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  • Pakistan cotton prices surge due to flood devastations

    Pakistan cotton prices surge due to flood devastations

    KARACHI: Cotton prices in Pakistan have surged sharply over the past few days because floods destroyed the cotton crop.

    According to analysts of AKD Research issued on Thursday, local cotton prices have traded up over the past month, increased by 24 per cent to Rs22,506 per 40-kg, having reached a recent high of as much as Rs24,649/40-kg on August 27, 2022.

    READ MORE: PYMA demands cotton import through land routes

    The sharp uptick in prices was driven by expectations of supply-side constraints in the cotton market in the aftermath of the floods that left one-third of the country submerged in water.

    According to latest estimates from the UN, about 3.6 million acres of crop land has been destroyed in the floods, with the majority of the devastation concentrated in Sindh (2.9 million acres affected).

    In a recent address, Finance Minister Miftah Ismail pointed towards all of the cotton crop in the province of Sindh having been damaged by the floods – indicating that about 30 per cent of the national cotton crop has been lost.

    READ MORE: Textile exporters urge allowing cotton import from India

    Resultantly, Pakistan is expected to meet the supply shortfall by importing cotton of $1.5-2 billion,

    Latest data released by Pakistan Cotton Ginners Association (PCGA) showed that cotton arrivals in the ginners were down by 0.25 million bales when compared to the same period last year, with 1.54 million bales having reached by September 2022. The slump was largely driven by a shortfall in Sindh, where 0.84 million bales arrived at the ginners, lower by 0.4 million bales or 33 per cent year on year.

    The COTLOOK A Index is currently trading at USc122/lb, compared to USc104/lb on September 06, 2021 and FY21 average of USc82/lb.

    READ MORE: FBR notifies duty exemption on cotton yarn import

    The prices have, however, eased from a high of USc173/lb reached in May 2022. Higher prices in the international arena are being driven by adverse climate conditions across the globe, with India suffering from heavy rains and pest attacks, while the US has experienced a drought in the cotton-growing region of Texas (the state has experienced the second driest year in 128 years so far this year).

    To note, the US accounted for 33 per cent of total cotton shipments in FY22, and the US Department of Agriculture estimates 66 per cent of the cotton producing area has been experiencing a drought.

    Moreover, the US has downward revised the global output for FY23 by around 3 million bales in recent WASDE reports, with the output now expected at 117 million bales.

    READ MORE: Exporters welcome duty withdrawal on cotton, yarn import

    The analysts said that textile players in Pakistan build the majority of their inventories during the December Quarter, although the damage to local crop may hinder local procurement. However, the analysts expect the companies to meet this shortfall through imports.

  • Pakistan trade deficit narrows by 17% in 2MFY23

    Pakistan trade deficit narrows by 17% in 2MFY23

    ISLAMABAD: Trade deficit fell by 17.13 per cent during first two months (July – August) 2022/2023 2MFY23, owing to fall in import bill, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.

    The statistics revealed that the trade deficit for the period July – August 2022/2023 was at $6.27 billion as compared with the deficit of $7.56 billion in the same period of the last fiscal year.

    READ MORE: Pakistan’s trade deficit narrows by 18% in July 2022

    Pakistan’s exports increased by 3.75 per cent to $4.76 billion during July – August 2022/2023 as compared with $4.58 billion in the corresponding period of the last fiscal year.

    On the other hand, import bill of the country fell to $11.03 billion during the first two months of the current fiscal year as compared with $12.15 billion in the same period of the last fiscal year, showing a decline of nine per cent.

    READ MORE: Pakistan’s import bill records over $80 bn in 2021/2022

    However, trade deficit surged by 29 per cent to $3.53 billion in August 2022 when compared with the deficit of $2.74 billion in the month of July 2022.

    The exports recorded 11 per cent increased to $2.50 billion in August 2022 when compared with $2.25 billion in July 2022.

    READ MORE: Pakistan’s trade deficit balloons $43.33 bn in 11 months

    Meanwhile, the import bill also climbed up by 21 per cent to $6.03 billion in August 2022 when compared with $4.99 billion in the month of July 2022.

    READ MORE: Pakistan’s imports hit record high at $65.47 bn in 10 months

  • Pakistan estimates flood devastation to cost $10 billion

    Pakistan estimates flood devastation to cost $10 billion

    ISLAMABAD: The torrential rains and flash floods across Pakistan have inflicted an estimated loss of $10 billion to the national economy.

    Federal Minister for Finance and Revenue Miftah Ismail on Thursday said the current devastation of flood in Pakistan is estimated to cost $10 billion.

