Pakistan has sufficient lpg stock
Liquefied Petroleum Gas Distributors Association (LPGDA) Chairman Irfan Khokhar has claimed that the country has sufficient LPG stock to ensure a smooth supply in peak winter season, but he has urged the government to deal with the artificial shortage being created by some elements.
“Around 80percent of LPG demand is met through domestic production and 20percent from imports,” he said while talking to source. However, he alleged that LPG quota holders were hoarding the commodity to make a quick buck in the season.
He pointed out that LPG marketing companies and dealers were bound to sell the commodity at rates fixed by the Oil and Gas Regulatory Authority (Ogra), under which LPG would be sold at Rs113 per kg and Rs1,338.78 per domestic cylinder of 11.8 kg.
The association chairman alleged that a handful of local LPG marketing companies and dealers had increased prices on their own in an attempt to create artificial shortage and asked Ogra to conduct an audit of their accounts.
Replying to a question, he acknowledged that LPG demand had increased substantially in cold weather conditions but suggested that it did not point to shortages as around 50,000 tons were expected to be imported in the current month. “By December 14, 25,000 tons of LPG has already been imported,” he claimed. “This month’s total imports are expected to almost double compared to November.”
SPI decreases 0.05pc
The Sensitive Price Indicator (SPI) for the week ended December 13, 2018 registered a decrease of 0.05percent for the combined income group, going down from 237.94 points in the prior week to 237.83 in the week under review. However, the SPI for the combined income group rose 5.4percent compared to the corresponding week of previous year. The SPI for the lowest income group remained stable compared to the previous week. The index for the group stood at 219.4 points, according to provisional figures released by the Pakistan Bureau of Statistics. During the week, average prices of 19 items rose in a selected basket of goods, prices of seven items fell and rates of remaining 27 goods recorded no change.
Fitch downgrades Pakistan’s rating amid stable viewpoint
Fitch – one of the three major global rating agencies – has downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘B-’ from ‘B’ ahead of a major maturing Eurobond repayment worth $1 billion in April 2019.
Besides, the country is to repay $7-9 billion in debt servicing per year over the next three years.
The rating was downgraded as Pakistan’s capacity to repay weakened due to fast shrinking foreign currency reserves, which depleted to a critically low level of $7.26 billion as on December 7, 2018 covering just one and a half month of imports, it said.
“The downgrade reflects heightened external financing risk from low reserves and elevated external debt repayments as well as a continued deterioration in the fiscal position, with a rising debt/GDP ratio,” Fitch said in a statement on Friday.
“External debt servicing will stay high throughout the next decade, with the China-Pakistan Economic Corridor (CPEC)-related outflows set to begin in the early 2020s,” it said.
“We also project high gross financing needs, with expected narrowing of the current account deficit being offset by higher external debt service payments relative to last year.”
The US-based rating agency noted Pakistan had yet to reach an agreement with the International Monetary Fund (IMF) for a bailout package as it remained engaged with the Fund since October.
PKR weakens against $
The rupee weakened against the dollar at Rs138.68/Rs139.02 in the inter-bank market on Friday compared with Thursday’s close of Rs138.67/Rs139.01, according to the State Bank of Pakistan (SBP). Earlier in November, the rupee fell to an all-time low at Rs144 against the dollar in intra-day trading before recovering to 139.05 in the sixth round of devaluation since December 2017. Cumulatively, the rupee has lost 31.8percent of its value in the last 12 months. In October, a slump in the value of the rupee came after the government decided to knock at the International Monetary Fund’s (IMF) door to avoid default on import payments and debt repayments. The central bank said economic data showed that the positive impact of recent stabilisation measures had started to emerge gradually. “Particularly, the current account deficit is showing early signs of improvement,” said the SBP. Earlier, the central bank said it “will continue to closely monitor the situation and stands ready to intervene in case of any unwarranted volatility in the foreign exchange market.”
IMF package: softening stances increase hope of early bailout deal
Islamabad and the International Monetary Fund (IMF) have narrowed down their differences on monetary and fiscal policies but the disagreement still persists on two critical issues of exchange rate adjustment and increase in electricity prices.
Both the sides have softened their positions on the targets of budget deficit and increase in interest rates after talks collapsed on November 20, sources in the Ministry of Finance told. Pakistan has conceded more ground than the IMF, they said.
The IMF has shared a programme design with the Finance Ministry, which raises hopes for an early agreement on the bailout programme. In the light of new positions taken by both the parties, the government is preparing a draft of Memorandum of Economic and Financial Policies (MEFP).
The MEFP could be dispatched to Washington next week, detailing the policies that the government of Prime Minister Imran Khan would implement under the IMF umbrella from 2019 to 2021.
The sources said Pakistan is willing to make further fiscal adjustments, primarily on account of Public Sector Development Programme (PSDP). The development spending may be slashed below Rs500 billion, around 30percent less than the actual spending in the previous fiscal year.
The revised deficit target for fiscal year 2018-19 may be close to 4.5percent of the Gross Domestic Product (GDP) in this fiscal year. The Federal Board of Revenue’s (FBR) target could be jacked up significantly.
