Day: June 3, 2023

A delegation of Karachi Chamber of Commerce and Industry (KCCI) led by Mr. Zubair Motiwala held a meeting with Finance Minister Senator Mohammad Ishaq Dar, today at FBR (Hqrs), to discuss the budget recommendations for Fiscal Year 2023–24.

Minister of State for Finance and Revenue Dr. Aisha Ghous Pasha, SAPM on Finance Mr. Tariq Bajwa, SAPM on Revenue Mr. Tariq Mehmood Pasha, Chairman RRMC Mr. Ashfaq Yousif Tola,Governor SBP, Chairman FBR, and senior officers from Finance Division and FBR attended the meeting.

The delegation expressed gratitude to the Finance Minister for inviting the budgetary proposals from the Karachi Chamber of Commerce and Industry (KCCI). They discussed the country’s present economic situation with the finance minister and informed him about the challenges they have been dealing with in carrying out business and economic activities.

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They suggested solutions to the Finance Minister in the form of budgetary proposals to be taken into consideration in the forthcoming Federal Budget. The Finance Minister Senator Muhammad Ishaq Dar praised the delegation’s budgetary suggestions and underlined the government’s resolve to address the problems that the business community is facing.

He also assured the business leaders that the government would do everything in its power to support the business sector for ease of doing business and economic growth and stability in the country. He assured that the government will put forward a business and people-friendly budget for fiscal year 2023–24. The KCCI delegation thanked the Finance Minister for considering their budgetary recommendations.

Source: Pro Pakistani

Pakistan’s textile exports in the first 11 months of FY 2022-23 stand at $15.01 billion against $17.61 billion in the same period last year. Exports declined by 20 percent on a monthly basis, looking at $1.31 billion in May 2023 against $1.64 billion in the same month last year.

Textile exports increased in the first three months of the current fiscal year from July, August, and September by 1 percent, 8 percent, and 3 percent respectively compared to the same months in the previous year but have been on a downward lane with a 15 percent dip in October 2022 to a 29 percent decline in April 2023, reported The News.

From November 2022, December 2022, and January 2023, exports plunged by 18.39 percent, 16.05 percent, and 15 percent respectively with the biggest decrease of 30 percent in February 2023 when the government announced the harsh mini-budget.

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All Pakistan Textile Mills Association (APTMA) expects exports to decline by $3 billion compared to last year’s record of $19.4 billion and that does not include the increase from newly installed capacity. APTMA states that this continuous dip is due to the ban on imports of raw materials and spare parts which are industry requirements.

The non-existent sufficient supply of energy at competitive prices and the failure of the sales tax refund system has also contributed to the reduction in industrial output with the closure of 50 percent of the industry. Banks are refusing Letters of Credit or retiring cotton or PSF imports through cash against documents while industrial stocks are diminishing.

Source: Pro Pakistani

According to the latest report by Arif Habib Ltd (AHL), inflation is predicted to come down in upcoming months to 0.99 percent MoM average by December 2023 and float somewhere between 23-29 percent between June and December.

The retreat is likely to be due to high base effects with real interest rates expected to turn positive in the second half of the FY24 with a possible reduction of 400-500 basis points in the policy rate. Past year floods, higher taxes, removing subsidies, and exchange rate depreciation have brought headline inflation at 38%, but the report states that further increasing interest will not do any good and a holistic approach is needed to address the fundamentals.

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Economic Outlook

The Monetary Policy Committee (MPC) is expected to meet on 12th June to lay out the future economic direction of the country. The report recommends against a further increase in policy rates pointing out the harmful impact of a monetary squeeze with provisional GDP of 0.29 and industrial negative growth of 2.94 percent.

The report states that the economy has come to a near halt with the rising cost of business due to rising interest rates and any more monetary tightening will add to the existing economic woes of the country. AHL surveyed Banks, AMCs, Insurance, and DFIs, Non-Financial Services/Manufacturing: EandPs, Cement, Fertilizers, Steel, Textiles, and Pharmaceuticals for feedback on the expected monetary decision next week.

According to results, 22.7% of the total respondents expect a 100 points increase in policy rate while 77.3% forecast that it will remain unchanged at 21.0%.

Markup on Domestic Debt to Cross Rs. 7.8 Trillion

Analyzing the fiscal situation, the report states that nearly 84% of deposits in domestic banks have been extended to the government while the domestic debt servicing has increased by 69 percent till Mar ‘23 to 3.6 trillion primarily due to jacking up policy rate by 725 basis points to current 21 percent.

The cost of markup on domestic debt is expected to be over Rs. 7.8 trillion, estimated at 85 percent of the expected Rs. 9.2 trillion of FRB revenue in FY24. It also makes the case against a further hike in interest rates as it will only worsen the state of affairs, so reports ask the officials to tread carefully during these challenging times.

Investors in “Wait and See” Mode

Reports state that the primary yield market has remained unchanged overall since the monetary policy of April ‘23 with cut-off yields of short-tenor instruments ranging from 21-22 percent and yields of all three tenor treasury bills are historically high. It also outlines a yield curve inversion in markets with yields on long-term bonds falling below those of shorter-term bonds.

Investors are waiting for the monetary policy landscape to unfold and are not making any significant changes in investment portfolios with yield curve inversion suggesting that stakeholders expect uncertain economic scenarios despite the expected policy rate cuts.

Source: Pro Pakistani

Prime Minister Muhammad Shehbaz Sharif has invited Turkish companies to invest in Pakistan in the energy, agriculture, Information technology and construction sectors.

He was talking to Chief Executives of different Turkish business Groups who called on him in Ankara on Saturday.

The Prime Minister outlined government's vision to facilitate foreign direct investment and encouraged joint ventures.

He said Turkish business community should utilize the opportunities like Trade in Goods Agreement signed between the two countries last year. The Prime Minister assured Turkish companies of complete facilitation and conducive business environment in Pakistan.

The meetings focused on expanding trade and investment ties to maximize mutual gains from available opportunities in Pakistan and enhance cooperation in key sectors of the economy through direct presence of Turkish enterprises and via joint ventures with Pakistani counterparts.

The Prime Minister also held separate meetings with leading Turkish companies that have already invested in Pakistan, including Anadolu Group, Arcelik, Zorlu, Albayrak, Dolsar, Turkish Contractors Association and Pak Yetirim.

During these meetings, Shehbaz Sharif encouraged the businessmen to benefit from the investment-friendly environment in Pakistan and expand their operations.

The Turkish companies briefed the Prime Minister about their existing and future plans for investment and thanked him for facilitating their operations in Pakistan.

Source: Radio Pakistan