IMF on Pak Budget, USC Sugar Rates, Pak Fuel Exports, Bank Deposits Soar, Global Gold Price High, Iran President Death Aftermath.

IMF on Pak Budget, USC Sugar Rates, Pak Fuel Exports, Bank Deposits Soar, Global Gold Price High, Iran President Death Aftermath.

TOPLINE

  • The IMF forecasts Pakistan's defense budget for the next fiscal year to be Rs 2,152 billion, a 19.29% increase from the current year. The IMF wants transparency in Pakistan's investment policy and Special Investment Facilitation Council operations amid projected 12.7% CPI-based inflation for the next budget.
  • The Utility Stores Corporation (USC) reportedly procured 10,000 metric tonnes of sugar at Rs 141.20/kg from a tender of 45,000 metric tonnes. After factoring in expenses, the sugar will cost USC Rs 156/kg. While the price for Benazir Income Support Programme (BISP) consumers remains fixed at Rs 109/kg, it is being sold to the general public at Rs 155/kg.
  • Pakistan exported a record 613,000 tonnes of fuel oil in the first 10 months of the fiscal year, driven by decreased domestic demand due to a shift to cleaner energy and high electricity prices. This is a significant increase from 277,000 tonnes the previous year and around 50,000 tonnes in the 2022 Fiscal Year.
  • Bank deposits soared by 21.3% in April to Rs 28.4 trillion, driven by high interest rates, currency smuggling crackdown, expanded branch networks, and higher remittances. Analysts note the decrease in currency circulation, pointing to increasing bank deposits due to attractive interest rates and anti-smuggling measures.
  • Gold prices reached an all-time high on Monday due to a slowdown in US inflation, raising expectations of an impending interest rate cut by the Federal Reserve. Spot gold surged 1% to $2,438.44 per ounce, hitting a record high of $2,449.89 earlier in the session.
  • Iran declared 5 days of public mourning on Monday following the discovery of the wreckage of a helicopter carrying President Ebrahim Raisi and his entourage. First Vice President Mohammad Mokhber was chosen as interim president, while the military's chief of staff Bagheri initiated an investigation into the cause of the crash.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

  • Punjab's Fruit Industry Faces Decline: Around 80% of fruit procurement and processing occurs in Punjab, but the industry is declining due to rising prices from inflation and increased taxation, adding stress to farmers already affected by the lack of wheat support. The government should prioritize facilitating private sector initiatives rather than directly supporting crops, as seen in the success of maize production with private sector financing and technical support. [BR]
  • Utility Stores Corporation Procures Sugar: The Utility Stores Corporation (USC) reportedly procured 10,000 metric tonnes of sugar at Rs 141.20/kg from a tender of 45,000 metric tonnes. After factoring in expenses, the sugar will cost USC Rs 156/kg. While the price for Benazir Income Support Programme (BISP) consumers remains fixed at Rs 109/kg, it is being sold to the general public at Rs 155/kg. [ARY]
  • Spices Export: Rs 1.89 billion was the export value of spices in April 2024, up 4.43% compared to Rs 7.81 billion in April 2023. [ET]
  • Medicine Prices in Pakistan Set to Surge: Medicine prices in Pakistan are expected to surge due to an 18% sales tax and deregulation of non-essential medicine prices, allowing pharmaceutical companies to set their own rates. This tax, recommended by the IMF, aims to rationalize tax policies and increase revenue but may render medicines unaffordable for many. [The News]

