateral development partners, foreign commercial borrowing, and time deposits to influence the process of development by increased investment in productive resources and transferring the modern technology.

• The State Bank of Pakistan (SBP) has eased 100 percent cash margin requirement on the import of certain raw materials to support manufacturing and industrial sectors and further enhance their capacity to contribute towards the recovery of the economy in the post-COVID-19 era.

• Savings mobilization by the National Savings Schemes (NSS) in the month of July 2020 witnessed a withdrawal of Rs 149.5 million compared to the withdrawal of Rs 71.98 billion recorded in the same month last year. While in the preceding month, the amount parked in NSS Schemes stood at Rs 23.8 billion.

• The overall power production during the month of August’20 increased by 4%YoY to 14,630Gwh.

• The import of mobile phones into the country has witnessed an increase of 87.37 percent during the first two months of the ongoing financial year (2020-21) as compared to the corresponding period of last year.

• In the month of August 2020, imports of the Petroleum group & coal surged by around 2.4% MoM while it plunged by 24.27% YoY to value at $770.58 million in August 2020.

• The exports of cement from the country witnessed an increase of 5.60 percent during the first two months of the ongoing financial year (2020-21) as compared to the corresponding period of the last fiscal year.

• Privatization Commission (PC) Board approved the Transaction Structure (TS) of the Heavy Electrical Complex (HEC).

• The Economic Coordination Committee (ECC) of the Cabinet Wednesday approved an amount of Rs 3850 million for the provision of salaries to the employees of Pakistan State Mills (PSM) for the financial year 2020-21, which would be disbursed every month.

• The Banking sector spread for August 2020 depressed by 12 basis points (bps) over the month which brings its latest value to 4.88% as compared to the prior month's spread of 5%. Similarly, the spread has contracted by 102 bps as compared to the same period last year.

• The overall urea offtake during the month of August 2020 was 573 thousand tonnes, depicting a decrease of 8.3 percent over August 2019.

• Total DAP offtake during the month of August stood at about 295 thousand tonnes, which is 180.2 percent more than the same period of last year.

• Total nutrient offtake during the month of August 2020 was about 531 thousand tonnes, which shows an increase of 35 percent over August 2019.

• Pakistan’s trade deficit in services stood at $102 million during the month of August 2020, signifying a decline of 72%, as compared to the previous month and 80% as compared to the same period of last year (SPLY).

• The Current Account Balance during the month of August 2020 showed a surplus of USD 297 million, i.e. around 42% lower than the surplus recorded in the previous month.

• The Government of Pakistan has decided to set up Medium Term Note (MTN) programs to float both Eurobonds and International Sukuk, for a period of one year initially in order to lure foreign exchange reserves into the country.

• The federal cabinet has decided to reduce the price of Remdesivir, which is used for the treatment of COVID-19. Prime Minister's Special Assistant on National Health Services Dr. Faisal Sultan said the price of Remdesivir is being reduced from over 10,000 rupees to 8400 rupees.

• The total debt of the Central Government during the month of July 2020 stood at Rs. 35.5 trillion, i.e.1% percent higher than the figures reported last month. Whereas, on a yearly basis, this debt figure was 8% higher compared to Rs 32.80 trillion recorded in July 2019.

• The World Bank’s Board of Executive Directors approved $450 million in financing on Thursday to support Pakistan’s transition to renewable energy resources that reduce its reliance on fossil fuel imports and lower costs of electricity production.

• Pakistan's outstanding debts as of August 31, 2020 stand at a massive sum of Rs.22.67 trillion whereas total debt at the end of the prior month was Rs.22.63 trillion, meaning that around Rs.39.45 billion were additionally borrowed during this month alone.

• The non-government sector has retired another net sum of Rs.1.08 billion during the week ended September 11, 2020, which brings the cumulative net retirement for the ongoing fiscal year FY2021 to Rs.168.47 billion. The net retirement as of the prior week was recorded at Rs.167.39 billion.

• The government of Pakistan has accumulated Rs.14.21 billion during the week ended September 11, 2020, which brings its total net retirement for the ongoing fiscal year FY2021 to Rs.126.59 billion. As of the prior week, the government had retired a net sum of Rs.140.8 billion.

• The government has released funds amounting to Rs357.232 million during the first three months of the current fiscal year to execute eight petroleum projects under the Public Sector Development Programme (PSDP 2020-21) against the total allocation of Rs 1,786.160 million.

• The exports of Chemical and Pharmaceutical Products witnessed a decline of 12.43% MoM and 11.17% YoY to value at $65.74 million during the month of August 2020.

• Food export earnings came down by 29.69% MoM and 19.58% YoY to $221 million in August’20. Rice and fruits remained the major sources of Foreign exchange earnings. However, during 2MFY21, their exports valued at $247 million and $70 million, depicting a substantial decline of 25.52% YoY and 7.35% YoY respectively where the major fall of foreign earnings was recorded in Basmati rice, down by 36.41% YoY.

• The export earnings from the textile group witnessed a decrease of 15.35% YoY and 20.38% MoM to stand at $1 billion in the month of August’20. While, the imports of the textile group into the country were recorded at $218 million, showing an increase of around 38.45% YoY and 25.97% MoM when compared to the same period of last year and last month respectively.

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