Day: May 21, 2024

The Securities and Exchange Commission of Pakistan (SECP) held a workshop in Karachi to explore areas of potential collaboration in capital markets between Pakistan and China. The purpose of the workshop was to benefit from the experience and ideas of financial market experts and veterans.

The workshop was chaired by Akif Saeed, Chairman SECP. The participants included Abdul Rehman Warraich, Commissioner SECP, senior management of SECP, and experts from capital market infrastructure institutions, brokerage houses, banks, insurance companies, and asset management companies.

The participants deliberated ways to strengthen connections between the capital markets of both countries and to enhance Chinese investment in Pakistan’s capital markets. Specific suggestions included exploring cross listings between the respective stock exchanges, establishing joint ventures between Chinese firms and their local counterparts, and creating Exchange Traded Funds (ETFs) to provide Chinese investors with easier access to Pa
kistan’s capital markets.

The discussions further delved into ways to strengthen Pakistan’s infrastructure, strive for continuous digitalization, increase the stock market investor base, and attain greater international financial integration. The need for further awareness on stock market as well as creating linkages between capital markets and the real economy was also emphasized during the workshop.

Source: Pro Pakistani

Discussions between Pakistan’s economic team and the International Monetary Fund (IMF) Mission this week will most likely end without a staff-level agreement, sources in the Finance Ministry told ProPakistani.

Sources said policy-level talks have so far failed to yield any conclusive result. The lender’s mission led by Nathan Porter will leave Pakistan after three days. Negotiations on the new bailout program will continue virtually in the coming weeks.

The IMF Mission will issue a report on the country’s overall economic situation after concluding its current visit, sources added.

Sources said the IMF will review Pakistan’s proposed budgetary measures for the next fiscal year, with the final decision on a new program hinging on the budget.

A staff-level agreement with the Washington-based lenders is expected after passage of next fiscal year’s federal budget.

Interest Payments of Rs. 9.7 Trillion Next Fiscal Year

During the ongoing policy-level talks, Pakistan has presented the country’s macroeconomic
framework to the IMF.

The lender sees a GDP growth rate of 3.5 percent next fiscal year, while the Finance Ministry is aiming slightly higher at 3.7 percent, Finance Ministry sources added. Inflation estimates also differed between the two sides, with the IMF forecasting a 12.7 percent rate compared to the Finance Ministry’s slower 11.8 percent estimate.

Sector-specific growth targets were outlined. Sources said the agriculture sector is expected to grow by 3.5 percent, the services sector by 3.8 percent, and the industrial sector by 4 percent in the next financial year.

Interest payments on loan repayments were projected to exceed Rs. 9,700 billion in FY25.

Exports, Remittances to Cross $61 Billion

The IMF estimated a current account deficit at $4.6 billion, while the Finance Ministry set a target of $4.2 billion. In terms of foreign exchange earnings, exports and remittances are expected to generate over $61 billion, with the domestic export target set at $32.7 billion for FY25.

The Finance Ministry p
rojected $58 billion in imports while IMF said $61 billion.

Remittances are expected to clock in at $30.6 billion in the upcoming fiscal year. Meanwhile, the fiscal deficit in FY25 is estimated at Rs. 9,600 billion.

Pension Bill to Rise By Over Rs. 150 Billion

The Finance Ministry has proposed allocating Rs. 1,000 billion for federal development projects, which goes against the IMF’s target of curbing development funding next fiscal year.

The Ministry also wants to earn an additional Rs. 1,300 billion in tax revenue in FY25, meaning that the Federal Board of Revenue (FBR) will likely face the daunting task of collecting Rs. 12,400 billion in tax next fiscal year.

The pension bill is also expected to increase from Rs. 801 billion to Rs. 960 billion, sources added.

These discussions will continue virtually after the IMF mission departs on Friday. An SLA looks viable and achievable only after the federal budget approval next month.

Source: Pro Pakistani

Power generation in the country went down by 13.7 percent YoY to 8,639 gigawatts per hour (GWh) in April 2024, and down 2.4 percent YoY to 101.089 GWH in 10MFY24 compared to the same period last year.

On a month-on-month (MoM) basis, power generation in the country went up by 7.7 percent from 8,023 GWh recorded in March 2024.

The cost of fuel for power generation decreased by 10.1 percent YoY to an average of Rs. 9.21/unit in April 2024. During April 2024, the actual power generation was 20.4 percent lower than the reference generation. This decline in generation is expected to result in higher capacity charges for the 4QFY24 QTA, according to Arif Habib Limited.

Major contributors during April 2024 were RLNG (25 percent), Hydel (24 percent), Nuclear (23.6 percent), and Gas (11.3 percent).

RLNG power generation is down by 10.8 percent YoY from 2,418 GWh in April 2023 to 2,157 GWh in April 2024. On an MoM basis, RLNG generation is up 30.1 percent. For the period July-April FY24, it is up 11.5 percent YoY.

