Gold prices in Pakistan decline for second consecutive day


Gold prices in Pakistan continued to decline for the second consecutive day after the rupee made massive gains against the dollar on Tuesday. 

According to data released by All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) decreased by Rs2,200 per tola and Rs1,887 per 10 grams to settle at Rs205,000 and Rs175,754, respectively.

Meanwhile, the price of the yellow metal increased for the second time by $17 to settle at $1,929 per ounce in the international market today.

Pakistan vows to fulfil IMF promises after averting default threat


Prime Minister Shehbaz Sharif said Wednesday that Pakistan would fulfill its commitments made to the International Monetary Fund (IMF) to secure a short-term financing deal, helping the cash-strapped nation avert a default in the near future.

A staff-level agreement on the $3 billion stand-by agreement (SBA) was reached between the local authorities and the IMF team, with the lender’s executive board to give final approval on July 12.

The economy has been stricken by a balance-of-payments crisis as it attempts to service crippling external debt, while months of political chaos have scared off foreign investment.

Power sector circular debt tops Rs2.64tr


The power sector circular debt has reached a staggering amount of Rs2.646 trillion by the end of May 2023, registering an increase of Rs394 billion from July 2022 to May 2023, according to a report by the Ministry of Energy.

The mounting debt has become a major concern for the government and power sector policymakers, as it indicates monthly inefficiencies in the energy system, particularly in generation and distribution, resulting in an additional burden of Rs35.82 billion ($132.2 million) each month.

This comes despite the government’s implementation of a base tariff increase for electricity last July, following pressure from the International Monetary Fund (IMF), which demanded tariff measures to reduce the debt, rejecting the notion of bridging the gaps in power holding companies.

Despite a significant tariff hike of Rs7.9 per unit in July 2022, the circular debt continued to rise, as underlying structural issues in the sector remained unaddressed, leading to a substantial financial burden on loyal power consumers, amounting to billions of rupees every month.

The data reveals that the cumulative debt volume stood at Rs2.253 trillion by the end of the fiscal year 2021-22, which ballooned to Rs2.646 trillion by the end of May 2023.

Meanwhile, payables to power producers surged by Rs420 billion to Rs1.771 trillion during these 11 months. The state-owned generation companies (GENCOs) also saw their payables to fuel suppliers rise from Rs101 billion to Rs110 billion during the same period.

However, a positive development was observed in the amount of debt parked in Power Holding Limited (PHL), which decreased by Rs35 billion to Rs765 billion from the previous figure of Rs800 billion recorded at the end of June 2022.

The inefficiencies of power distribution companies (DISCOs) have emerged as a significant burden on the financial health of the power sector, primarily due to their high losses and low bill recoveries.

These shortcomings in power transmission and distribution are impeding the sustainable provision of energy services, resulting in elevated energy prices and amplified business costs.

During the eleven-month period, the power distribution companies (DISCOs) incurred losses and inefficiencies, along with non-recoveries of bills, contributing Rs374 billion to the circular debt, accounting for 95% of the total addition of Rs394 billion to the overall debt stock.

DISCOs’ losses and inefficiencies amounted to Rs125 billion, while low bill recoveries added Rs249 billion during July-May 2022-23.

The breakdown of circular debt additions further shows that Rs87 billion was attributed to the payment of interest to power producers on delayed payments, with the government currently owing Rs1.77 trillion to these generators.

Additionally, Rs58 billion was added to the circular debt due to interest payments to banks on the Rs765 billion parked in a power holding company.

To address this issue, the government has imposed a debt servicing surcharge of Rs3.23 per unit, passing on the cost of inefficiency to power consumers.

Furthermore, Rs171 billion was included in the circular debt due to delays in the recovery of generation costs through quarterly and monthly fuel charges adjustments. An additional Rs57 billion was added to the debt stock due to non-payment by K-Electric.

