Category: Business

The most important business news, explained in a young, easy to understand way. News that affects young career professionals.

  • Pakistan’s forex reserves decline by $63.3 million to $9.09 billion

    Pakistan’s forex reserves decline by $63.3 million to $9.09 billion

    The State Bank of Pakistan (SBP) has reported a marginal decline in the nation’s foreign exchange reserves, indicating a decrease of $63.3 million or 0.69 per cent week over week (WoW) to $9.09 billion, according to data released on Thursday.

    The central bank attributed this downturn primarily to debt repayments. In a statement issued by the SBP, it was highlighted that during the week ending May 24, 2024, SBP reserves experienced a $63 million decrease to reach $9.09 billion, primarily due to external debt repayments.

    Similarly, Pakistan’s overall reserves witnessed a decrease of $270 million or 1.85 per cent WoW, amounting to $14.32 billion. Furthermore, commercial banks saw a decline in reserves by $206.7 million or 3.81 per cent WoW, totaling $5.22 billion.

    Despite these fluctuations, the current fiscal year has seen a remarkable increase in SBP-held reserves, amounting to $4.63 billion or 103.6 per cent.

    This surge follows Pakistan’s attainment of the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA) of approximately $3 billion by the end of June last year.

    This arrangement not only bolstered the nation’s reserves but also facilitated access to additional multilateral and bilateral funding.

    Furthermore, the ongoing calendar year has witnessed a notable increase of $872.5 million or 10.61 per cent in reserves, reflecting continued efforts to stabilise and strengthen Pakistan’s economic position.

  • Gold price surges by Rs2,400 per tola amid declining purchasing power

    Gold price surges by Rs2,400 per tola amid declining purchasing power

    In a notable upswing, the price of 24-karat gold in Pakistan surged by Rs2,400 on Wednesday, bringing the cost to Rs242,700 per tola.

    This increase reflects the ongoing volatility in the gold market, influenced by both domestic and international factors.

    Interestingly, the current price of gold remains Rs3,000 below its actual market value. This discrepancy is primarily attributed to a reduction in purchasing power, as reported by market analysts.

    The Karachi Sarafa Association disclosed that the price of 24-karat gold also rose to Rs208,076 per 10 grammes, marking an increase of Rs2,058.

    The price of 22-karat gold followed this upward trend, reaching Rs190,736 per 10 grammes. 

    Silver prices have also climbed, keeping pace with international trends. The price of 24-karat silver now stands at Rs2,900 per tola and Rs2,486.28 per 10 grammes, up by Rs100 per tola and Rs85.74 per 10 grammes, respectively.

    On the global stage, spot gold traded at approximately $2,345.04 per ounce, a decline of 0.66 per cent from the previous day’s closing. In contrast, spot silver maintained its strength, trading near $32 per ounce after recording a 1.36 per cent increase the previous day.

  • Gold price slides by Rs500 per tola following Monday’s surge

    Gold price slides by Rs500 per tola following Monday’s surge

    Gold prices in Pakistan experienced a downturn on Tuesday, mirroring the global trend of decrease.

    According to the latest data provided by the All Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price per tola of gold stood at Rs240,300, marking a decrease of Rs500 within a single day.

    Similarly, the price of 10 grammes of gold witnessed a decline, reaching Rs206,018 after experiencing a decrease of Rs429, as reported by APGJSA.

    In contrast, silver rates remained unchanged at Rs2,800 per tola.

    This drop in prices contrasts with the situation on Monday when gold prices surged by Rs800 per tola in Pakistan.

    It’s noteworthy that just last month, gold reached an all-time high of Rs252,200 per tola in the local market, reflecting the volatility and fluctuations within the precious metals market.

    Internationally, the price of gold also saw a reduction on Tuesday. APGJSA reported an international rate of $2,339 per ounce, with a $20 premium, marking a decrease of $4 during the day.