ENERGY - WEATHER, WATER & POWER

  • Pakistan's Fuel Oil Exports Hit Record High: Pakistan exported a record 613,000 tonnes of fuel oil in the first 10 months of the fiscal year, driven by decreased domestic demand due to a shift to cleaner energy and high electricity prices. This is a significant increase from 277,000 tonnes the previous year and around 50,000 tonnes in the fiscal year ending June 30, 2022. [The News]
  • OGRA Sets Lower Gas Prices for FY 2024-25: For fiscal year 2024-25, OGRA set the average gas price at Rs 1635.90 per MMBTU for SNGPL, a 10% decrease, and at Rs 1401.25 per MMBTU for SSGC, a 4% decrease. The significant previous years' shortfall of Rs 580,585 million has been referred to the Federal Government for a policy decision. [BR]
  • CPPA-G Seeks Rs 3.50/Unit Tariff Hike for April 2024: CPPA-G seeks a Rs 3.50 per unit adjustment in Discos' tariffs for April 2024 to recover Rs 30 billion, with Nepra's public hearing set for May 30, 2024. In April, hydel power comprised 23.96% of total generation, local coal 10.19%, imported coal 0.24%, and RLNG 24.97%, while HSD and HSF contributed zero. [BR] [Dawn]
  • KP Filling Stations Strike: Owners of filling stations in Khyber Pakhtunkhwa held a one-day strike to protest the federal government's inaction against illegal sales of smuggled Iranian petroleum. Following their meeting with the deputy commissioner, a crackdown on illegal filling stations was agreed upon. [Dawn]
  • NEPRA Approves K-Electric's 2024-2028 Power Plan: NEPRA has approved K-Electric's Power Acquisition Program (PAP) for 2024-2028, aimed at enhancing power supply reliability and sustainability in Karachi. KE's PAP, submitted on March 20, 2023, integrates renewable energy, local fuel, and National Grid power, aligning with the IGCEP 2022-2031, National Electricity Policy 2021, and National Electricity Plan 2023-2027. [BR] [Dawn] [The News]
  • Protests Disrupt Life in Chaman: For nearly two weeks, life in Chaman has been disrupted by protests against new border crossing regulations and actions by security forces, resulting in the closure of key institutions and services. Protesters have also blocked the Quetta-Chaman highway, stranding hundreds of trucks and vehicles carrying Afghan transit trade goods. [Dawn]
  • PML-N Dismisses Power Company Boards: On Monday, the PML-N government dismissed the boards of eight power distribution companies, accusing them of causing a Rs 589 billion loss this fiscal year. They also enlisted military and intelligence agencies, citing Article 245 and the Anti-Terrorism Act, to improve governance within these companies. [ET]
  • Karachi Forecasts Mild Impact Amid Sindh Heatwave: Karachi is forecasted to be least affected by the upcoming week-long heatwave in Sindh, with temperatures soaring 6-8 degrees above normal in other cities. On Monday, Jacobabad recorded the highest temperature at 47°C, while Karachi remained relatively cooler at 36.3°C with 55% humidity. [Dawn] [Dawn]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

  • Federal Budget 2024-25 to Be Presented on June 7: The federal government will present the budget for the financial year 2024-25 in the National Assembly on June 7 (Friday), with the budget session starting on June 6 (Thursday). Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, will present the budget, after which the Speaker will adjourn the House for two days, reconvening on Monday. [BR]
  • Punjab Assembly Passes Defamation Bill: The Punjab Assembly passed the Defamation Bill, 2024, rejecting opposition amendments amidst protests by PTI-backed Sunni Ittehad Council and journalists. After a voice vote, members of the SIC tore apart copies of the bill. It was tabled by Punjab Finance Minister Mujtaba Shujaur Rehman after the PML-N government refused to delay the vote, despite journalists' request for a week's postponement. [Dawn]
  • KP Assembly Presents Rs 306.520 Billion Budget: In the Khyber-Pakhtunkhwa Assembly, a supplementary budget of over Rs 306.520 billion for 2022-23 was presented. Finance Minister Aftab Alam and Speaker Babar Salim Swati withdrew all demands for grants due to political circumstances related to the caretaker government, though Minister Alam emphasized the constitutional requirement to pass the budget. [ET]
  • IMF Forecasts 19.29% Defense Budget Rise: The IMF forecasts Pakistan's defense budget for the next fiscal year to be Rs 2,152 billion, a 19.29% increase from the current year. There's no response from the military regarding alignment with their budget requirements, while the IMF estimates defense spending to be 1.72% of GDP, with nominal GDP projected at Rs 124,813 billion for the next fiscal year. [BR]
  • IMF Urges Investment Transparency: The IMF wants transparency in Pakistan's investment policy and Special Investment Facilitation Council operations amid projected 12.7% CPI-based inflation for the next budget. Queries on tax exemptions for CPEC SEZs and maximizing non-tax revenues, including raising the Petroleum Development Levy or implementing a Carbon levy, have been raised. [The News]
  • JCP Meeting to Review Supreme Court Vacancies: The upcoming Judicial Commission of Pakistan (JCP) meeting on June 7 will review nine judges from the Lahore and Sindh High Courts for three vacant positions in the Supreme Court. The LHC proposes six judges, while the SHC suggests three. Chief Justice Qazi Faez Isa will propose three names for each vacancy, with the JCP meeting to be held no later than 15 days before the vacancies occur. [Dawn]
  • PBC Proposes Tax Collection Solutions: The Pakistan Business Council proposes unconventional solutions to increase tax collection from the undocumented sector, suggesting revising property values and reintroducing incentives for retailers to issue sales tax invoices. They urge reassessment of FBR property values to align with market rates and discourage black money investment in real estate. [The News]
  • Bank Deposits Surge 21.3% to Rs 28.4 Trillion: Bank deposits soared by 21.3% in April to Rs 28.4 trillion, driven by high interest rates, currency smuggling crackdown, expanded branch networks, and higher remittances. Analysts note the decrease in currency circulation, pointing to increasing bank deposits due to attractive interest rates and anti-smuggling measures. [Dawn] [The News]
  • Belgian Ambassador Urges GSP+ Compliance: Belgian Ambassador Charles Delogne urged Pakistan's business community to inform authorities about the need to apply for the new GSP Plus regulation, despite its extension until 2027. Speaking at the Karachi Chamber of Commerce and Industry (KCCI), he emphasized that GSP+ covers important issues like human rights and the environment, crucial for Pakistan amid climate change challenges. [ET]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