Hydel-based power generation increased by 10.6 percent YoY to 2,070 GWh in April 2024 from 1,872 GWh last year. On an MoM basis, Hydel-based power output showed a decrease of 6.6 percent in April from 2,217 GWh in the previous month.

Nuclear power generation increased by 6.6 percent YoY to 2,043 GWh in April 2024 from 1,916 GWh last year, while monthly nuclear power generation shows a decrease of 1.3 percent from 2,070 GWh observed the previous month.

Gas-based power generation decreased by 18 percent YoY to 975 GWh in April 2024 from 1,189 GWh last year but up by 22.6 percent MoM compared to 795 GWh in March 2024.

Solar-based generation is down 10.2 percent YoY from 126 GWh last year to 113 GWh in April 2024. During 10MFY24, it fell by 6.8 percent YoY to 787 GWh from 844 GWh in 10MFY23.

Fuel Cost

During April 2024, fuel cost for power generation decreased by 10.1 percent YoY and also up 10.8 percent MoM to an average of Rs. 9.21/unit, compared to an average cost of Rs. 10.24 in April 2023 and Rs. 8.31/u
nit in March 2024, respectively. For 10MFY24, fuel costs are down 4.9 percent YoY with an average cost of Rs. 8.79/unit, compared to Rs. 9.25/unit in 10MFY23.

Imported fuel was the priciest with a cost of Rs. 27.45 per unit during the period in review.

Source: Pro Pakistani

While the November release of quarterly national accounts represents an important step forward for economic statistics in Pakistan, projects are underway for future improvements, including further refinements of seasonally adjusted estimates for eventual public release and the development of quarterly expenditure-based GDP, says the World Bank.

The Bank officials in a blog stated that smart, impactful economic policy and decision-making require accurate, timely data.

Toward this end, and with support from the World Bank, on November 28, 2023, the Pakistan Bureau of Statistics (PBS) launched new Quarterly National Accounts (QNA), a landmark development in the nation’s macroeconomic statistics program.

Following a rigorous methodology aligned with international standards from the System of National Accounts, this represents a significant leap forward for short-term economic policy responses in Pakistan.

The new quarterly data are a response to user demand for more frequent and up-to-date information on Pak
istan’s economy and will enable more timely and impactful decision-making.

Quarterly National Accounts are important for evaluating short-term economic performance and provide a foundation for forecasting the economy’s future trajectory. This first release for Pakistan included quarterly estimates of gross value added (GVA) by industry and quarterly GDP in current and constant prices, consistent with the most recent published annual GDP estimates.

These new quarterly data can be used to track the performance of each industry, to identify the main contributors to overall economic growth, and to provide early, robust estimates of the annual GDP for Pakistan.

For example, Quarterly National Accounts enable the development of forecasts via econometric models and monitoring of business cycles, in addition to other tools and analyses. This dataset is crucial for timely measuring of the impact of economic shocks and understanding dynamic relationships between different aspects of the economy, particularly in peri
ods of high inflation or significant changes in relative prices.

These QNAs provide a more comprehensive picture of economic trends than specific short-term indicators can offer since they are compiled within a comprehensive and integrated national accounts framework. The QNA data can indicate, for example, whether a decrease in output is the result of internal or external demand, in addition to identifying the industries impacted.

World Bank technical assistance was provided in a joint effort by the Economic, Debt, and Price Data Unit (DECED) of the Bank’s Development Economics Data Group (DECDG) and the Poverty and Equity Global Practice, with the goal of closing an important gap in core economic data in Pakistan.

Via regular collaborative virtual technical sessions over a 12-month period and a one-week, face-to-face workshop in June 2023, the World Bank provided crucial support to establish a methodology, evaluate data sources, design a measurement framework, formulate a release and revision strategy, a
nd fully document the process. Prioritizing the ongoing sustainability of the report going forward, the team put in place a practical implementation strategy, working closely with PBS to ensure long-term success.

In addition to enabling data-driven decision-making in the public and private sectors in periods of economic volatility, this initiative positions Pakistan as a full subscriber to the IMF Special Data Dissemination Standard (SDDS), enhancing its access to international capital markets and facilitating further economic development.

Source: Pro Pakistani

Finance Minister Muhammad Aurangzeb will present the 2024-25 federal budget in parliament on June 7, 2024.

The budget session will initially start on Thursday, June 6, before presenting it in full on Friday (the next day). After Aurangzeb’s budget presentation, the National Assembly will adjourn proceedings for two days and meet next week on Monday.

Meanwhile, the budget will be presented in the Upper House (Senate) of Parliament on the same day as it is tabled in the National Assembly.

Lower House of the Parliament will then discuss the budgetary provisions for the next fiscal year which will last till end-June 2024. The new budget will approved right after these proceedings.

Source: Pro Pakistani