Wheat Target Shortfall, Pak Oil Exports, Longer IMF Deal, Debt Repayments, Balochistan Rainfall, US Inflation.

TOPLINE

• The new government may fall short of this year's wheat production target, with projected output at 29 million tons instead of the targeted 32 million tons due to high energy costs and urea price manipulation.
• Pakistan exported over 500,000 metric tonnes of fuel oil in the first 8 months of the current FY due to low local demand, with exports halted in February as domestic consumption for power generation rose. The highest export was in December at over 135,000 metric tonnes, but dropped to 89,000 metric tonnes in January.
• Finance Minister Aurangzeb aims for a "longer and larger" IMF bailout to sustain economic stability, suggesting a possible rate cut while stressing the monetary policy committee's autonomy. Meanwhile, the SBP may cut interest rates next week, the first time since June 2020, due to declining inflation and better external accounts.
• Finance Minister Muhammad Aurangzeb must handle significant external debt repayments of $4.33 billion in the last quarter, including $1 billion for an international bond maturity and $1 billion to China. Pakistan received $2.408 billion from multilateral creditors and $794.6 million from bilateral creditors in the first 7 months of the current FY.
• Heavy rainfall has triggered a state of emergency in Quetta and other parts of Balochistan, causing widespread disruption. Train services to Iran are suspended, and communication networks are severely impacted.
• US inflation topped forecasts for a second straight month in February as prices jumped for car insurance, air travel and clothes, bearing out the Fed’s cautious approach to cutting interest rates. The consumer price index increased 0.4% from January and 3.8% from a year ago. Overall CPI climbed 0.4% from January and 3.2% from a year ago.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Ramadan Begins with Price Surge: Food Items Soar - On the first day of Ramadan, prices of vegetables, fruits, and Ramadan-specific food items surged significantly in the capital. Chicken prices rose from Rs 15,400 to Rs 16,800 per 40kg in the wholesale market, with retail prices at Rs 450 per kg. Eggs jumped from Rs 6,600 to Rs 9,700 per carton, retailing at Rs 270 per dozen. Additionally, other items like besaan, Jam-e-Shireen, and dates also saw price increases. [BR]
• Cotton Prices Hold Steady in Sindh & Punjab: Cotton prices in Sindh and Punjab range from Rs 19,000-21,500/maund, with Phutti prices in Punjab observed between Rs 8,500-10,000/40 kg. The Spot Rate remained steady at Rs 21,500/maund, while Polyester Fiber was priced at Rs 367/kg. [BR]
• Wheat Production Target at Risk: The new government may fall short of this year's wheat production target, with projected output at 29 million tons instead of the targeted 32 million tons due to high energy costs and urea price manipulation. Rising input costs and alleged market monopolies have sparked concerns about inflation and food shortages, prompting the caretaker administration to refer the issue to the Competition Commission of Pakistan (CCP) for investigation. [BR]
• Punjab CM Launches Shrimp Aquaculture Project: Punjab CM Maryam Nawaz Sharif plans to launch the 'Shrimp Aquaculture in Saline and Brackish Areas of Punjab project,' focusing on shrimp farming in uncultivable lands. Senior Minister Marriyum Aurangzeb highlights job creation and income opportunities through fish and shrimp farming. The initiative aims to enhance fisheries sector quality, yield, and profitability, boosting employment and food security in the province. [BR] [ET]
• Pakistan's Denim Export Decline: Until 2017, denim fabric was Pakistan's fifth-largest export, but by 2023, it dropped out of the top 15. Despite breaching half a billion dollars in revenue once in 2021, the denim industry remains critical to Pakistan's textile sector, with top exporting firms heavily invested in denim manufacturing. [BR]
• Pakistani Textile Companies Shine at Shanghai Exhibitions: Eighteen Pakistani textile companies impressed at the Yarn Expo Spring 2024 and Intertextile Shanghai Apparel Fabrics-Spring Edition 2024 in Shanghai, China. Showcasing diverse products and innovative technologies, they attracted global buyer interest, highlighting Pakistan's renowned textile industry quality and competitiveness. [ET]