  • Honda Atlas records over Rs2 billion profit despite sales decline

    Honda Atlas records over Rs2 billion profit despite sales decline

    Honda Atlas Cars (Pakistan) Limited (HCAR) has reported a remarkable 797 per cent increase in profit-after-tax (PAT), achieving Rs2.33 billion for the fiscal year ending March 31, 2024, despite experiencing a significant drop in sales.

    This is a substantial increase compared to the Rs260.14 million PAT recorded in the previous year.

    The financial statements, released at the Pakistan Stock Exchange (PSX) on Wednesday, show that HCAR’s earnings per share (EPS) soared to Rs16.34, up from Rs1.82 the previous year. 

    The company’s Board of Directors has also announced a final cash dividend of Rs6.5 per share, equivalent to 65 per cent, in contrast to the previous year’s nil dividend.

    The impressive rise in profit is mainly attributed to a significant reduction in other expenses and lower taxation during the period.

    Sales for the year fell by over 42 per cent, from Rs95.08 billion last year to Rs55.07 billion. As a result, the company’s gross profit declined by over 37 per cent, from Rs7.16 billion to Rs4.51 billion. Nevertheless, HCAR’s gross margins improved, rising to 8.2 per cent from last year’s 7.5 per cent.

    There was a 12 per cent increase in administrative expenses, which amounted to Rs1.48 billion, up from Rs1.32 billion in the previous year. However, other expenses saw a dramatic 92 per cent reduction, falling to Rs393.6 million from Rs4.93 billion.

    The finance cost also rose significantly by over 252 per cent, reaching Rs1.22 billion compared to Rs346.1 million last year.

    HCAR reported a profit before taxation (PBT) of Rs2.75 billion, a nearly 39 per cent year-on-year increase. Despite this higher PAT, the company’s tax payments dropped nearly 76 per cent, amounting to Rs418.85 million, down from Rs1.72 billion last year.

  • K-Electric seeks Rs10.69 per unit hike in basic power tariff

    K-Electric seeks Rs10.69 per unit hike in basic power tariff

    K-Electric has proposed a substantial increase in its basic power tariff, seeking to raise the rate by Rs10.69 per unit to reach Rs44.69 per unit.

    This proposal has been made under the 7-year Multi-Year Tariff (MYT) framework.

    Currently, K-Electric’s average basic tariff stands at Rs34 per unit. The utility company has detailed its request, including specific components for the proposed increase. The Energy Purchase Price (EPP) component is to be set at Rs18.88 per unit.

    Additionally, transmission charges are projected to be Rs3.48 per unit, and distribution charges at Rs3.84 per unit. Operation and maintenance costs are requested to be Rs0.42 per unit, while the retail margin is sought to be Rs0.59 per unit.

    Furthermore, K-Electric has asked for the recovery of lost allocation at Rs2.88 per unit and working capital at Rs2.07 per unit.

    The National Electric Power Regulatory Authority (NEPRA) has invited stakeholders to submit their feedback on K-Electric’s request within the next seven days.

    A decision on the proposal is anticipated soon. If approved, the new tariff will impact millions of electricity consumers in Karachi and its surrounding areas.

    Last month, K-Electric submitted a request for a significant hike of Rs18.86 per unit in the power tariff. This adjustment was based on the Fuel Charge Adjustments (FCA) for seven months, submitted to NEPRA.

    Concurrently, K-Electric also requested a reduction in the power tariff by Rs0.29 per unit for a two-month period.

    In another development, the federal government has outlined a plan to privatise several profit-making power distribution companies (Discos). The companies slated for privatisation include Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO), Gujranwala Electric Power Company (GEPCO), Multan Electric Power Company (MEPCO), and Faisalabad Electric Supply Company (FESCO).

    These developments come at a critical time for Pakistan’s power sector, where tariff adjustments and privatisation efforts are expected to have significant implications for both the economy and consumers.

  • PM Shehbaz rejects FBR’s sales tax hike and carbon tax proposals

    PM Shehbaz rejects FBR’s sales tax hike and carbon tax proposals

    Prime Minister Shehbaz Sharif has rejected two significant budgetary proposals put forth by the Federal Board of Revenue (FBR) aimed at increasing revenue.

