Good Morning

The coronavirus cases in Pakistan are continuing to proliferate, compelling the government to impose targeted lockdowns to curb the spread. Imposition of wide-scale lockdowns capable of affecting businesses activity, however, seems unlikely at present time. While external account imbalances appear to have been rectified for the time being with support from bilateral institutions, Fitch Ratings expresses a difficult period for Pakistan to achieve assigned economic targets during FY21.

Political uncertainty also influenced last week’s trading with BNP-Mengal announcing its intention to leave the ruling party’s coalition, generating concerns over the federal government’s voting capacity.

Market View: The KSE100 ended the earlier week down by 1,172 points, to close at 33,439 points. As mentioned, the political uncertainty compelled investors to liquidate their positions the previous week and will likely have its impact in the present week.

Commodities:

Brent oil (USD/bbl): 37.91 (-2.12% D/D)

WTI oil (USD/bbl): 37.91 (-3.71% D/D)

Gold (USD/oz): 1,728.20 (-0.274% D/D)

National News

Pakistan’s $2.41bn debt payments to be rescheduled

Pakistan will reschedule $2.41 billion worth of debt repayments in 2020 under the Debt Service Suspension Initiative (DSSI). The initiative will help the country “enable an effective crisis response. Borrowers therefore commit to use freed-up resources to increase social, health, or economic spending in response to the [Covid-19] crisis,” the World Bank said in a statement accompanying the release of the country specific data on the rescheduling.

https://dawn.com/news/3000734/pakistans-2-41-bn-debt-payments-to-be-rescheduled

Pakistan signs $1.5 billion loan agreement with IFIs to strengthen Covid-19 response

The government has signed financial agreements worth $1.5 billion with the three International Financial Institutions (IFIs) – World Bank (WB), Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) – to strengthen its response to the Covid-19 pandemic.

https://tribune.com.pk/story/2246115/1-pakistan-signs-1-5-billion-loan-agreement-ifis-strengthen-covid-19-response/

IMF allows Pakistan to utilise its resources for BoP, budgetary support

The International Monetary Fund (IMF) has allowed Pakistan for utilising its resources as balance of payment as well as budgetary support in next fiscal year 2020-21, The News has learnt. The IMF support is traditionally being utilised for balance of payment (BoP) support, but keeping in view the yawning budget financing requirement of any country, the Fund provides such facility of allowing for budgetary support with the approval of its Executive Board.

https://www.thenews.com.pk/print/675157-imf-allows-pakistan-to-utilise-its-resources-for-bop-budgetary-support

Structural benchmark agreed with IMF: Nepra being empowered to pass on cost inefficiencies on to consumers

Ministry of Finance has reportedly clubbed amendments in Nepra Act with the Finance Bill 2020-21 to get it passed before July 1, 2020 as per agreement with the International Monetary Fund (IMF) aimed at empowering the regulator to pass on cost inefficiencies of power sector to the consumers through imposition of Debt Servicing Surcharge (DSS).

https://www.brecorder.com/news/10000094/structural-benchmark-agreed-with-imf-nepra-being-empowered-to-pass-on-cost-inefficiencies-on-to-consumers

DB signs $359m loan agreements for Sindh projects

The Asian Development Bank (ADB) and the government have signed two loan agreements amounting to $359 million relating to the bus rapid transit (BRT) project in Karachi and the Sindh secondary education improvement project.

https://dawn.com/news/3000771/adb-signs-359-m-loan-agreements-for-sindh-projects

Oil major Eni looks to cash out lucrative Pakistan assets

Italy-based Eni SpA is seeking an exit from Pakistan’s upstream sector that according to the company’s own estimate embraces massive untapped potential, as its dizzying post-corona global losses make the oil giant to cash out its lucrative asset, market observers said on Saturday.

https://www.thenews.com.pk/print/675578-oil-major-eni-looks-to-cash-out-lucrative-pakistan-assets

Pakistan underutilises Saudi oil facility

Pakistan could utilise less than $900 million worth of Saudi oil and gas credit facility on deferred payments in this fiscal year against the sanctioned annual limit of $3.2 billion – a lifeline that Prime Minister Imran Khan had secured by going twice to the Kingdom.

https://tribune.com.pk/story/2246981/2-pakistan-underutilises-saudi-oil-facility/

PSDP 2019-20: Rs611.83 released under PSDP

The federal government has released Rs611.83 billion (87.2 percent) including Rs121.24 billion foreign aid (94.5 percent) for various ongoing and new development projects under the Public-Sector Development Programme (PSDP) 2019-2020 against the total budgeted allocation of Rs701 billion.

https://epaper.brecorder.com/2020/06/20/11-page/841407-news.html

Govt decides to reduce VCM on urea

The government has reportedly decided to reduce Variable Contribution Margin (VCM) on urea by 20 per cent to Rs 234 per bag from Rs 294 per bag (Rs 60 per bag), well-informed sources told Business Recorder. The decision was taken by an inter-ministerial committee headed by Ministry of Industries and Production, constituted by the Economic Coordination Committee (ECC) of the Cabinet.

https://epaper.brecorder.com/2020/06/20/1-page/841338-news.html

61 healthcare items exempted from duties, sales tax

The Federal Board of Revenue (FBR) has exempted customs duty, regulatory duty, additional customs duty and sales tax on the import of 61 different kinds of diagnostic support and health safety items including medical equipment/machinery and apparatus such as coronavirus detection kits, surgical masks, multimode ventilator with air compressor, face shields, and other medical equipment for a period of three months.

https://www.brecorder.com/news/1006023/61-healthcare-items-exempted-from-duties-sales-tax

Cabinet approves furnace oil imports for KE

The Cabinet Committee on Energy (CCoE) on Saturday allowed Pakistan State Oil (PSO) to import furnace oil for supply to K-Electric in a bid to manage Karachi’s demand for electricity in summer. The special permission to import high sulphur furnace oil (HSFO) — two cargoes of 70,000 tonnes each — has been granted after almost two years since local refineries have not been able to fulfill the demand due to shutdowns and other unusual circumstances faced by the oil sector amid the Covid-19 pandemic.

https://dawn.com/news/3000735/cabinet-approves-furnace-oil-imports-for-ke

Sell-off process could contribute Rs 100 billion revenue

Privatisation Division has short listed 10 entities which are scheduled to be sold out in financial year 2020-21 to achieve budgeted revenue of Rs 100 billion. Federal Minister Mohammedmian Soomro chaired a meeting on Sunday which reviewed and approved new schedule for privatisation of ongoing transactions. The new schedule is contingent upon resumption of economic activities and improvement in market conditions once Covid 19 pandemic situation is improved.

https://www.brecorder.com/news/10000100/sell-off-process-could-contribute-rs-100-billion-revenue

FDI surges 91% to $2.4b in July-May

Foreign investment in Pakistan’s long-term projects like power plants, oil and gas exploration and 3G/4G internet dropped to a nine-month low at $120 million in May 2020 mainly due to the global health and economic crisis. Foreign direct investment (FDI) was 10% lower than the $133.2 million recorded in April 2020 and 53% lesser than the $254 million registered in May 2019, the State Bank of Pakistan (SBP) reported on Friday.

https://tribune.com.pk/story/2246358/2-fdi-surges-91-2-4b-july-may/


KASB Research