    READ MORE: Pakistan allows tax exemption on tomato, onion imports

    During flood, railway lines, roads, bridges, grid stations, power lines and houses etc. were badly damaged, which has to be rehabilitated, the minister added.

    The minister said that the United Nation has made a commitment of $160 million and USAID has announced the provision of 30 million dollars.

    Miftah added that in addition to this, friendly countries including the United Kingdom, European countries, Australia and Arab countries has provided financial support and also delivered aid materials.

    READ MORE: FBR announces tax exemptions for flood relief operation

    He said that rehabilitation is a long process which Pakistan will try to complete with the help of its own resources and friendly countries.

    The Minister said that the devastating magnitude of the flood was very high and it is a big challenge for us which “we will try our best to tackle.”

    In response to a question, he said that the federal and provincial governments are helping the flood victims and adding that the central government is disbursing money, for which a woman in every house is being given an amount of up to Rs 2500.

    He said that this amount will be disbursed to 4.2 million women across the country.

    READ MORE: Complaints against banks for refusing flood donations

    Miftah said that the federal and provincial governments and National Disaster Management Authority are currently busy helping the flood victims and the government is delivering food packets, mosquito nets, tents and medicines to the flood affected areas.

    He said that there is no shortage of food, but there is a shortage of onions and tomatoes.

    He said that “we are importing tomatoes and onions by reducing the import duty.”

    The Minister said that apart from this, several million tons of wheat are being imported and the duties on it are being reduced and are being ordered at subsidy rates.

    He said that the goods which will have shortages will be imported so that there is no shortage of essential goods.

    READ MORE: US provides Rs6.65 billion for Pakistan flood relief

    He said that this is a very challenging situation, crops have been damaged due to flood in Sindh province.

    Miftah said that cotton crops have been damaged up to 30% in Sindh province and sugarcane crop has been damaged up to 20 per cent.

    He said that wheat will be sown in the next two months and water draining out is a big challenge but it will be resolved so that the farmers can sow their crops.

    In response to a question, he said that the government is considering giving incentives to farmers and banks will relax the loans of farmers so that they can cover their losses.

  • Pakistan FX reserves drop to $13.4 billion

    Pakistan FX reserves drop to $13.4 billion

    KARACHI: The foreign exchange (FX) reserves of Pakistan have declined by $119 million to $13.40 billion by week ended August 26, 2022, the State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $13.522 billion by week ended August 19, 2022.

    READ MORE: Pakistan’s forex reserves fall to $13.52 billion

    The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.825 billion.

    The official foreign exchange reserves of the State Bank witnessed a decline of $113 million to $7.697 billion by week ended August 26, 2022 as against $7.810 billion a week ago.

    READ MORE: Pakistan’s forex reserves increase by $52 million

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.449 billion.

    The central bank said it had received proceeds of $1.16 billion (equivalent of SDR 894 million) from IMF under the Extended Fund Facility (EFF) on August 31, 2022 which would be included in SBP’s foreign exchange reserve position for the week ending on September 02, 2022.

    READ MORE: Pakistan’s reserves plunge 43-month low to $13.56 billion

    The SBP received the tranche after the IMF executive board approved the seventh and eighth reviews in its meeting held on August 29, 2022.

    The foreign exchange reserves held by commercial banks also slipped by $6 million to $5.706 billion by week ended August 26, 2022 when compared with $5.712 billion a week ago.

    READ MORE: Pakistan’s foreign reserves dip to $14.21 billion

  • Pakistan’s headline inflation hits 47-year high in August 2022

    Pakistan’s headline inflation hits 47-year high in August 2022

    ISLAMABAD: The headline inflation in Pakistan has recorded 47-year at 27.3 per cent in August 2022. This is a 47-Year high after 1975 and has crossed peak levels of global financial crisis 2008 of 25.3 per cent, according to Fahad Rauf, analyst at Ismail Iqbal Securities.

    Pakistan Bureau of Statistics (PBS) on Thursday issued the data of Consumer Price Index (CPI) stating that it increased by 27.3 per cent on year-on-year basis in August 2022 as compared to an increase of 24.9 per cent in the previous month and 8.4 per cent in Aug 2021.

    READ MORE: Pakistan’s sensitive price inflation surges by 45%

    On month-on-month basis, it increased by 2.4 per cent in August 2022 as compared to an increase of 4.3 per cent in the previous month and an increase of 0.6 per cent in August 2021.

    CPI inflation Urban, increased by 26.2 per cent on year-on-year basis in August 2022 as compared to an increase of 23.6 per cent in the previous month and 8.3 per cent in August 2021.