• Illicit Cigarette Sales Soar in South Punjab: Illicit cigarette sales have soared to around 60 percent in South Punjab, causing billions in revenue loss, according to the Pakistan Tobacco Company (PTC). Mohsin Ali, a Business Development Analyst, highlighted the prevalence of tax-evaded and smuggled brands, openly sold despite excise duty increases, as enforcement fails to deter illicit trade. [BR]
• Pulses Import: Rs 16.6 billion was the import value of pulses in Jan 2024, up 28.3% compared to Rs 12.9 billion in Jan 2023. [ET]
• Textile Products Export: Rs 9.12 billion was the export value  of art, silk and synthetic textile in Jan 2024, up 29.7% compared to Rs 7.02 billion in Jan 2023, according to the PBS. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Pakistan's Fuel Oil Exports: Trends and Shifts: Pakistan exported over 500,000 metric tonnes of fuel oil in the first eight months of the current financial year due to low local demand, with exports halted in February as domestic consumption for power generation rose. The highest export was in December at over 135,000 metric tonnes, but dropped to 89,000 metric tonnes in January as local power plants increased their use of furnace oil. [The News]
• Heavy Rainfall Sparks Emergency in Balochistan: Heavy rainfall has triggered a state of emergency in Quetta and other parts of Balochistan, causing widespread disruption. Train services to Iran are suspended, and communication networks are severely impacted. Residents face challenges such as gas and electricity shortages, exacerbating difficulties. [ET]
• Provinces Hesitate on BISP Funding Shift: Provincial governments are hesitant to fund the Benazir Income Support Programme (BISP) despite its transition to their jurisdiction, part of the agenda set by the Special Initiative Facilitation Council (SIFC) aiming to settle financial matters between the Centre and provinces, where the federal government's subsidies and projects in provincial domains total around Rs 1 trillion. [The News]
• SNGPL Proposes Tax Law Amendments for Relief: Sui Northern Gas Pipeline Company Limited (SNGPL) has proposed tax law amendments to reduce financial burdens, including changes in sales tax, income tax, and minimum turnover tax, urging immediate relief in the upcoming Finance Bill for FY 2024-25 to address adverse impacts on liquidity and profitability. [BR]
• Petroleum Division Urges RLNG Restriction: The Petroleum Division is concerned about the large diversion of RLNG to the domestic sector, urging Sui Southern and Sui Northern gas companies to limit this to prevent a drastic increase in gas prices. Officials estimate RLNG costs could reach around Rs 180 billion after June 2024, with 19 LNG cargoes worth Rs 232 billion set for domestic delivery. [The News]
• KPK Demands Rs 1,516 Billion from Federal Govt: The Federal government owes Khyber Pakhtunkhwa Rs 1,510 billion for net hydel profit (NHP) under the 'AGN Qazi Formula', with an additional Rs 6 billion in arrears for electricity generated by the province. These figures were discussed in a meeting at the Chief Minister's House chaired by KP Chief Minister Ali Amin Khan Gandapur. [BR]
• IMF Talks Limit Utility Price Cuts: The government's ability to cut utility prices is constrained during IMF talks, with emphasis on reducing losses and improving governance in the energy sector, noted by the Secretary of Finance. Additionally, electricity prices can't be lowered until meeting NEPRA loss standards, improving recovery, and adding renewable energy projects, according to Power Division sources. [BR]
• Sindh Chamber of Agriculture Rejects IRSA Act Amendment: The Sindh Chamber of Agriculture (SCA) rejected a proposed amendment to the IRSA Act via ordinance, criticizing the caretaker government's overreach. [Dawn]
• Punjab Greenlights Rs 100 Billion Innovation City: The Punjab government has approved the Rs 100 billion Innovation City project in Lahore, expected to generate one million jobs. Initially overseen by the Lahore Knowledge Park Company, it's now under the Punjab Central Business District Development Authority, renamed as the 'Nawaz Sharif Innovation City'. [ET]

