NEC APPROVES PKR 2.5TR FOR DEVELOPMENT OUTLAY
The National Economic Council (NEC) on Friday approved the new financial year’s economic framework on rosy assumptions while setting aside a relatively realistic picture painted by the Ministry of Planning and also endorsed a Rs2.5-trillion national development outlay for public investment, source said to Research Analyst-PAGE. The NEC did not approve next year’s current account deficit target of $10.4 billion, which was equivalent to 3.1% of gross domestic product (GDP), after the finance ministry gave assurances to the council that it would curtail imports and enhance exports. Prime Minister Nawaz Sharif chaired the meeting of NEC – a constitutional body with mandate to approve the macroeconomic framework and national development budgets. The NEC also approved the special PM Initiatives of Energy for All and Clean Drinking Water for All in addition to allocating Rs180 billion for the China-Pakistan Economic Corridor (CPEC) projects. It asked the planning ministry to revisit its prepared macroeconomic framework in light of the assurances given by the finance minister to Prime Minister Nawaz Sharif. The Ministry of Finance managed to convince the premier that the planning ministry’s projections about imports, exports and current account deficit should be readjusted, source added.
GIANT PIZZA HUT SET TO OPEN 75 NEW OUTLETS IN PAKISTAN
American fast food giant Pizza Hut has decided to double its presence in Pakistan, the company and its local partner announced on Friday, adding that they would open 75 new outlets at an approximate investment of $3.4 million. During a ceremony at the US Consulate in Karachi, a new franchise agreement was signed between Yum! Brands – a Fortune 500 company that owns Pizza Hut – and its local partner MCR. The deal was aimed at expanding Pizza Hut’s presence in Pakistan and adding to its network of 75 outlets over the period of next five years. While the official stated that the agreement commits to an expansion of 150 new Pizza Hut units in Pakistan, Pizza Hut (Middle East) General Manager Randall Blackford confirmed that the company is targeting a total number of 150 outlets across the country. We are currently operating at almost 75 units in Pakistan and we are going to double this number in the next four to five years. Pizza Hut has a long list of first milestones, which include the first food product to be sold over the internet and the first food product to be delivered to outer space. Therefore, it is natural that we want to reach the milestone of first restaurant chain to have 150 outlets in Pakistan, he added.
PAKISTANIS, ON AVERAGE, EARN 1,629 DOLLAR A YEAR
Pakistan’s per capita income has grown to $1,629, but for the fourth year in a row the government has failed to achieve investment and savings targets set for the outgoing fiscal year – the two most critical economic indicators after national output goal, source said to Research Analyst-PAGE. Failure to achieve these two crucial targets limit the government’s ability to spend on deteriorating infrastructure and increases its reliance on external and domestic sources to meet its requirements. Situation in the case of private investment is even more alarming as it has declined in terms of total size of the economy compared to the previous fiscal year despite hype around the $54 billion China-Pakistan Economic Corridor. The government’s inability to increase investment as a percentage of the total size of the national economy remains its biggest failure on the economic front, suggesting that structural obstacles remain unaddressed despite undertaking so-called reforms under the $6.2 billion International Monetary Fund program. Pakistan has one of the lowest investment and savings rates in the region and the world, obstructing progress towards sustainable inclusive economic growth path. Officials said that in dollar terms the per capita income has grown by 6.4% to $1,629 – up $98 per person in the outgoing fiscal year 2016-17. Relatively stable exchange rate of Pakistani rupee against the US dollar, low population growth rate and an increase in economic growth rate are said to be reasons behind 6.4% increase in per capita income, source added.
FOR EXPORTERS: FCCI TO ORGANIZE SPECIAL CELL
A special cell will be created in the Faisalabad Chamber of Commerce and Industry (FCCI) to familiarise exporters with recently introduced Registered Exporter System in order to facilitate exports to European Union under the GSP Plus scheme, said FCCI President Muhammad Saeed Sheikh. Speaking at an awareness seminar at the FCCI, he explained the GSP Plus status given to Pakistan in 2014, saying its basic objectives were to offset the impact of damages caused to Pakistan’s economy due to the war on terror. Appreciating the Registered Exporter System, Sheikh said it would further facilitate Pakistan’s exporters by making their shipments to EU countries free of hassle and unnecessary procedural bottlenecks. He said it was actually a self-certification system and many European countries were already following it to streamline imports from Pakistan under GSP Plus.
STATE BANK ISSUES UPDATED FOREX MANUAL
The State Bank of Pakistan (SBP) on Friday issued an updated version of Foreign Exchange Manual, 2017. In order to facilitate the stakeholders, including authorised dealers (banks), exporters, importers, travel agents, carriers, etc, the SBP issues an updated Foreign Exchange Manual from time to time. The last such version of the manual was issued in May 2016. Since issuance of the updated Foreign Exchange Manual in 2016, several changes/amendments in the foreign exchange regulations have been made. Although the circulars, circular letters, notifications, etc through which these changes/amendments were made have been posted at the bank’s website, the same have been incorporated in the Foreign Exchange Manual so that the stakeholders can find the regulations/instructions in consolidated form in a single document.
