PTI Chairman Imran Khan Announces New Committee to Revive Pakistan’s Economy

Imran Khan has constituted a special committee, comprising of political and economic experts, to propose remedial measures for the economic recovery of the country. It was agreed that the former Finance Minister Shaukat Tareen will head the economic committee headed by Imran Khan.

The committee will include experts from finance, energy, industry, social welfare, trade, and agriculture.

Govt to Cut Development Budget by Rs. 100 Billion to Support Flood-Hit Areas

The Federal Government is likely to impose a cut of up to Rs. 100 billion on the Public Sector Development Programme (PSDP) 2022-23. The PSDP is the key government expenditure that impacts growth rate directly. To help the flood-affected areas with additional funds, the Planning Commission is evolving a mechanism for imposing cuts.

The fast-moving, important and new PSDP projects are likely to be exempted from the cut while the slow-moving and less important projects will face the brunt, a source said. There are three components of the Federal Developmental Outlay which include the rupee component, Foreign Exchange Component(FEC) and Viability Gap Fund (VGF).

The fund can be surrendered to the Prime Minister Flood Relief fund, Finance Division or Accountant General, he said.

KP Govt Withdraws Commitment of Provincial Surplus Risking IMF Deal

The move could potentially weaken Pakistan’s case for the resumption of the International Monetary Fund (IMF) program. Khyber Pakhtunkhwa’s Finance Minister Taimur Khan Jhagra says federal government had committed to resolving major financial issues of KP.

Jhagra: “In return, I obtained the authorization of the Chief Minister, for the province of Khyber Pakhtunkhwa to sign on to the memorandum of understanding (MoU) and did so within 24 hours”. He adds that in the intervening period of almost 2 months, he has been unable to get time to meet either the Minister or the Secretary.

The provincial minister also listed some of the key issues that remain pending. The issues listed include:

  1. Issue of budget allocations for ex-FATA.
  2. Commitment to monthly net hydel profit (NHP) transfers based on the MoU signed between the federal government and Khyber Pakhtunkhwa in 2016.
  3. Revival of National Finance Commission (NFC).
  4. A commitment from the federal government to immediately engage and resolve other financial issues with Khyber Pakhtunkhwa.
He says that the recent flooding has caused destruction in the province and the damage from the floods is greater than that of the super-floods of 2010.
The center had agreed in the Memorandum of Economic and Fiscal Policies inked with IMF to present a MoU duly signed by provinces for the provision of cash surplus by them. Khyber Pakhtunkhwa government signed the MoU regarding fiscal responsibility after the federal government agreed to address its issues.

Engro Corp’s Profits Decline by Massive 42% in First Half of 2022

Engro Corporation posted a profit of Rs. 16.8 billion in 1H 2022, which is 42 percent lower than 1H 2021. The company’s net profit for the half year was Rs. 29.1 billion, down from Rs. 46.4 billion a year earlier.

Engro Corporation’s PAT attributable to the shareholders is Rs. 7.4 billion, translating into an EPS of PKR 12.87 per share (1H 2021: PKR 29.60 per share). The imposition of super tax on current and prior year earnings weighed on the conglomerate’s consolidated profitability.

Engro Corporation’s standalone revenue increased from Rs. 8.6 billion in 1H 2021 to Rs. 16.6bn in 1H 2022, exhibiting a substantial growth of 92 percent. Higher revenue was primarily due to higher dividends received from Engro Polymer & Chemicals and Engro Fertilizers.

Engro Corporation announced an interim cash dividend of PKR 11 per share for the year ended 30 June 2015. This is in addition to the PKR 12 per share dividend that has already been announced during the year, bringing the cumulative payout to PKR 23 per share.

New LNG Deal Likely to be Part of PM’s Qatar Visit Agenda

The committees will be formed to tackle the issues pertaining to various ministries during the visit of the Prime Minister Shehbaz Sharif to Qatar. The visit is expected to strengthen bilateral ties and sign agreements, including talks on a new LNG deal for Pakistan’s gas industry.

The committee for Power, Petroleum, Aviation, and other sectors would comprise Minister for Defence, former PM Shahid Khaqan Abbasi. Special Assistant to the Prime Minister (SAPM), Jehanzeb Khan, would be its chairman.

Additional committee members include Mussadik Masood Malik, Secretary of State for Petroleum, and NFSR Secretary.

The PM has instructed SAPM Syed Tariq Fatemi and Foreign Secretary, Sohail Ahmed, to attend all committee meetings. According to the sources, the Minister of Commerce has been designated as the chairman of the committee charged with hiring security personnel for the upcoming FIFA Cup.

