Tag: pakistan economy

  • Pakistan’s Business Confidence Index increases in May 2024

    Pakistan’s Business Confidence Index increases in May 2024

    The overall Business Confidence Index (BCI) in Pakistan rose to 54.6 in May 2024, according to the 48th wave of the Business Confidence Survey conducted by the State Bank of Pakistan (SBP) and the Institute of Business Administration (IBA).

    This increase was driven by improvements in both the Industry and Services sectors, with the Industry BCI rising by 2.2 points to 52.1 and the Services BCI by 0.7 points to 55.4.

    The headline index, “Overall Business Confidence,” consists of the Current Business Confidence Index (CBCI) and the Expected Business Confidence Index (EBCI). The CBCI, reflecting economic conditions over the past six months, increased by 1.1 points to 51.2 in May 2024.

    Specifically, the Industry CBCI climbed by 2.8 points to 48.3, while the Services CBCI edged up by 0.5 points to 52.1, indicating more positive and neutral views and fewer negative perceptions.

    Looking ahead, the EBCI saw a 1.1-point increase to 58, driven by rises in both sectors. The Industry EBCI grew by 1.6 points to 55.9, and the Services EBCI by 0.9 points to 58.7, with a corresponding shift towards more positive and neutral expectations.

    However, the Purchasing Managers Index (PMI) fell by 0.6 points to 49.3, continuing to stay below the positive zone last seen in June 2022. Four of the five PMI components decreased: total orders by 1.5 points, business activities by 1.0 point, supplier delivery times by 0.6 points, and employment by 0.3 points. Only the quantity of raw material purchases slightly improved by 0.1 points.

    On inflation, expectations significantly dropped by 10.1 points to 56.0, with the Industry and Services sectors both showing decreases of 10.2 and 9.8 points, respectively.

    Employment trends were mixed. The Current Employment Index rose by 1.1 points to 51.2, primarily due to a 1.6-point increase in the Services sector, despite a slight 0.3-point decrease in the Industry sector.

    Conversely, the Expected Employment Index fell by 0.8 points to 55.1, driven by a 1.0-point decline in the Services sector, while the Industry sector showed a marginal increase of 0.1 points.

    Additionally, the Average Current Capacity Utilization (ACCU) in the Manufacturing sector within the Industry sector increased by 4.1 per cent to 67.7 per cent in May 2024.

  • Gold price falls by Rs3,600 per tola to Rs239,400

    Gold price falls by Rs3,600 per tola to Rs239,400

    Gold prices in Pakistan witnessed a significant decrease on Saturday, with the rate of 24-karat gold falling by Rs3,600 per tola. According to the Karachi Sarafa Association, 24-karat gold was priced at Rs239,400 per tola.

    In tandem, the price of 24-karat gold per 10 grammes saw a reduction, now standing at Rs205,247, down by Rs3,086. The decline extended to 22-karat gold, which is now quoted at Rs188,143 per 10 grammes.

    Silver prices also experienced a drop in the domestic market. The rate for 24-karat silver decreased by Rs50, bringing the price to Rs2,750 per tola. Similarly, the price for 24-karat silver per 10 grammes fell by Rs43, settling at Rs2,358.

    On the global stage, spot gold concluded the week at $2,293 per ounce, marking a 1.4 per cent decline over the week. The drop in international gold prices has contributed to the downward trend observed in the local market.

    This decrease in gold and silver prices is reflective of broader economic factors influencing precious metals globally, impacting local market conditions.

  • Govt’s debt rises to Rs5.53 trillion with recent Rs35.4 billion borrowing

    Govt’s debt rises to Rs5.53 trillion with recent Rs35.4 billion borrowing

    The government of Pakistan has secured an additional debt of Rs35.4 billion during the week ending on May 24, 2024, bringing the total net borrowing for the ongoing fiscal year 2024 to Rs5.53 trillion, according to the latest estimates from the central bank.

    Government borrowings this fiscal year have consistently outpaced those of previous years, indicating a persistent reliance on external financing. The borrowing is classified into three primary categories: budgetary support, commodity operations, and other purposes.

    For the week in question, net borrowing for budgetary support amounted to Rs24.52 billion, while loans for commodity operations totaled Rs13.07 billion. Conversely, a net amount of Rs2.19 billion was repaid under the “others” category.

    Cumulatively, for fiscal year 2024, borrowings for budgetary support have reached Rs5.68 trillion. In contrast, there has been a retirement of Rs149.47 billion in loans for commodity operations and Rs5.48 billion for other categories.

    The principal sources of financing for budgetary support are the State Bank of Pakistan and scheduled banks. This fiscal year, the government has repaid a net total of Rs1.07 trillion to the central bank. This repayment includes Rs598.84 billion by the Federal Government, Rs423.28 billion by the Provincial Government, Rs38.19 billion by the AJK Government, and Rs5.16 billion by the GB Government.

    On the other hand, scheduled banks have lent a net total of Rs6.75 trillion. The Federal Government borrowed Rs6.9 trillion from these banks, while the Provincial Government retired Rs151.49 billion.