    The proposals included raising the standard rate of sales tax from 18 to 19 per cent and imposing an 18 per cent sales tax on petroleum products, often referred to as a “carbon tax”.

    The FBR had suggested a 1 per cent increase in the sales tax rate, projecting an additional revenue generation of Rs40-50 billion for the fiscal year 2024-25. However, Prime Minister Sharif declined this proposal, citing the potential for immediate inflationary effects on the general public.

    In response, the Prime Minister directed the FBR to enhance its enforcement and administrative measures and to draft alternative proposals targeting untaxed or under-taxed sectors of the economy. Additionally, he instructed the FBR to consider proposals to increase taxes on non-essential and luxury items.

    The second proposal, which aimed to impose an 18 per cent sales tax on petroleum products, was also rejected due to its likely inflationary impact on the public.

    According to sources, out of the total proposed measures worth Rs1,200 billion to Rs1,300 billion by the FBR, the government is anticipated to approve measures amounting to approximately Rs400-500 billion.

  • Pakistan secures over $228 million in loans from multiple foreign sources

    Pakistan secures over $228 million in loans from multiple foreign sources

    In April 2024, Pakistan secured $237.24 million in external financing from various sources, according to the Economic Affairs Division (EAD). This sum included $228.64 million in loans and $8.60 million in grants.

    Throughout the first ten months of the fiscal year 2024 (10MFY24), the country managed to obtain a total of $7.14 billion in external financing, significantly less than the annual budget estimate of $17.62 billion.

    In April, the government received a substantial loan of $117.39 million for non-project aid, aimed at providing program and budgetary support to help restructure the economy. Over 10MFY24, loans for non-project aid amounted to $4.84 billion.

    The Ministry of Economic Affairs noted Pakistan’s continued reliance on foreign commercial borrowing, which amounted to $107.95 million in April and $889.43 million in 10MFY24. This was primarily facilitated through the Naya Pakistan Certificate.

    Notably, no funds were secured from foreign commercial banks in 10MFY24, despite a budget estimate of $4.5 billion for the fiscal year.

    Disbursements from bilateral and multilateral development partners remained strong, totaling $129.29 million in April and $3.74 billion in 10MFY24. Although these inflows helped bolster foreign exchange reserves, they fell short of the government’s budget estimates.

    Multilateral sources provided nearly $121.61 million in April and $2.87 billion in 10MFY24. Among these, the International Development Association-World Bank (IDA) led with $61.73 million in April, followed by the Asian Development Bank (ADB) with $42.78 million.

    The International Bank for Reconstruction and Development (IBRD) contributed $8.52 million, and the Asian Infrastructure Investment Bank (AIIB) provided $6.33 million. Cumulatively, IDA’s disbursements totaled $1.35 billion, ADB’s $708.30 million, and AIIB’s $309.95 million.

    Bilateral development partners contributed $7.68 million in April and $877.76 million in 10MFY24. In April, Germany provided $3.10 million, Korea $1.80 million, France $1.77 million, and the USA $1.01 million. Over 10MFY24, Saudi Arabia’s Oil Facility dominated bilateral disbursements with $595.18 million.

    While foreign assistance has been crucial in maintaining financial stability, the shortfall compared to budget estimates highlights the need for improved fiscal strategies and diversified financing avenues to achieve Pakistan’s economic goals.

  • Pakistan’s headline inflation expected to drop below 14%

    Pakistan’s headline inflation expected to drop below 14%

    Inflation in Pakistan is projected to decelerate significantly in May 2024, with the year-on-year (YoY) rate expected to drop to approximately 13.9 per cent. This sharp slowdown is attributed to a notable decline in monthly prices, aided by a favorable base effect.

    Monthly inflation is forecasted to decrease by 1.4 per cent, marking the second consecutive month of decline. This figure is significantly lower than the average monthly increase of 1.35 per cent observed over the past 12 months.