  • Iran Mourns Helicopter Crash, Appoints Interim President: Iran declared five days of public mourning on Monday following the discovery of the wreckage of a helicopter carrying President Ebrahim Raisi and his entourage in the country's remote western regions. First Vice President Mohammad Mokhber was chosen as interim president, while the military's chief of staff Mohammad Bagheri initiated an investigation into the cause of the crash. [Dawn] [ET]
  • Russian Attacks Kill 11 in Ukraine's Kharkiv Region: Russian attacks in Ukraine's Kharkiv region on Sunday killed at least 11 people, with ongoing ground assaults since May 10 resulting in significant territorial gains. Six individuals, including a pregnant woman, died in a missile strike from Russia's Belgorod territory, and twenty-seven were wounded in the attack on a recreation center in Kharkiv city outskirts. [BR]
  • BJP's Voter Fatigue Challenge: As India's general election approaches its final weeks, Prime Minister Narendra Modi's BJP faces voter fatigue and opposition resistance. To counter this, foot soldiers from the party's parent Hindu nationalist organization are stepping up efforts to regain momentum amidst concerns over lower turnout and stronger opposition in certain states. [Dawn]
  • Systems Limited, Temenos Team Up for APAC Banking: Systems Limited has teamed up with Temenos to enhance banking services in five Asia-Pacific countries by licensing and developing Country Model Banks. The deal aims to tailor solutions to local market needs in Indonesia, Malaysia, Vietnam, Myanmar, and Brunei, leveraging Systems Limited's banking technology expertise and Temenos platforms. [The News]
  • China's April Imports of Australian Coal Surge: China's imports of Australian coal surged in April to the highest level since July 2020, reaching 7.19 million metric tons, according to Reuters and customs data. This increase, up by 25% from April 2019, is attributed to improving trade relations and tariff advantages, marking a shift from a years-long unofficial ban on Australian coal imports. [BR]
  • Chicago Wheat Rises 1% on Production Concerns: Chicago wheat prices rose over 1% on Monday due to production concerns in major exporting countries like Russia, while soybeans dipped slightly despite ongoing crop losses in Brazil. Corn prices strengthened as well. The most-active wheat contract on the CBOT increased by 1.2% to $6.59-1/4 a bushel, soybeans fell by 0.2% to $12.25-3/4 a bushel, and corn rose by 0.3% to $4.54 a bushel. [BR]
  • Gold Prices Hit Record High on Inflation Slowdown: Gold prices reached an all-time high on Monday due to a slowdown in US inflation, raising expectations of an impending interest rate cut by the Federal Reserve. Spot gold surged 1% to $2,438.44 per ounce, hitting a record high of $2,449.89 earlier in the session, while US gold futures rose 1.1% to $2,442.60. [BR] [Dawn]
  • Commodities Push: Bobby Jain’s new hedge fund is tapping talent from commodity trading houses and committing a chunk of the money it’s raising for a major push into raw materials. Jain Global will allocate 15% to 20% of the roughly $5 billion it’s aiming to raise, according to a person familiar. Due to launch in July, the fund will trade commodities derivatives before moving into physical transactions. Jain Global is on track to be one of the biggest hedge fund launches in years, and its push into energy and metals is the latest example of how investors are piling back into raw materials. A gauge of prices has rallied to the highest in a year, driven by supply disruptions, geopolitical tensions and a bid to hedge against inflation. [BBG] [BBG] [BBG]

OPINION(S) & REMAINDERS

  • Pakistan's Mobile Phone Imports Skyrocket: During the first 10 months of fiscal year 2023-24, mobile phone imports to the country surged to $1.462 billion, a 209.07% increase from the previous year. In rupee terms, imports totaled Rs 414.276 billion, marking a growth of 279.52%. [BR]
  • April Auto Loans Drop 24% to Rs 236 Billion: Auto loans fell by 24% year-on-year to Rs 236 billion in April, attributed to higher borrowing costs and economic constraints, dampening consumer demand. Analysts cite increased borrowing expenses and economic activity limitations as factors reducing interest in these loans. Additionally, there was a 2% month-on-month decrease from the previous month's Rs 239 billion in car financing. [The News]
  • Opinion: Climate Resilience - “According to the World Bank, the financial toll of infrastructure disruptions in low and middle-income countries reached up to $647 billion in 2019. If there is one thing that developing countries like Pakistan need to learn from this, it is to ensure that development gains are preserved. This means that there is an urgent need to develop the resilience of critical infrastructure to enable it to withstand climate shocks, such as floods.” - By Ajaz  Ahmed [Dawn]

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