    This pattern of borrowing underscores the government’s heavy dependence on domestic financial institutions to meet its budgetary needs amidst ongoing economic challenges.

  • FBR surpasses May revenue target with Rs760 billion collection

    FBR surpasses May revenue target with Rs760 billion collection

    The Federal Board of Revenue (FBR) has exceeded its revenue target for May in the fiscal year 2023-24 by collecting Rs760 billion in tax revenues, surpassing the target of Rs745 billion.

    This achievement, announced in a statement by the FBR today, signifies a remarkable 33 per cent growth compared to May 2023.

    In addition to the overall revenue increase, domestic taxes also experienced a significant 33 per cent growth during May.

    “The FBR is poised to achieve the assigned target for the final month of the current financial year, June 2024,” the statement added.

    This positive trend has contributed to an overall revenue growth of 31 per cent for the first eleven months of the current fiscal year, compared to the same period last year.

  • Tomato and onion price hikes push weekly inflation up

    Tomato and onion price hikes push weekly inflation up

    In a significant shift, weekly inflation in Pakistan has increased after seven weeks of consecutive declines.

    The Weekly Sensitive Price Indicator (SPI) for the Combined Group saw a 0.11 per cent week-on-week rise for the week ending May 30, 2024.

    This comes as a 21.4 per cent year-on-year increase compared to the same period last year, according to the Pakistan Bureau of Statistics (PBS).

    The Combined Index stood at 308.52, slightly up from 308.19 the previous week, and significantly higher than the 254.13 recorded a year ago.

    Out of the 51 items monitored, prices for 14 items (27.45 per cent) increased, 14 items (27.45 per cent) decreased, and 23 items (45.10 per cent) remained unchanged.

    Inflation drivers

    Notable price increases during the week were observed in tomatoes (11.25 per cent), onions (3.62 per cent), pulse mash (2.00 per cent), bananas (1.78 per cent), and potatoes (1.23 per cent).

    Conversely, significant price decreases were seen in eggs (6.14 per cent), chili powder (5.73 per cent), LPG (5.40 per cent), garlic (4.02 per cent), and rice IRRI (2.93 per cent).

    The SPI percentage change by income groups revealed increases across all segments, ranging from 0.08 per cent to 0.15 per cent. The lowest income group experienced a 0.09 per cent rise, while the highest income group saw a 0.08 per cent increase.

    On an annual basis, SPI changes showed increases between 14.68 per cent and 24.67 per cent across different income segments, with the lowest income group seeing a 14.68 per cent rise and the highest income group a 19.24 per cent increase.

    The average price of Sona urea was recorded at Rs4,796 per 50 kg bag, reflecting a 0.16 per cent decrease from the previous week but a 55.19 per cent increase from last year.

    Meanwhile, the average price of cement rose to Rs1,237 per 50 kg bag, up 0.30 per cent from the previous week and 9.80 per cent higher than the previous year.

  • 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.

  • IMF team engages in talks with Pakistan for new $8 billion programme

    IMF team engages in talks with Pakistan for new $8 billion programme

    The International Monetary Fund (IMF) confirmed that it is in discussions with Pakistan regarding a 24th bailout programme under the Extended Fund Facility (EFF), signalling a significant development in the country’s ongoing economic negotiations.

    IMF Communication Director Julie Kozack, during a press briefing, refrained from commenting directly on the status of a staff-level agreement, suggesting that the talks are still in progress.

    She stated, “A mission team led by Nathan Porter is currently meeting with Pakistani authorities to discuss the next phase of our engagement.”

    Kozack elaborated on recent IMF activities in Pakistan, noting that on April 29th, the IMF Executive Board completed the second review of the stand-by arrangement for Pakistan, enabling a disbursement of approximately $1.1 billion.

    “The completion of this review reflects the authorities’ robust policy efforts during the stand-by arrangement, which contributed to stabilising the economy,” she explained.

    Addressing further queries, Kozack indicated that the mission is actively working on the ground and that their findings would be communicated upon the mission’s completion. 

    Pakistan is seeking a substantial $6 to $8 billion bailout package from the IMF over a three- to four-year period to address its financial difficulties.

    The IMF’s technical team arrived in Pakistan on May 10 to engage in discussions regarding the new loan programme and budget preparations.

    These talks come at a critical time for Pakistan, which is grappling with considerable economic challenges, including the failure of a tax amnesty scheme proposed by the IMF. The outcome of these negotiations will be pivotal in determining Pakistan’s economic stability and future financial policies.

  • IMF urges gas sector reforms to curb circular debt

    IMF urges gas sector reforms to curb circular debt

    The International Monetary Fund (IMF) highlighted the significance of prompt gas tariff determinations and notifications, crucial in curbing the escalating gas circular debt, while safeguarding vulnerable households.

    Stressing the necessity of adhering to the mandated 40-day window, the IMF underscored the urgency to initiate these measures commencing with the June 2024 semiannual adjustment.