MINISTRY OF PETROLEUM TAKES NOTICE OF LPG SHORTAGE
The Ministry of Petroleum has taken notice of liquefied petroleum gas (LPG) shortage ahead of Ramazan after two gas-carrying vessels returned without offloading the cargo, source said to Research Analyst-PAGE. In a letter sent to the managing director of SSGC LPG, a subsidiary of Sui Southern Gas Company (SSGC), the petroleum ministry issued directives to look into the matter and present a report immediately. The move came after the ministry received a letter from the Pakistan LPG Chamber, which complained that SSGC LPG was hampering imports in order to create LPG shortage just before Ramazan, when demand goes up. Speaking at a press conference on Thursday, FPCCI’s LPG Standing Committee Regional Chairman Irfan Khokhar said SSGC LPG – a state-owned LPG terminal company – had refused to entertain two ships carrying 11,900 tons of LPG within a week, resulting in a cumulative loss of Rs40 million to the national exchequer. He said the LPG terminal company charged $32 per tone, hence it caused a loss of millions of rupees to the national exchequer. LPG demand stands in the range of 3,000 to 3,500 tons per day and it jumps to 7,000 tons in Ramazan, source added to him.
FITCH TELLS PAKISTAN’S EXTERNAL FINANCE PRESSURES MANAGEABLE
Fitch Ratings, one of the three big credit rating agencies, has announced that Pakistan’s external finance pressures are still manageable – a welcome sign for the government that has been claiming all along that macroeconomic indicators have improved considerably over the past four years. Pakistan is unlikely to face significant external financing difficulties in the short term, barring an unexpected shock, Fitch said and it did not see a significant deterioration in the country’s international financing conditions. The assessment came in the backdrop of continued heavy borrowing by Pakistan government to meet expenditures and offset less-than-impressive increase in revenue collection. On the contrary, Moody’s Investor Services, another big rating agency, predicted earlier this month that Pakistan’s external debt would grow to $79 billion by June this year – higher than initial estimates, and the country’s very weak fiscal strength was weighing on its ability to afford the ever-growing debt burden. In its report, Moody’s said Pakistan’s challenges included a relatively high general government debt burden, weak physical and social infrastructure, fragile external payment position and high political risks. Against government’s annual revenue estimate of Rs3.956 trillion, the collection in the first nine months (Jul-Mar) stood at Rs2.5 trillion or 62% of the target, according to the Consolidated Fiscal Operations summary of the Ministry of Finance. On the other hand, total expenditures of the government stood at Rs2.8 trillion or 63% of the annual target. Fitch said the recent fall in Pakistan’s foreign exchange reserves and widening of the current account deficit were also manageable. On May 12, the foreign currency reserves held by the central bank stood at $15,895.9 million, decreasing $16.6 million from the previous week. The reserves have dropped persistently over the past few months. Apart from this, Pakistan’s current account deficit widened a massive 205% in the first 10 months (July-April) of the current fiscal year, standing at $7.25 billion compared to $2.38 billion in the same period of previous year.
RAILWAYS NEEDS $35 BN FOR COMPLETE UPLIFT: MINISTER
Cash-strapped Pakistan Railways is likely to continue facing financial woes even after CPEC pours investments and upgrades to the tune of $10 billion to its infrastructure. The blunt admission of how poor the state currently is came from federal minister Khawaja Saad Rafique who said that even $10 billion would be insufficient for an organisation as big as Pakistan Railways. Rafique said that Railways needs $30 to $35 billion – approximately 10% of Pakistan’s economy – to upgrade its entire ecosystem and bring it at par with railway networks of developed countries. Previous governments failed to upgrade the railways network, said Minister of Railways Rafique during on Thursday. In fact, people looted the most out of this sector. A recent agreement under CPEC promises improvement in the railways infrastructure around ML-1, but Rafique, who has held this portfolio since 2013, said a revamp of the entire organisation needed around $35 billion. And the cost will increase each passing day, he added. He said that currently, Railways is a 157-year old corporation on technology that is 100 years old. However, with the recent agreements under CPEC, improvements in railways infrastructure will be seen. Pakistan Railways has signed a frame work agreement with the Chinese ministry of transport to upgrade ML-1, covering Karachi-Peshawar track. The cost of this project is estimated at around $10 billion and it includes doubling the entire track for faster transportation of passenger as well as goods trains. The existing speed of trains on ML-1 stands in between 60km/h to 120km/h, which, after up gradation, will run in-between 120km/h to 160km/h. Other than up-gradation; the project includes renovation of Karachi cantonment and Lahore railways stations as per international standards, construction of walls on populous areas along the track, fixing the issues of un-manned level crossings, up-gradation of rolling stock which includes locomotives, as well as freight coaches, construction of Havelian terminal and up-gradation of Walton academy. China will also construct mass transit railways network in metropolitan cities of the four provinces.
SACHAL’S WIND ENERGY PROJECT STARTS PRODUCTION
Sachal Energy Development (Private) Limited has started commercial operation of its 49.5-megawatt wind energy project, which has started producing electricity, source said to Research Analyst-PAGE. Sachal Energy is a wholly owned subsidiary of Arif Habib Corporation Limited, one of the largest private sector conglomerates in Pakistan. It has received formal notification from the Central Power Purchasing Agency (Guarantee) Limited. Sachal Energy’s wind power project is the first Pakistani-owned Early Harvest Project of the China-Pakistan Economic Corridor (CPEC), which has been developed over 680 acres of land in the Jhimpir wind corridor in Sindh. The company is committed to supplying electricity to the national grid through the National Transmission and Despatch Company for 20 years under an energy purchase agreement. The project comprises 33 wind turbine generators manufactured by Goldwind of China whereas Hydrochina is the engineering, procurement and construction (EPC) as well as operation and maintenance (O&M) contractor of the project. It is the first project that has received Sinosure-backed financing and has been 100% financed by the Industrial and Commercial Bank of China. Under CPEC, Pakistan and China have signed $57 billion worth of energy and infrastructure projects. Source further said that bulk of the investment is going to the energy projects, including renewable and clean energy, to bridge the shortfall that has plagued Pakistan’s economy for years.