Daily News: 20th April 2020

Good Morning

China will contribute $6.3 billion in financing to Pakistan over the next 12 months with all key bilateral partners committing to maintaining their exposure throughout the Extended Fund Facility (EFF) programme which would remain in effect, says the International Monetary Fund (IMF). Pakistan’s primary deficit is now expected to deteriorate to 2.9 percent of GDP in fiscal year 2020 (from 0.8 percent expected earlier) due to a 1.8 percentage point decline in tax revenue relative to the pre-virus baseline and the needed higher spending to support the health response, social safety nets for the very poor, and employment. The large-scale manufacturing (LSM) output declined by 1.15 per cent year-on-year in February, the Pakistan Bureau of Statistics (PBS) reported on Saturday.

Market View: The KSE100 Index gained 1502.37 points on Friday, ending the session at 32,831.8 points. Investors celebrated the approval of USD 1.39bn package to Pakistan by the IMF and a 200bps cut by the central bank. We expect the market to remain range bound in the upcoming session as  the number of COVID 19 cases are increasing across the country.

Commodities:

Brent oil (USD/bbl): 27.75 (+1.18% D/D
WTI Crude oil (USD/bbl): 15.27 (-16.60% D/D)
Gold (USD/oz): 1,697.50 (-0.0648% D/D)

National News

China to contribute $6.3bn in financing over next 12 months

ISLAMABAD: China will contribute $6.3 billion in financing to Pakistan over the next 12 months with all key bilateral partners committing to maintaining their exposure throughout the Extended Fund Facility (EFF) programme which would remain in effect, says the International Monetary Fund (IMF).

https://epaper.brecorder.com/2020/04/19/6-page/834112-news.html

Govt steps must be targeted, temporary: IMF

ISLAMABAD: The regulatory measures and expanded refinancing schemes of the government to contain the ensuing economic impact of COVID-19 must be targeted and temporary, and their design should not create moral hazard nor foster poor credit risk management practices, says the International Monetary Fund (IMF). IMF in its latest report “Request for purchase under the Rapid Financing Instrument”, emphasized on adoption of the necessary supervisory procedures to ensure that measures proposed will not obscure credit quality assessment in the future. With growth remaining below potential, risks associated with policy slippages and resistance to reforms, including from vested interest groups, loom large, the report maintains. 

https://epaper.brecorder.com/2020/04/18/1-page/833990-news.html

WB to support Covid-hit SMEs through IFC: Malpass

ISLAMABAD: The World Bank is working in Pakistan through its International Finance Corporation (IFC) for creating working capital facilities and trade finance with the objective to support Small and Medium Enterprises (SMEs), affected badly by the Covid-19.

https://epaper.brecorder.com/2020/04/18/1-page/833991-news.html

Covid-19 shock to cause big impact on BoP

ISLAMABAD: Pakistan’s primary deficit is now expected to deteriorate to 2.9 percent of GDP in fiscal year 2020 (from 0.8 percent expected earlier) due to a 1.8 percentage point decline in tax revenue relative to the pre-virus baseline and the needed higher spending to support the health response, social safety nets for the very poor, and employment.

https://epaper.brecorder.com/2020/04/18/1-page/833988-news.html

LSM contracts 1.2pc in February

ISLAMABAD: The large-scale manufacturing (LSM) output declined by 1.15 per cent year-on-year in February, the Pakistan Bureau of Statistics (PBS) reported on Saturday.

https://www.dawn.com/news/1550424/lsm-contracts-12pc-in-february

Credentials of Eagle Kingdom Technologies to be examined

ISLAMABAD: Ministry of Energy (Petroleum Division) is to check the credentials of Eagle Kingdom Technologies (EKT), a new entity nominated by the Russian Government to execute a $2 billion North-South Gas Pipeline Project (NSGPP) on Government to Government (G to G) basis, official sources told Business Recorder.

https://epaper.brecorder.com/2020/04/20/12-page/834237-news.html

Body formed to hold talks with IPPs

ISLAMABAD: The government has constituted a six-member technical committee headed by Prime Minister’s Special Assistant on Coordination of Marketing and Development of Mineral Resources, Shahzad Syed Qasim to hold formal negotiations with Independent Power Producers (IPPs).

https://epaper.brecorder.com/2020/04/20/10-page/834222-news.html

AIDC to finalise budget recommendations by 23rd

ISLAMABAD: The Auto Industry Development Company (AIDC) which is scheduled to meet on April 23, 2020 will finalise recommendations for budget 2020-21 on the proposals of PAMA and PAAPAM.