    On month-on-month basis, it increased by 2.6 per cent in August 2022 as compared to an increase of 4.5 per cent in the previous month and an increase of 0.5 per cent in August 2021.

    READ MORE: Pakistan’s sensitive price inflation surges by 37.67%

    CPI inflation Rural, increased by 28.8 per cent on year-on-year basis in August 2022 as compared to an increase of 26.9 per cent in the previous month and 8.4 per cent in August 2021.

    On month-on-month basis, it increased by 2.2 per cent in August 2022 as compared to an increase of 4.2 per cent in the previous month and an increase of 0.7 per cent in August 2021.

    Sensitive Price Indicator (SPI) based inflation on YoY increased by 34.0 per cent in August 2022 as compared to an increase of 28.2 per cent a month earlier and an increase of 15.9 per cent in August 2021.

    READ MORE: Pakistan’s headline inflation may up 24% in July 2022

    On MoM basis, it increased by 5.2 per cent in August 2022 as compared to increase of 7.3 per cent a month earlier and an increase of 0.7 per cent in August 2021.

    Wholesale Price Index (WPI) based inflation on YoY basis increased by 41.2 per cent in August 2022 as compared to an increase of 38.5 per cent a month earlier and an increase of 17.1 per cent in August 2021.

    WPI inflation on MoM basis increased by 3.1 per cent in August 2022 as compared to an increase of 2.0 per cent a month earlier and an increase of 1.2 per cent in corresponding month i.e. August 2021.

    READ MORE: Pakistan inflation crosses 33% on high petroleum prices

  • Pakistan allows tax exemption on tomato, onion imports

    Pakistan allows tax exemption on tomato, onion imports

    ISLAMABAD: Pakistan on Wednesday granted exemption of income tax and sales tax on imports of tomato and onion during next four months.

    In this regard, the Federal Board issued notifications in this regard. The FBR issue SRO 1639(I)/2022 to allow withholding income tax exemption on import of tomato and onion imported till December 31, 2022.

    READ MORE: FBR collects Rs948 billion as tax revenue during 2MFY23

    Similarly, another SRO 1640(I)/2022 was issued to allow sales tax exemption on import of tomato and onion during September – December 2022.

    Previously, on August 30, 2022, in a meeting at the Ministry of National Food Security and Research (MNFSR), it was decided that the Ministry will issue import permits of onion and tomatoes within 24 hours.

    The Ministry has also proposed to FBR to waive-off taxes and levies on import of onion and tomatoes.

    It is expected that this will be made effective on immediate basis. These steps are taken to ensure a supply of the essential commodity in the market and to stabilize the prices.

    READ MORE: FBR announces tax exemptions for flood relief operation

    According to the details, the importers will be allowed to import onion and tomatoes.

    Ministry of National Food and Security has directed the Department of Plant Protection (DPP) to facilitate the import and ensure that there are no hindrances for importers.

    MNFSR has taken on-board all the stakeholders with an aim to ensure a supply of the essential commodities to the consumers.

    Furthermore, a contact group to facilitate imports is created, where importers will be able to share their problems. While a team at Ministry of National Food Security will monitor the situation and will take necessary action for redressal.

    READ MORE: KTBA demands suspending further tax due to practical issues

    Ministry of National Food Security and Research has taken the above decisions to ensure that onion and tomatoes are available in the market at reasonable rates to the consumers.

    Pakistan Embassies in Iran, Afghanistan, UAE and other countries have been requested to assist imports. Ministry of National Food Security and Research, with stakeholders, will continue to take necessary steps to ensure food security in the country in the times when crops have been heavily damaged because of recent floods and rains.

    READ MORE: FBR gets 3.38 million active taxpayers by August 28, 2022

  • Pakistan receives $1.16 billion from IMF

    Pakistan receives $1.16 billion from IMF

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday received $1.16 billion from International Monetary Fund (IMF) under Extended Fund Facility.

    SBP in a Tweet said that it had received proceeds of $1.16 billion (equivalent of SDR 894 million) after the IMF Executive Board completed the combined seventh and Eight review under the EFF for Pakistan.

    READ MORE: IMF board allows $1.1 billion disbursement for Pakistan

    “This will help improve SBP’s foreign exchange reserves and will also facilitate realization of other planned inflows from multilateral and bilateral sources,” according to the Tweet.

    Earlier, on August 29, 2022 the executive board of the IMF completed the combined seventh and eighth reviews of the Extended Arrangement under the EFF for Pakistan.