    In its latest report, the IMF conducted its second and final review within the stand-by arrangement framework, released on Friday.

    It noted a slight decrease in natural gas circular debt to Rs2,083 billion (equivalent to 2.0 per cent of GDP) as of January 2024, attributing this decline to the resumption of gas tariff adjustments, albeit with some delay, aligned with cost recovery objectives.

    The Fund recommended a continued trajectory towards eliminating captive power usage, advocating for the prioritization of cheaper natural gas for the most efficient power plants.

    Additionally, it proposed efforts to standardize gas prices for all fertilizer companies, aligning with plans to implement a weighted average cost of gas (WACOG) across Pakistan, ensuring uniformity while facilitating cost recovery.

    Acknowledging Pakistan’s recent 24 per cent gas tariff increase on February 15, the report highlighted its progressive rate structure protecting residential consumers, while enhancing and equalizing prices for fertilizer companies.

    Furthermore, it recognized Pakistan’s adherence to the Structural Benchmarks (SBs) concerning the notification of the semiannual gas tariff adjustment.

    The report also shed light on the increasing prominence of Regasified Liquefied Natural Gas (RLNG) within Pakistan’s gas mix, driven by dwindling natural gas supplies exacerbated by years of under-pricing.

    Consequently, RLNG has been diverted to domestic users at subsidized rates, underscoring the complexity of the gas sector dynamics.

  • PSX surges to record high as KSE-100 closes above 73,000 points

    PSX surges to record high as KSE-100 closes above 73,000 points

    After a series of subdued sessions, the Pakistan Stock Exchange (PSX) saw a resurgence of buying on Friday, propelling its benchmark KSE-100 index above the 73,000 mark for the first time in history.

    The positive momentum reflected renewed investor confidence amid signs of economic stability.

    The KSE-100 index opened on a bullish note, reaching an intra-day high of 73,449.37 before settling at 73,085.50, a gain of 427.45 points or 0.59 per cent by the close of trading.

    Despite some sporadic selling during the day, the bulls largely controlled the market, resulting in a robust session.

    Industries driving the surge

    Key sectors that drove the surge included cement, chemical, oil and gas exploration companies, and oil marketing companies (OMCs). Index-heavy stocks such as Lucky Cement (LUCK), Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), Pakistan State Oil (PSO), Sui Northern Gas Pipelines Limited (SNGPL), and Sui Southern Gas Company (SSGC) closed in the green, contributing significantly to the overall upward trend.

    Market experts attribute the surge to a combination of improved economic indicators and investor expectations.

    Pakistan’s foreign exchange reserves and remittances have shown positive growth, suggesting a stabilising economy.

    Additionally, there is anticipation of a potential policy rate cut in the upcoming Monetary Policy Committee (MPC) meeting on June 10, following a recent decline in the inflation rate.

    On Thursday, the KSE-100 index had a marginal increase in a largely range-bound session, closing at 72,658.05, a gain of 56.24 points, or 0.08 per cent.

    The strong close on Friday underscores a more optimistic outlook for the market as investors continue to monitor key economic developments and policy changes.

  • Pakistan’s debt climbs by Rs276.55 billion to Rs4.78 trillion

    Pakistan’s debt climbs by Rs276.55 billion to Rs4.78 trillion

    Pakistan’s government incurred an additional debt of Rs276.55 billion during the week ending April 26, 2024, according to the State Bank of Pakistan’s weekly report.

    This brings the total net borrowing for the current fiscal year to a staggering Rs4.78 trillion, underscoring a trend of elevated borrowings compared to previous years.

    The government sector’s borrowings are categorised into three main segments: budgetary support, commodity operations, and others.

    During the latest week, the bulk of the borrowing went towards budgetary support, which accounted for Rs230.84 billion.

    Meanwhile, commodity operations contributed Rs45.76 billion to the debt increase, while the “others” category saw a retirement of Rs54.82 million.

    Looking at the cumulative figures for the ongoing fiscal year, budgetary support borrowings have now reached Rs5.07 trillion, with commodity operations showing a net retirement of Rs283.57 billion, and others indicating a net retirement of Rs2.64 billion.

    The government’s financing primarily comes from two sources: the State Bank of Pakistan (SBP) and scheduled banks.

    This fiscal year, the government has paid off a net sum of Rs735.22 billion to the SBP, with the Federal Government contributing Rs425.15 billion to the total.

    Provincial governments collectively retired Rs294.54 billion, while the governments of Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan (GB) retired Rs17.89 billion and borrowed Rs2.36 billion, respectively.

    In contrast, scheduled banks have lent out a net total of Rs5.8 trillion. Of this amount, the federal government borrowed Rs5.96 trillion, while the provincial governments retired Rs159.99 billion.

    These figures point to the government’s continued reliance on borrowing to manage fiscal operations.

    Analysts are concerned about the sustainability of this trend, suggesting that it could pose risks to the country’s economic stability if not carefully managed.