https://epaper.brecorder.com/2020/04/20/10-page/834223-news.html

DISCOs charge GST, WHT instead of special tariff

LAHORE: The power distribution companies (DISCOs) have charged general sales tax (GST) and withholding tax (WHT) on the basis of notified tariff instead of special tariff for zero-rated industrial consumers for the month of March.

https://epaper.brecorder.com/2020/04/19/2-page/834077-news.html

New scheme to be launched for SMEs; Razak

ISLAMABAD: Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood said on Sunday the government is set to launch a scheme to support Small and Medium Enterprises (SMEs) to promote small businesses across the country.

https://epaper.brecorder.com/2020/04/20/2-page/834144-news.html

Cash reserve requirements cut to 10pc

KARACHI: The State Bank of Pakistan on Friday reduced the Special Cash Reserve Requirement to 10 per cent from 15pc of total FE-25 deposits from April 20 on wards.

https://www.dawn.com/news/1550174/cash-reserve-requirements-cut-to-10pc

Textile exports contract 4.5pc in March

ISLAMABAD: Pakistan’s textile and clothing exports declined 4.5 per cent year-on-year in March owing to order cancellations and delays amid coronavirus-led global lockdowns, showed Pakistan Bureau of Statis­tics data issued on Friday.

https://www.dawn.com/news/1550173/textile-exports-contract-45pc-in-march

Petroleum imports fall 33pc in March

ISLAMABAD: Imports of petroleum products dipped nearly 33 per cent year-on-year in March owing to the sharp reduction in demand for petroleum products as a result of coronavirus pandemic.

https://www.dawn.com/news/1550423/petroleum-imports-fall-33pc-in-march

US announces $8.4m to help Pakistan’s anti-virus efforts

ISLAMABAD: The United States announced on Friday a funding of $8.4 million for Pakistan to combat the spread of new coronavirus in the country.

https://www.dawn.com/news/1550102/us-announces-84m-to-help-pakistans-anti-virus-efforts

First Rs200bn sukuk issue launched via stock market

ISLAMABAD: For the first time the government has floated debt of a state-owned entity (SoE) — earlier the exclusive domain of the banks — for ordinary investors through the stock market.

https://www.dawn.com/news/1550171/first-rs200bn-sukuk-issue-launched-via-stock-market

$500m WB aid likely to boost social sector

ISLAMABAD: The World Bank plans to approve a credit of $500 million for Pakistan next month to strengthen civil registration and vital statistics, health and education systems essential for human capital accumulation, and improve national safety nets to respond to shocks effectively.

https://www.dawn.com/news/1550411/500m-wb-aid-likely-to-boost-social-sector

FBR agrees to tax incentive proposals of businessmen for next budget

KARACHI: The Federal Board of Revenue (FBR) agreed to a number of proposals related to tax incentives expected to be announced in the next budget, considering limitations under the IMF-backed reforms, a trade body said on Friday.

https://www.thenews.com.pk/print/645826-fbr-agrees-to-tax-incentive-proposals-of-businessmen-for-next-budget

Pakistan expected to take $10-15bln breather on debt repayments

KARACHI: Pakistan’s struggling economy is expected to get $10 to $15 billion of one year breather on interest and principal payments to foreign bilateral, multilateral and commercial creditors under the G-20 debt relief package for poor countries, analysts said on Friday.

https://www.thenews.com.pk/print/645817-pakistan-expected-to-take-10-15bln-breather-on-debt-repayments

IMF increases petroleum levy to Rs 489 bn

ISLAMABAD: Without massive re-adjustments on macroeconomic and fiscal framework for evolving agreement with the IMF staff, the halted existing $6 billion Extended Fund Facility (EFF) program for Pakistan could not be revived.

https://www.thenews.com.pk/print/646310-imf-increases-petroleum-levy-to-rs-489-bn

Inefficiency of power sector: Country sustains Rs4,802 bn loss due to circular debt in 13 years

ISLAMABAD: The menace of circular debt has already led the country to a total loss of Rs4,802 billion during the last 13 years because of the power sector’s inefficiencies, which also caused an annual loss of Rs370 billion. This was revealed in a report of nine-member committee on power sector audit, circular debt and way forward that was headed by ex-chairman SECP and it was submitted to the prime minister.

