Tag: imports

  • Pakistan’s inflation forecasted to remain between 25-27% for July, says Finance Ministry

    Pakistan’s inflation forecasted to remain between 25-27% for July, says Finance Ministry

    The Ministry of Finance anticipates a decline in inflation for the month of July compared to the previous month, with expectations of it remaining within the range of 25-27 per cent. The ministry’s ‘Monthly Economic Update & Outlook’ for July attributes this anticipated decrease to the recent reduction in administered prices of petrol and diesel, which is expected to lower domestic prices of essential goods by impacting transportation costs.

    The headline inflation in Pakistan slowed to 29.4 per cent in June, marking the lowest reading since January. The report explains that the recent decline in international commodity prices is likely to counteract the inflationary pressures caused by domestic supply shocks. Notably, the benchmark index of international food commodity prices experienced a downturn in June 2023, primarily driven by price decreases in major cereals and various vegetable oils.

    The government’s timely efforts to boost the agriculture sector through the Kisan Package are expected to result in a better crop outlook and smoother domestic supplies. Additionally, anticipated political stability and a stable exchange rate are deemed as factors that would contribute to achieving price stability.

    Regarding the fiscal outlook, the Ministry of Finance expects both exports and imports to gradually increase in the upcoming months of FY2024. Despite other factors, the report projects that the current account deficit will remain sustainable during this period.

    To enhance revenue collection in FY2024, the government has unveiled a comprehensive strategy for all sectors of the economy, aiming to revive economic growth and foster a higher inclusive and sustainable growth trajectory. Various administrative and policy measures have been introduced to increase tax collection, while the State Bank of Pakistan’s withdrawal of import restrictions is expected to stimulate demand and support revenue improvement.

    The report acknowledges the success of the government in ensuring the sustainability of the external and fiscal sectors during FY2023, achieved through the implementation of tough decisions and stabilisation measures. Looking ahead to FY2024, the government aims to achieve higher economic growth of 3.5 per cent through measures such as the Kisan package, industrial support, export promotion, encouragement of the IT sector, and resource mobilisation.

    In conclusion, the Ministry of Finance emphasises that prudent and effective economic decisions, political and economic certainty, and the continuation of friendly economic policies, along with sufficient foreign exchange financing, will be crucial to attaining higher and sustainable economic growth. The recent approval of the Stand-By Arrangement by the International Monetary Fund and other bilateral and multilateral inflows are expected to further improve the macroeconomic environment and enhance the confidence of economic agents.

  • FBR increases ‘green channel’ clearance to 66% for imports and exports

    In a significant advancement in trade facilitation, the Federal Board of Revenue (FBR) has decided to increase the clearance of imports and exports through the “green channel” facility from 35 per cent to 66 per cent.

    A meeting was convened at the FBR Headquarters on Thursday to assess the progress of the Pakistan Raises Revenue Program during the previous financial year.

    The meeting recognised the significant achievements made in the past four years under the Pakistan Raises Revenue Program, particularly in the areas of sustainable revenue mobilisation, taxpayer facilitation, and cost reduction for businesses. A major milestone was achieved through the harmonisation of Sales Tax laws and procedures among provinces and the federal government, benefiting taxpayers and all revenue authorities.

    Other notable achievements included reducing the cost of doing business by streamlining withholding lines from 58 to 33, elevating the share of imports and exports processed through the green channel from 35 per cent to 66 per cent, and expanding the tax base.

    Emphasising the importance of the next objective, the meeting highlighted the need to launch a Single Portal to facilitate Sales Tax Return filing. It was acknowledged that FBR’s commitment to transparency had led to the publication of detailed tax expenditure reports.

    Both parties agreed to sustain their focus on upgrading the IT infrastructure and automating FBR processes to ensure timely completion of project targets. Mr Asim Ahmad commended the dedication and contributions of both teams involved in the initiative.

    The meeting was attended by Najy Benhassine, Country Director of the World Bank, and Mr Asim Ahmad, Chairman of the Federal Board of Revenue. Also present were members of the World Bank team, including Gailius Draugelis, Operations Manager; Tobias Haque, Lead Country Economist; Lucy Pan, Senior Economist; Irum Touqeer, Public Sector Specialist; and Shabih Ali Mohib, Manager. Additionally, Member Reforms of FBR, Ardesher Tariq, and other project team members participated in the discussion.

    The Country Director of the World Bank expressed appreciation for the progress made and regarded the harmonisation of the Goods and Services Tax (GST) as a flagship achievement of FBR. A mutual commitment to continued cooperation in pursuing the reform agenda under the project was reaffirmed by the FBR and World Bank.

  • Local manufacturing plants in Pakistan assemble 4.88 million mobile phones in first five months of 2023

    Local manufacturing plants in Pakistan assemble 4.88 million mobile phones in first five months of 2023

    According to official data, local manufacturing plants in Pakistan have successfully manufactured and assembled 4.88 million mobile handsets during the first five months (January-May) of 2023. This figure stands in stark contrast to the mere 0.41 million handsets that were commercially imported during the same period.

    For the month of May 2023, local manufacturing plants contributed 1.44 million mobile handsets, while commercial imports lagged behind at 0.11 million.