    READ MORE: Pakistan may face food security due to flash floods

    The Board’s decision allows for an immediate disbursement of SDR 894 million (about $1.1 billion), bringing total purchases for budget support under the arrangement to about $3.9 billion.

    The EFF was approved by the Executive Board on July 3, 2019 for SDR 4,268 million (about $6 billion at the time of approval, or 210 percent of quota).

    READ MORE: SBP issues IBAN list for donations to PM flood relief fund

    In order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board approved an extension of the EFF until end-June 2023, rephasing and augmentation of access by SDR 720 million that will bring the total access under the EFF to about $6.5 billion.

    READ MORE: Flash floods affect internet services in Pakistan

  • IMF board allows $1.1 billion disbursement for Pakistan

    IMF board allows $1.1 billion disbursement for Pakistan

    Washington, DC: Pakistan will get around $1.1 billion from the International Monetary Fund (IMF) after its executive board on Monday allowed immediate disbursement.

    The Executive Board of the International Monetary Fund (IMF) completed today the combined seventh and eighth reviews of the Extended Arrangement under the Extended Fund Facility (EFF) for Pakistan. The Board’s decision allows for an immediate disbursement of SDR 894 million (about $1.1 billion), bringing total purchases for budget support under the arrangement to about $3.9 billion.

    READ MORE: Pakistan may face food security due to flash floods

    The EFF was approved by the Executive Board on July 3, 2019 for SDR 4,268 million (about $6 billion at the time of approval, or 210 percent of quota). In order to support program implementation and meet the higher financing needs in FY23, as well as catalyze additional financing, the IMF Board approved an extension of the EFF until end-June 2023, rephasing and augmentation of access by SDR 720 million that will bring the total access under the EFF to about $6.5 billion.

    Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels. The resultant economic overheating led to large fiscal and external deficits in FY22, contributed to rising inflation, and eroded reserve buffers. The program seeks to address domestic and external imbalances, and ensure fiscal discipline and debt sustainability while protecting social spending, safeguarding monetary and financial stability, and maintaining a market-determined exchange rate and rebuilding external buffers.

    The Executive Board also approved today the authorities’ request for waivers of nonobservance of performance criteria.

    READ MORE: SBP issues IBAN list for donations to PM flood relief fund

    Following the Executive Board’s discussion on Pakistan, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued the following statement:

    “Pakistan’s economy has been buffeted by adverse external conditions, due to spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven and unbalanced growth. Steadfast implementation of corrective policies and reforms remain essential to regain macroeconomic stability, address imbalances and lay the foundation for inclusive and sustainable growth.

    “The authorities’ plan to achieve a small primary surplus in FY2023 is a welcome step to reduce fiscal and external pressures and build confidence. Containing current spending and mobilizing tax revenues are critical to create space for much-needed social protection and strengthen public debt sustainability. Efforts to strengthen the viability of the energy sector and reduce unsustainable losses, including by adhering to the scheduled increases in fuel levies and energy tariffs, are also essential. Further efforts to reduce poverty and protect the most vulnerable by enhancing targeted transfers are important, especially in the current high-inflation environment.

    READ MORE: Flash floods affect internet services in Pakistan

    “The tightening of monetary conditions through higher policy rates was a necessary step to contain inflation. Going forward, continued tight monetary policy would help to reduce inflation and help address external imbalances. Maintaining proactive and data-driven monetary policy would support these objectives. At the same time, close oversight of the banking system and decisive action to address undercapitalized financial institutions would help to support financial stability. Preserving a market-determined exchange rate remains crucial to absorb external shocks, maintain competitiveness, and rebuild international reserves.

    “Accelerating structural reforms to strengthen governance, including of state-owned enterprises, and improve the business environment would support sustainable growth. Reforms that create a fair-and-level playing field for business, investment, and trade necessary for job creation and the development of a strong private sector are essential.”

  • Pakistan may face food security due to flash floods

    Pakistan may face food security due to flash floods

    ISLAMABAD: The flash floods in Pakistan may create a situation of food security in coming days as rice, banana, onion and other agriculture produces have been badly affected.

    Minister for Planning, Development, and Special Initiatives Ahsan Iqbal Monday said that the recent floods and torrential rains have also damaged 40-50 percent cotton crop across the country.

    He said Pakistan is witnessing more devastation than that caused by the flood in 2010.

    READ MORE: SBP issues IBAN list for donations to PM flood relief fund

    The minister informed that 0.9 million livestock and one million houses have been washed away in the recent floods while over 1000 people lost their lives.