    As a result, the average yearly inflation for the first 11 months of the fiscal year 2024 (11MFY24) is anticipated to be 25.1 per cent YoY, compared to 29 per cent YoY in the same period of the previous fiscal year (FY23).

    The primary driver behind the decline in monthly inflation is a substantial 440 basis points (bps) drop in the Food Index. This reduction is mainly due to lower prices of essential food items such as onions, tomatoes, chicken, and wheat. Additionally, the Transport Index is expected to decrease due to falling fuel prices.

    Looking ahead, if consumer prices increase by an average of 0.5 per cent per month, the annual inflation rate is projected to decline to about 7.4 per cent by the end of December 2024. With a 1 per cent monthly increase, the annual inflation rate would fall to approximately 11.7 per cent.

    If the monthly increase matches the last 12-month average of 1.35 per cent, the annual inflation rate will stand at 14.8 per cent by December 2024.

    The following chart outlines the projected yearly inflation trajectory based on monthly inflation rates of 0.5 per cent, 1 per cent, and the last 12-month average of 1.35 per cent.

  • UAE pledges $10 billion investment in Pakistan’s key economic sectors

    UAE pledges $10 billion investment in Pakistan’s key economic sectors

    The United Arab Emirates (UAE) has pledged $10 billion for investment in promising economic sectors in Pakistan.

    Pakistani Prime Minister Shehbaz Sharif met with UAE President Sheikh Mohamed bin Zayed Al Nahyan in Abu Dhabi today, according to a post by Pakistan Television (PTV) on X.

    The meeting focused on a wide range of bilateral issues, including cooperation in political, economic, social, cultural, and defence sectors.

    During the discussion, Prime Minister Sharif emphasised the need to enhance existing cooperation and strengthen the strategic partnership between the two nations. He highlighted key areas such as information technology, renewable energy, and tourism as potential fields for increased collaboration.

    Sharif also outlined steps his government has taken to ensure socio-economic stability and boost investor confidence in Pakistan.

    He reaffirmed Pakistan’s commitment to effectively implement investment cooperation agreements in sectors like energy, port operations, wastewater treatment, food security, logistics, minerals, and banking and financial services.

    Sheikh Mohamed bin Zayed Al Nahyan expressed the UAE’s unwavering support for Pakistan and confirmed the UAE’s commitment to investing $10 billion across various sectors in the country, as stated by PTV.

    The Prime Minister expressed his gratitude to the UAE leadership for hosting 1.8 million Pakistani expatriates and underscored Pakistan’s significant human resource potential that could be utilised in diverse sectors.

  • Sharp drop in gold prices: 24-karat gold down by over Rs6,000 per tola

    Sharp drop in gold prices: 24-karat gold down by over Rs6,000 per tola

    In a substantial decline aligned with global trends, gold prices in Pakistan saw a sharp decrease on Thursday. The price of 24-karat gold fell by Rs6,200, bringing the new rate to Rs242,000 per tola.

    Notably, the current market price has been set Rs4,000 below its actual cost. This adjustment reflects a significant reduction in purchasing power within the country, impacting the gold market.

    The Karachi Sarafa Association reported that the price of 24-karat gold per 10 grammes also dropped, now standing at Rs207,476 after a decrease of Rs5,315. Similarly, the price of 22-karat gold fell to Rs190,186 per 10 grammes.

    Silver prices mirrored this downward trend in the domestic market. The price of 24-karat silver decreased to Rs2,800 per tola and Rs2,400.54 per 10 grammes, representing a fall of Rs50 per tola and Rs42.87 per 10 grammes.

    On the international stage, spot gold prices have declined from recent record highs. The price per ounce fell by 0.62 per cent to $2,364 on Thursday, following a 1.74 per cent drop on Wednesday.

    These price adjustments in both gold and silver highlight the ongoing volatility in the precious metals market, influenced by a combination of domestic economic factors and global financial trends.