    However, it is worth noting that the local manufacturing industry experienced a decline in production during the calendar year 2022, manufacturing 21.94 million mobile handsets compared to the 24.66 million produced in 2021. This decline can be attributed to import issues caused by restrictions on the opening of letters of credit (LCs).

    Providing additional insight, the Pakistan Telecommunication Authority (PTA) disclosed that out of the 21.94 million mobile handsets assembled in 2022, only 1.53 million were commercially imported.

    Of the 4.88 million locally manufactured and assembled mobile handsets, 4 million were 2G phones, while 0.88 million were smartphones.

    Furthermore, the PTA data reveals that smartphones accounted for 56 per cent of the mobile devices used in Pakistan, while 44 per cent were 2G phones.

    Moving on to imports, Pakistan imported mobile phones valued at $516.488 million during the first 11 months (July-May) of the current fiscal year 2022-23, indicating a significant negative growth rate of 73.46 per cent compared to the $1.946 billion imported during the same period last year.

    In May 2023, the country experienced a remarkable 308 per cent month-on-month increase in mobile phone imports, reaching $43.201 million. This figure surpasses the $10.587 million worth of imports recorded in April 2023, as reported by the Pakistan Bureau of Statistics (PBS).

    When compared to May 2022, however, mobile phone imports in May 2023 exhibited a negative growth rate of 68.52 per cent, with the value dropping to $137.212 million.

    Taking a broader view of the telecom industry, overall imports into Pakistan amounted to $860.441 million during the July-May 2023 period. This marks a substantial negative growth rate of 66.87 per cent compared to the $2.597 billion recorded during the same period in the previous fiscal year.

  • Inventory shortage forces Pak Suzuki to extend motorcycle plant shutdown

    Pak Suzuki Motor Company (PSMC) has officially announced the extension of the shutdown of its motorcycle plant until June 16, 2023. The decision was conveyed to the Pakistan Stock Exchange (PSX) through a notice on Tuesday. The company attributed this action to ongoing government restrictions on imports, which have negatively impacted the automotive industry and resulted in a shortage of inventory.

    The notice stated, “Due to shortage of inventory level, the management of the company has decided to shut down motorcycle plant from June 12, 2023 to June 16, 2023.” However, the automobile plant will continue its operations as usual.

    Previously, PSMC had temporarily closed its motorcycle plant until June 10, 2023, due to a shortage of raw materials. Furthermore, both the automobile and motorcycle plants had experienced a shutdown from May 2 to May 9. Similarly, the automobile plant underwent closure from April 7 to April 28.

    As an assembler, manufacturer, and marketer of Suzuki cars, pickups, vans, 4x4s, motorcycles, and related spare parts, PSMC plays a crucial role in the automotive sector. The Suzuki brand, originating from Japan, holds prominence in the company’s product lineup.

    Earlier in April, PSMC reported its highest-ever quarterly loss of Rs12.9 billion for the first quarter of 2023. The decline in sales and substantial finance costs were cited as contributing factors. In comparison, the company had incurred a loss of Rs460.227 million during the same period last year.

    The auto industry in Pakistan is currently grappling with numerous challenges. Indus Motor Company Limited and Honda Atlas Cars, two other prominent listed companies, have also halted production in recent months due to economic hardships.

    The country’s auto sector heavily relies on imports, making it particularly vulnerable to the government’s import restrictions and the tightening of Letters of Credit iissuance. Furthermore, soaring finance costs and significant increases in car prices have dampened consumer demand.

  • Pakistan’s merchandise exports dive for ninth consecutive month, drop by 16.69% in May

    Pakistan’s merchandise exports continue to decline for the ninth consecutive month, plunging by 16.69 per cent year-on-year to $2.18 billion in May, according to data released by the Pakistan Bureau of Statistics.

    The downward trend has persisted throughout the first 11 months (July to May) of the 2022-23 fiscal year, with exports experiencing a dip of 12.14 per cent to $25.36 billion compared to $28.87 billion during the same period the previous year.

    The decline in export proceeds can be attributed to a combination of internal and external factors, raising concerns about the potential closure of industrial units, particularly within the textile and clothing sector.

    In line with this, imports also experienced a significant decrease of 36.76 per cent to $4.27 billion in May compared to $6.76 billion in the corresponding month last year. From July to May, imports fell by 29.22 per cent to $51.15 billion, down from $72.28 billion during the same period last year.

    The government has implemented restrictions on luxury and non-essential goods while promoting imports of raw materials, semi-finished products, pharmaceuticals, food, and energy products. This policy shift has resulted in a substantial decline in the import bill over the past 11 months.

    As a result of these developments, the trade deficit has narrowed by over 40 per cent, reaching $25.79 billion between July and May of the fiscal year 2022-23, compared to $43.40 billion during the corresponding months of the previous year. In May, the trade deficit saw a year-on-year decline of 49.49 per cent to $2.08 billion.

    According to Dawn, the textile and clothing sector, which constitutes over 60 per cent of total exports, has been severely affected, making it challenging for the government to achieve its export target for the current fiscal year. Exporters have pointed out that the federal government lacks a clear strategy and effective prioritization, leading to a decline in textile exports.