Avanceon has secured a Multi-Million Dollar contract in Middle East region


Avanceon Ltd (PSX: AVN) in a notification to the PSX, announced that Avanceon Automation & Control W.L.L Qatar, subsidiary of Avanceon Limited has been awarded a multimillion-dollar contract from a major municipality in the middle east region.

The objective is to improve the Drainage Network Operation System by enabling real time monitoring and control of assets at various locations. The operation system improvement will be achieved by sensing early warning of flood risk, blockages, infiltration, surcharging etc. from master SCADA station. Avanceon will be installing permanent monitoring and control equipment with RTUs and will extract power from the nearest local permanent or solar power source.

The contract valued at more than $10 million will see Avanceon enable real time monitoring and control of assets at various locations.

BOP bought Punjab Capital Securities from FPJM


First Punjab Modaraba (PSX: FPJM) in a latest notification to the PSX has announced that it has sold its 100% shareholding in a wholly owned subsidiary namely Punjab Capital Securities (Pvt) Limited to The Bank of Punjab (PSX: BOP) at a price of Rs85.487 million. BOP is the parent bank of FPJM.

CPI Inflation clocked in at 29.4% in June 2023


CPI Inflation in June 2023 clocked in at 29.4% YoY as compared to 38.0% in May 2023 and 21.3% YoY in June 2022.

On MoM basis, CPI inflation was down 0.3% as compared to increase of 1.6% last month. This takes FY23 average inflation to 29.18% compared to 12.15% in FY22.

MPC of the SBP has raised Policy rate to 22%


MPC of SBP convened an emergency meeting today, where it noted that potential upside risks to the inflation outlook have increased from the last meeting, and accordingly decided to raise the policy rate by 100bps to 22%. MPC views that these risks are mainly coming from the implementation of new measures in the fiscal and external sectors, which are important in the context of completion of the ongoing IMF program.

MPC noted that today’s action is necessary to keep the real interest rate firmly in positive territory on a forward-looking basis that would help in bringing down inflation towards the medium term target of 5 – 7 percent by the end of FY25.

National Assembly has passes IMF-aligned budget FY24


The National Assembly passed the budget for the next fiscal year 2023-24 with a majority after the government met tough International Monetary Fund (IMF) conditions.

In a last-ditch effort to clinch a stalled rescue package with the IMF, the government introduced a number of changes to its budget for the fiscal year 2024, Finance Minister Ishaq Dar had confirmed on the floor of the National Assembly.

For the fiscal year starting next month, the government will raise a further Rs215 billion in new tax and cut Rs85 billion in spending, as well as a number of other measures to shrink the fiscal deficit.

Trade deficit in services surges by 75% MoM in May


The service sector of Pakistan posed a trade deficit of $245 million in May 2023, which has significantly increased by 75% MoM as compared to $140mn in April 2023.

On the other hand, the deficit narrowed by 47.08% YoY compared to a deficit of $463mn in May 2022.

Cumulatively, in 11MFY23, the trade deficit in services clocked in at $607mn, plummeting by 88.27% YoY as compared to $5.17bn in the corresponding period last fiscal year.

Details made available by SBP revealed that the exports of services in May 2023 increased by 19.81% YoY compared to $515mn in May 2022.

Pervez Khattak served show cause notice over anti-PTI move


The Pakistan Tehreek-e-Insaf (PTI) Wednesday issued a show cause notice to Pervez Khattak seeking an explanation for allegedly inciting the members to leave the party, The News reported.

The notice issued by PTI Secretary General Omar Ayub Khan requires Khattak, a senior politician from the Nowshera district, to explain his position on the anti-party move within seven days of the notice.

“It has come to the notice of the party leadership that you are contacting party members and inciting them to leave the party. In view of these reported activities, you are hereby called to explain yourself in writing within seven days of this notice,” the show-cause notice states.

It was also made clear in the notice that if his reply was found unsatisfactory or he did not respond, further action would be taken as per the party policy and rules.