AGRI UPDATES & PAKISTAN POLICY

• Finance Minister Eyes Bigger IMF Aid: Finance Minister Aurangzeb aims for a "longer and larger" IMF bailout to sustain economic stability, suggesting a possible rate cut while stressing the monetary policy committee's autonomy. Meanwhile, the SBP may cut interest rates next week, the first time since June 2020, due to declining inflation and better external accounts, but discussions with the IMF add uncertainty. [BR] [BR] [Dawn] [The News]
• Finance Minister Faces $4.33 Billion Debt Repayments: Finance Minister Muhammad Aurangzeb must handle significant external debt repayments of $4.33 billion in the last quarter, including $1 billion for an international bond maturity and $1 billion to China. The Prime Minister needs to request a rollover of a $1 billion SAFE deposit for another year from China. [The News]
• Pakistan: $2.408B Multilateral, $794.6M Bilateral - Pakistan received $2.408 billion from multilateral creditors and $794.6 million from bilateral creditors in the first 7 months of the current fiscal year. Contributions came from various organizations including the IDA, CATIC, ADB, AIIB, IBRD, IFAD, IDB, and the OPEC Fund. [ET]
• Pakistan's Banks Achieve Record Profit Growth: Pakistan's listed banks saw a significant 86% growth in net profit, reaching a record high of Rs572 billion by December 2023, attributed to higher interest rates. Despite economic challenges, banks achieved this milestone, driven by a surge in net interest income (NII) and balance sheet growth. In US dollar terms, their profit rose by 36% to $2 billion compared to 2022. [ET]
• Ramazan Price Hikes May Stall Interest Rate Cuts: Market sources indicate that Ramazan-induced price increases may push food basket inflation to its peak in March, possibly preventing the State Bank of Pakistan from making substantial interest rate cuts. Despite Finance Minister Aurangzeb's appointment, previously CEO of HBL, discussions remain focused on the potential for interest rate cuts in the next monetary policy. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Global Inflation: US inflation topped forecasts for a second straight month in February as prices jumped for car insurance, air travel and clothes, bearing out the Federal Reserve’s cautious approach to cutting interest rates. The so-called core consumer price index, which excludes food and energy costs, increased 0.4% from January and 3.8% from a year ago. Overall CPI climbed 0.4% from January and 3.2% from a year ago. After a brisk January reading, the report adds to evidence that inflation is proving stubborn, which in turn should keep the Fed wary of easing policy too soon. [BBG] [BBG] [BBG]
• Hezbollah Rockets Strike Israel Bases: Hezbollah launched over 100 rockets at Israel's military bases on Tuesday in retaliation for a strike in Lebanon. Tensions between Hezbollah and Israel have escalated, raising fears of a broader conflict as Israeli strikes target Hezbollah positions in northern areas. [Dawn]
• Chinese, Russian Warships in Iranian Waters: Chinese and Russian warships have entered Iranian waters for joint naval exercises, reported state media. This comes amidst rising tensions in the Middle East due to the Israel-Hamas conflict, involving Iranian allies like Yemen’s Houthi rebels, leading to attacks on commercial shipping in the Red Sea and Gulf of Aden, prompting Western responses. [BR]
• Protests Erupt in India Over Citizenship Law: Protests broke out in India against a controversial citizenship law criticized for discriminating against Muslims, implemented by PM Narendra Modi's government just before a general election announcement. Demonstrations occurred in Assam and Tamil Nadu, with no reported clashes. The law facilitates Indian citizenship for non-Muslim refugees from Muslim-majority South Asian nations. [Dawn]
• EU Backs Kristalina Georgieva for IMF Second Term: All 27 EU countries have endorsed Kristalina Georgieva for a second term as IMF chief. Georgieva, a Bulgarian economist, expressed her willingness to continue leading the IMF for another five years. Belgium's Finance Minister Vincent Van Peteghem announced unanimous EU support for Georgieva after a meeting in Brussels. [BR]
• Unemployment Drives Afghans to Artisanal Gold Mining: Homayon, a 30-year-old mechanic from Faizabad city, found little work, so he joined other unemployed men in northeastern Afghanistan to dig for gold on a mountainside in Badakhshan province. Hoping to carve out a living, they work at a small-scale mine they set up, taking brief breaks amid the din of the machines. [Dawn] [ET]
• OPEC Forecasts Steady Oil Demand Growth: OPEC kept its forecasts for strong global oil demand growth in 2024 and 2025 unchanged, while raising its economic growth forecast for this year, citing potential for improvement. World oil demand is expected to rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, according to OPEC's monthly report. [BR] [ET]

PAKISTAN - REMAINDERS

• Misprinted Rs 1,000 Notes Spark Public Panic: The State Bank of Pakistan (SBP) is investigating the circulation of misprinted Rs 1,000 denomination currency notes after a bank branch in Karachi received at least four such notes, causing panic among the public. The branch manager's video of the misprinted notes went viral on social media, prompting concerns about the possibility of fake currency in circulation. [BR]
• PM Shehbaz Lauds IT Export Growth: Prime Minister Shehbaz Sharif praised the growth of Information Technology (IT) service exports to over $3 billion and called for a comprehensive roadmap to further boost exports during a meeting reviewing the IT and telecom sectors. Additionally, newly appointed federal cabinet member Shaza Fatima Khawaja was assigned the portfolio of Minister of State for IT. [Dawn]
• Punjab Bans Adiala Jail Meetings Over Security Concerns: The Punjab Home Department imposed a two-week ban on prisoner meetings at Adiala jail due to security threats, following alleged terrorist arrests nearby, despite PTI opposition. Security measures will also increase at the overcrowded facility, housing figures like Imran Khan and Shah Mehmood Qureshi, with over 6,000 inmates - double its capacity. [Dawn] [ET]