Pakistan’s Sukuk Based Borrowing Crosses Rs. 2 Trillion

The funds raised by the government through Sukuk, an Islamic financing instrument, have crossed Rs. 2 trillion. During 2008-2017, the government raised funds to the tune of Rs. 936 billion through various issues of Government Ijara Sukuk (GIS).

The government has been raising funds through an Islamic instrument rather than conventional and interest-based government bonds, including T-Bills and Pakistan Investment Bonds (PIBs). The shift in policy saves billion to the national exchequer, according to industry experts.

Sukuk is an Islamic instrument of raising funds through which Islamic banks own the assets of the issuer (the government) for an agreed period. Banks provide financing to the issuer and then generate revenues from the state assets. This phenomenon also helps greatly to support the Islamic banking industry in Pakistan.

The government of Pakistan has raised two issues of Rs. 400 billion through Pakistan Stock Exchange (PSX) as Pakistan Energy Sukuk I and II. The issues were intended to meet budgetary needs and promote Islamic banking in Pakistan, according to the Ministry of Finance.

Experts say they can be used to raise funds not only by the government but also by the private sector.

Cabinet Approves Increase in Dealers’ Margin on MS, HSD

The federal cabinet Saturday approved an increase in dealers’ margin to Rs. 7 per liter on the motor spirit (MS) and high-speed diesel. Ministry of Petroleum took the approval of the increase in dealer’s commission on the sale of petroleum products through circulating a summary.

The Petroleum Division submitted a summary on the revision of OMCs and dealers’ margins on petroleum products. The existing margins were fixed in December 2021. Pakistan Petroleum Dealers Association has approached the government for immediate revision of their margins due to inflation, increase in tariff salaries, and utility bills.

The committee approved the proposal to fix the margin of dealers at Rs. 7 per liter. The increase in the proposed margins for dealers may be accounted for in the forthcoming selling price from the 1st August 2022, in accordance with the agreement with the dealers and the Ministry of Petroleum and Natural Resources (MPR).

However, after intense negotiations, PPDA agreed to margins of Rs. 7 per liter for both MS and HSD and based on the agreement and the commitment that the revised margins will be made effective from August 2022.

Pakistan May Get Additional Funds from IMF Under Saudi Arabia’s Quota

Sources say Pakistan can get additional funds from Saudi Arabia under the Special Drawing Rights (SDR) quota, an international reserve asset created by the IMF. Pakistan and the International Monetary Fund (IMF) have held discussions in this regard, sources told ProPakistani.

Final decision on Pakistan’s participation in the International Monetary Fund (IMF) program is yet to be made. The conditions include the collection of general sales tax (GST) and petroleum development levy (PDL) on petroleum products. IMF has also demanded immediate implementation on the power sector reforms.

Pakistan has committed to resuming power sector reforms including, critically, the timely adjustment of power tariffs. The delayed annual rebasing and quarterly adjustments will improve the situation in the power sector and limit load shedding, Pakistan’s Energy Minister Ghulam Ishaq Khan has said.

The International Monetary Fund (IMF) announced on Thursday that it has reached a staff-level agreement with Pakistan. The agreement would pave the way for the disbursement of $1.17 billion and increase the total loan size to $7 billion, subject to approval by the IMF’s Executive Board.

Pakistanis’ Average Income Increased by 69% in 20 Years: World Bank

Average household income in Pakistan has grown by 69 percent as compared to 49 percent expenditure growth over the last 20 years. Data shows that average household income grew from Rs. 16,000 in 2001 to over Rs. 26,000 in 2018, to increase further in the following years.

Rural households owned 32 percent more wealth than urban households on average between 1997 and 2018, according to a World Bank report. The gap between expenditures and income has widened over the last 20 years, the report said. Economists say widening gap between incomes and savings has enabled Pakistanis to increase their savings.

Household savings account accounts for more than 80 percent of Pakistanis’ budgets, according to the latest government data. Income starts outpacing household expenses in the early 40s and the savings rate grows by 20 percentage points by the age of 55, it shows.

Farmers Under Pressure As Fertilizer Prices Increase Significantly

Potassium sulfate prices have surged by 170 percent, registering an increase of Rs. 12,816 per bag. The prices of diammonium sulfate have also increased from Rs. 5,584 per bag to Rs. 11,425, registering a 104 percent increase.

Prices of urea have risen from Rs. 1,746 to Rs. 2,337 per bag, according to PBS. Calcium Ammonium Nitrate (CAN) prices have also gone up by nearly 50 percent. Some varieties of CAN are available in the market for as much as Rs. 3,000 per bag.