As a result of fiscal and monetary adjustments, Pakistan expects that the economic growth rate would remain around 4percent in this fiscal year and inflation could be restricted to 7percent. However, the IMF sees economy slowing down to below 3.5percent.
In case of staff-level agreement, the interest rates would be further increased in coming months as a prior action but these will be lower than what the IMF had demanded during the staff level talks.
While addressing the Pakistan Economic Forum on Thursday, Prime Minister Imran Khan said the talks with the IMF were under way. The Fitch rating agency reported on Thursday that the delay in the IMF bailout package is a temporary phenomenon and Pakistan would successfully achieve the bailout worth $8 billion during January-March 2019.
The State Bank of Pakistan (SBP) has increased the interest rates by 4.25percent since January including 1.5percent increase in the last monetary policy.
The present 10percent interest rate was 50 basis points higher than the rate the SBP Governor Tariq Bajwa had anticipated for June 2019 during a presentation to the PM couple of months ago.
Adviser rules out closure of fertiliser units due to gas shortage
The government was taking measures to overcome gas shortage as soon as possible, said Adviser to Prime Minister on Commerce, Textile and Industries Abdul Razak Dawood.
Talking to source on Friday, he said gas supply to all fertiliser manufacturing units was continuing without any interruption in order to meet domestic fertiliser requirements during the current season and provide it to farmers at affordable rates.
He said the government was not shutting down fertiliser units and there was no shortage of urea, therefore, the farmers should not be worried. “Surplus stock of urea is kept by fertiliser dealers as well as fertiliser manufacturers,” he added. He, however, said other industrialists were worried about the shortage of gas these days due to increased demand from domestic consumers across the country.
With respect to the recent gas crisis in Karachi, the adviser told the media that the prime minister had taken action and asked the authorities concerned to resolve the issue as soon as possible. “The minister for petroleum is in Karachi where he is meeting with officials of Sui Southern Gas Company (SSGC) to resolve the issue on a priority basis,” he added.
Dawood informed the journalists that his recent visit to Japan had remained highly successful as Japanese investors showed keen interest in investing in Pakistan’s engineering, information technology, waste water treatment and desalination plants.
Responding to a question, he said projects under first phase of the China-Pakistan Economic Corridor (CPEC) would be completed within a year and after that the government would look forward to expanding the scope of CPEC in the areas of industries, social development, agriculture and education.
Replying to a question regarding Chinese commitment to providing assistance to ease Pakistan’s foreign exchange reserves’ problem, Dawood said the Chinese ambassador in Islamabad had reaffirmed that his country stood by what was agreed during the visit of Prime Minister Imran Khan to China last month.
Saudi Arabia releases second $1billion loan tranche
Pakistan on Friday received a second tranche of $1 billion in financial assistance from Saudi Arabia under the $6-billion package announced earlier aimed at stabilising the fast dwindling foreign currency reserves.
The inflow has pushed the reserves above $8 billion compared to a four-and-a-half-year low of $7.26 billion on December 7, 2018, according to an official of the State Bank of Pakistan (SBP).
The loan has improved the country’s capacity to pay for imports and conveniently pay off upcoming external debt installments in the current fiscal year 2018-19.
Earlier, Riyadh parked $1 billion in Pakistan’s foreign currency reserves in November. It is expected to release the third and last tranche of $1 billion in January 2019.
The kingdom had agreed to park $3 billion in Pakistan’s foreign currency reserves for a year and establish a credit line of $3 billion for the sale of petroleum products over three years. The credit line will be available to Pakistan from January 2019 onwards. This would also help Pakistan in making import payments and debt repayment.
An analyst commented that the Riyadh loan would fail to stabilise the foreign currency reserves in the long run as they were shrinking by over $1 billion every month.
Governor extends complete support to furniture industry
Punjab Governor Chaudhry Muhammad Sarwar assured the local furniture industry of the government’s complete support for enhancing the country’s exports and betterment of the business environment.
Inaugurating a three-day ’10th Interiors Pakistan’ mega exhibition, at the expo centre on Friday, Sarwar urged the businessmen to work extensively to promote the local industry in Pakistan. He appreciated that the Pakistani handmade furniture products possess potential to capture the global market with excellent modern designing.
He added that the Pakistan Tehreek-e-Insaf (PTI) government aims to establish strong liaison with this particular sector for thorough understanding of the market conditions and requirements of the industry.
“The PTI will direct the concerned authorities to provide more visible support to the furniture business in terms of simple and easily obtainable grants,” he announced. “This would help the sector to exhibit and attend trade shows and also promote local exports as a success globally.”
Chinese to participate in Pakistan’s fair: furniture exhibition
He termed his interaction ‘imperative’ to determine how industries are faring and to research how they can be better supported through government support. Regretting that Pakistan loses hefty amount of foreign exchange in imports, he observed that this can be reduced by encouraging local industries to grow by supporting them.
Speaking on the occasion, Pakistan Furniture Council (PFC) Chief Executive Mian Kashif Ashfaq extended his deep gratitude to Punjab governor for providing assurance to support furniture sector at the government level.
He seconded the view that handmade world-class Pakistani furniture market has a huge opportunity for furniture exporters across the globe if the government makes policies in accordance with the suggestions of its stakeholders for promotion furniture exports.