https://www.thenews.com.pk/print/646037-inefficiency-of-power-sector-country-sustains-rs4-802-bn-loss-due-to-circular-debt-in-13-years

FBR braces up for worst-ever tax performance in last quarter

KARACHI: Tax managers have estimated a massive 25 percent year-on-year decline in revenue collection during the last quarter of the current fiscal year as government-imposed lockdown adversely upset economic activities, unleashing a fiscal turbulence in an already fragile economy.

https://www.thenews.com.pk/print/646270-fbr-braces-up-for-worst-ever-tax-performance-in-last-quarter

Imran sees tough May in war against coronavirus

ISLAMABAD: Prime Minister Imran Khan on Saturday advised against politicking on the issue of corona pandemic saying some people wanted more people to die so that they could criticise the government for political mileage.

https://www.thenews.com.pk/print/646270-fbr-braces-up-for-worst-ever-tax-performance-in-last-quarter

UK announces £2.67m aid for Pakistan

ISLAMABAD: Britain has announced an aid of £2.67 million for Pakistan to combat the novel coronavirus pandemic.British High Commissioner Christian Turner said, “Friends support in difficult times. The aid will help Pakistan cope with the virus and save people’s lives.”

https://tribune.com.pk/story/2201707/1-uk-announces-2-67m-aid-pakistan/

Finance ministry accuses SBP of causing Rs6.5b loss to kitty

ISLAMABAD: The Ministry of Finance (MoF) has said that State Bank of Pakistan (SBP) “facilitated speculative behaviour” of commercial banks last year which caused a loss of Rs6.5 billion to the national kitty in just first five months on account of additional borrowing cost.

https://tribune.com.pk/story/2201631/2-finance-ministry-accuses-sbp-causing-rs6-5b-loss-kitty/

Islamabad needs to fast-track TAPI pipeline

As Turkmenistan targets to achieve financial close of a multibillion-dollar transnational gas pipeline project in November this year, Pakistan needs to expedite work on its part of the pipeline to ensure energy security.

https://tribune.com.pk/story/2200597/2-islamabad-needs-fast-track-tapi-pipeline/

Pakistan’s pharmaceutical firms report 50% decline in profits due to pandemic

The pharmaceutical industry of Pakistan has lost 50% of its revenue during the past two months owing to the spread of coronavirus pandemic in the country.

https://tribune.com.pk/story/2201463/2-pakistans-pharmaceutical-firms-report-50-decline-profits-due-pandemic/

Traders give govt three days to lift coronavirus lockdown

Markazi Tanzeeme Tajiran Pakistan (MTTP) has given a three-day deadline to the government to end the countrywide lockdown imposed to contain the spread of coronavirus.

https://tribune.com.pk/story/2202162/1-traders-give-govt-three-days-lift-coronavirus-lockdown/

Pakistan’s pharmaceutical firms report 50% decline in profits due to pandemic

The pharmaceutical industry of Pakistan has lost 50% of its revenue during the past two months owing to the spread of coronavirus pandemic in the country.

https://tribune.com.pk/story/2201463/2-pakistans-pharmaceutical-firms-report-50-decline-profits-due-pandemic/

International News

Asia Pacific stocks slip ahead of China’s loan prime rates release; US crude plummets

Asia Pacific stocks slipped in Monday morning trade as investors awaited the release of China’s benchmark lending rate.The Nikkei 225 in Japan fell 1.29% in early trade while the Topix index shed 0.56%. Over in South Korea, the Kospi dipped 0.12%.

https://www.cnbc.com/2020/04/20/asia-markets-china-loan-prime-rate-coronavirus-currencies-in-focus.html

US crude plummets more than 15% as one analyst says the situation stateside is ‘quite dire’

U.S. crude prices plunged in the morning of Asian trading hours on Monday as traders continued to fret over a slump in demand due to the coronavirus pandemic, with one analyst describing the situation stateside as “quite dire.”

https://www.cnbc.com/2020/04/20/oil-markets-us-crude-futures-in-focus-as-coronavirus-dents-demand.html

Gold falls on firm dollar, US economy re-open hopes

Gold prices fell to a more than one-week low on Monday as the dollar firmed and as investors remained optimistic that the U.S. economy might reopen soon from lockdowns that were enforced to contain the novel coronavirus’ spread.

https://www.cnbc.com/2020/04/20/gold-markets-coronavirus-pandemic-in-focus.html

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