    The Minister made these remarks while speaking at the event titled, “an overview and findings of the Rural Poor Stimulus Facility (RPSF) – Waseel-e-Khurak, pilot project” that was organized by the Scaling Up Nutrition (SUN) in collaboration with Ministry of Planning Development & Special Initiatives.

    In 2013, he said when the PML-N government took the charge, the country had already faced devastated floods in 2010 and it launched the fourth phase of Pakistan flood protection programme to minimize the impacts of such floods.

    “In May 2017, we got approved the Programme from Council of Common Interest duly signed by all the provinces and it was agreed that new infrastructure would be built under the programme”, he added.

    He said it was also agreed that Rs 177 billion would be spent under the Programme and the provinces would contribute half of the amount.

    READ MORE: Flash floods affect internet services in Pakistan

    However, he said despite completing the final roadmap to spend Rs 177 billion under the programme, the next PTI government dumped this programme in the cold storage and not a single rupee was spent on this programme.

    Had we spent Rs 177 billion under the programme, the loss would be far less than what we are facing now, he added.
    Ahsan Iqbal said a big challenge is ahead as the 30 million people have been affected and the government have to help them standing on their feet.

    He expressed his resolve that under the leadership of Prime Minister Shehbaz Sharif, the government would complete the rehabilitation process of the flood hit areas.

  • Pakistan fixes amount of diyat for 2022/2023

    Pakistan fixes amount of diyat for 2022/2023

    Pakistan has fixed the amount of diyat (compensation) at Rs4.32 million for the fiscal year 2022/2023 to be the value of thirty thousand six hundred and thirty (30,630) grams of silver.

    The finance ministry issued a circular to declare the amount of diyat on August 26, 2022.

    Diyat is the financial compensation paid to the victim or heirs of a victim. The compensation may be paid in the cases of murder, bodily harm or property damage.

    READ MORE: Cellular mobile operators provide free calls in Pakistan

    Pakistan Penal Code has defined “diyat” as the compensation specified in Section 323 payable to the heirs of the victim.

    Section 323 of the Pakistan Penal Code notified the value of diyat as:

    (1) The Court shall, subject to the Injunctions of Islam as laid down in the Holy Qur’an and Sunnah and keeping in view the financial position of the convict and the heirs of the victim, fix the value of diyat which shall not be less than the value of thirty thousand six hundred and thirty grams of silver.

    (2) For the purpose of sub-section (1), the Federal Government shall, by notification in the official Gazette, declare the value of Silver, on the first day of July each year or on such date as it may deem fit, which shall be the value payable during a financial year.

    Diyat is one of the modes of punishment under Section 53 of the Pakistan Penal Code.

    READ MORE: SBP issues IBAN list for donations to PM flood relief fund

    Section 53: The punishments to which offenders are liable under the provisions of this Code are:

    Firstly, Qisas;

    Secondly, Diyat;

    Thirdly, Arsh;

    Fourthly, Daman;

    Fifthly, Ta’zir;

    Sixthly, Death;

    Seventhly, Imprisonment for life;

    Eighthly, Imprisonment which is of two descriptions, namely:–

    (i) Rigorous, i.e., with hard labour;

    (ii) Simple;

    Ninthly, Forfeiture of property;

    Tenthly, Fine

    Under Pakistan Penal Code where qisas is not enforceable then the offender is liable to pay diyat.

    READ MORE: SBP issues IBAN list for donations to PM flood relief fund

    Section 308. Punishment in qatl-i-amd not liable to qisas, etc.:

    (1) Where an offender guilty of qatl-i-amd is not liable to qisas under Section 306 or the gisas is not enforceable under clause (c) of Section 307, he shall be liable to diyat:

    Provided that, where the offender is minor or insane, diyat shall be payable either from his property or, by such person as may be determined by the Court:

    Provided further that where at the time of committing qatl-i-amd the offender being a minor, had attained sufficient maturity of being insane, had a lucid interval, so as to be able to realize the consequences of his act, he may also be punished with imprisonment of either description for a term which may extend to twenty-five years as ta’zir.

    READ MORE: SBP opens account for Balochistan Flood Relief, Rehabilitation Fund

    Provided further that, where the qisas is not enforceable under clause (c) of Section 307, the offender shall be liable to diyat only if there is any wali other than offender and if there is no wali other than the offender, he shall be punished with imprisonment of either description for a term which may extend to twenty-five years as ta’zir.

    (2) Notwithstanding anything contained in sub-section (i), the Court, having regard to the facts and circumstances of the case in addition to the punishment of diyat, may punish the offender with imprisonment of either description for a term which may extend to twenty-five years, as ta’zir.