    Exporters have also highlighted several root causes contributing to the export decline. These include shortages in working capital and liquidity, delayed refunds of taxes and levies, technology upgradation fund, and duty drawbacks.

    The promised faster refund system has not functioned as intended, resulting in refund processing times of 3-5 months instead of the expected 72 hours. The sector is also grappling with increased financial and energy costs.

    In addition, exporters are facing challenges in procuring raw materials and other inputs, both domestically and through imports. The State Bank of Pakistan’s hurdles in opening letters of credit have further contributed to the decline in exports.

    The negative growth in exports, except for a slight increase in August due to backlog clearance, poses a significant concern as it threatens the balance of the country’s external account.

    The government needs to address these issues promptly and formulate effective policies to revive the export sector and stimulate economic growth.

  • Pakistan’s forex reserves decline to $4.31 billion, covering less than a month’s worth of imports

    Pakistan’s forex reserves decline to $4.31 billion, covering less than a month’s worth of imports

    The State Bank of Pakistan (SBP) has experienced a continuous decline in foreign exchange reserves for the third consecutive week. This decline is attributed to the country’s ongoing struggle to secure a deal with the International Monetary Fund (IMF).

    The central bank’s statement indicates that the reserves decreased by $72 million to reach $4.31 billion as of May 12, primarily due to external debt payments. This amount is sufficient for less than a month’s worth of imports.

    In contrast, commercial banks in Pakistan hold net foreign reserves amounting to $5.62 billion, which is $1.01 billion higher than the central bank’s reserves. Therefore, the country’s total liquid foreign reserves amount to $9.93 billion.

    Pakistan’s economy is currently facing significant challenges, exacerbated by financial difficulties and the delay in reaching an agreement with the IMF. Such an agreement is crucial as it would provide much-needed funding to mitigate the risk of default.

    Earlier, on May 11, the State Bank of Pakistan (SBP) witnessed a decline of $74 million in foreign exchange reserves within a week, resulting in reserves amounting to $4.38 billion. Additionally, commercial banks held net foreign reserves of $5.6 billion.

    Reports indicate that the IMF remains skeptical and is urging Islamabad to take further actions to unlock the loan program, despite assurances from friendly countries regarding external funds for Pakistan.

    Pakistan has been asked to present a repayment plan for a $3.7 billion loan to the IMF in June and demonstrate stronger support from friendly nations to fulfill its commitments.

  • Pakistan rupee recovers by one paisa against US dollar

    Pakistan rupee recovers by one paisa against US dollar

    According to the State Bank of Pakistan (SBP), the Pakistani rupee (PKR) strengthened by Rs0.01 against the US dollar in the interbank market on Tuesday.

    The local currency managed to recover and closed at Rs284.96.

    In contrast, the dollar is being traded at Rs290 in the open market.

    It’s worth noting that the rupee had reached a record low of Rs298.93 against the US dollar last week.

    Market speculation suggests that the rupee’s gains were further supported by reduced demand for foreign currency, resulting from a significant import payment between May 9 and 11, coinciding with the period of heightened political drama in the country.

    Reports indicate that the substantial dollar payment for imports had been arranged by the oil refineries. Oil imports constitute approximately one-fourth of the total import bill for a month.

    Earlier, the rupee experienced a sharp decline of 4.71 per cent or Rs14.09 in just two days (May 10-11), hitting a record low of Rs298.93/$ due to worsening political turmoil and deteriorating law and order following the arrest of former Prime Minister Imran Khan. However, the rupee managed to recover some of its losses after Khan’s release on May 12, as ordered by the court.

  • Alarming decline in Pakistan’s manufacturing sector, latest data reveals

    Alarming decline in Pakistan’s manufacturing sector, latest data reveals

    The manufacturing industry in Pakistan, which is responsible for about 20 per cent of the country’s economic growth, has experienced its eighth consecutive month of decline. This is a major cause for concern as it could have negative impacts on the overall economy.

    In February, the rate of decline was particularly severe, with a contraction of 11.59 per cent compared to the same period in the previous year, according to data from the Pakistan Bureau of Statistics.

    This decline will impact Pakistan’s overall economic growth, with the gross domestic product (GDP) also expected to suffer a significant blow this fiscal year.

    The negative growth of the sector is due to both domestic and global factors, including high energy costs, rupee devaluation, and the government’s tightening of monetary and fiscal policies. Industrial output fell by 5.56 per cent in the first eight months (July-February) of the ongoing fiscal year, compared to the same period last year.

    The global economic slowdown has further worsened the situation, with many businesses scaling back operations or reducing operating hours, while others have shut down their plants. The LSM sector has witnessed a decline in production from August 2022 to February 2023.

    All major and small sectors’ output contracted in February, including textile, food, coke and petroleum products, chemicals, automobile, pharmaceuticals, cement, fertilisers, iron and steel, furniture, leather products, electrical equipment, and non-metallic mineral products.

    To combat soaring inflation, the State Bank of Pakistan (SBP) also raised the discount rate to 21 per cent, hindering industrial activities by making bank financing more expensive.