Business

Govt to borrow record Rs11.1 trillion in FY24 first quarter

Published

1 year ago

Farwa

Govt to raise Rs8.70 trillion via short-term paper auctions.
PIBs to allow govt to borrow Rs1.68 tn from commercial banks.
Markup expenses budgeted at Rs7.3 trillion for FY24.

KARACHI: As the government grapples with a ballooning budget deficit and a sluggish economy, the central bank’s auction calendar shows it plans to borrow a record Rs11.1 trillion rupees through treasury bills and bonds in the July-September quarter, The News reported Friday.

Most planned borrowing for the first quarter of FY24 will be done through Market Treasury Bills with maturities of three, six, and 12 months.

According to the auction calendar issued by the central bank on Thursday, the government will raise Rs8.70 trillion via short-term paper auctions.

The sale of Pakistan Investment Bonds (PIBs) with fixed and floating rates will allow the government to borrow Rs1.68 trillion from commercial banks.

It will borrow Rs450 billion via variable rental rate and Rs270 billion via fixed rate government of Pakistan Ijara Sukuk.

During July-September FY24, T-bills and PIBs worth Rs9.6 trillion will mature.

According to the Ministry of Finance, the federal budget deficit increased by more than Rs3.5 trillion in the first nine months of the current fiscal year due to a sharp increase in spending on debt servicing and defence requirements, which accounted for two-thirds of all expenditures.

Markup expenses have been budgeted at Rs7.3 trillion for FY24, up 85% from a year earlier.

Markup expenses are expected to grow on the back of higher interest rates that have been increased to tame inflation, along with higher borrowings by the government to plug fiscal deficit.

Due to the government’s expanding demand for funding, public debt is accumulating more quickly, and the stalled International Monetary Fund (IMF) Extended Fund Facility (EEF) — which expired on June 30 — dried foreign currency inflows.

Moreover, given poor revenue and high expenditure demands, the government was forced to increase its domestic debt.

The federal government’s debt increased 32% year-on-year to Rs58.962 trillion at the end of May.

At the end of May, the domestic debt surged by 28% year-on-year to Rs37.1 trillion.

Domestic debt rose by 19.2% during the 11 months of FY2023.

Similarly, foreign debt increased sharply by 40% to Rs21.9 trillion in May, while it grew by 31% in FY2023.

Last week, the government reached a staff-level agreement with the IMF for a $3 billion standby arrangement.

The eight-month delay in the agreement, awaiting IMF board approval in July, gives Pakistan some relief as it struggles with a severe balance of payments crisis and declining foreign exchange reserves.

The IMF agreement has reduced the nation’s risk of a short-term default.

Business

Report: Solar is expected to set new records this year.

Published

9 hours ago

Farwa

In 2023, there was an expected 87% increase in growth. This year’s increase is 29% over the previous one, according to the research.

The cheapest source of electricity globally is solar power, and as such, it is expanding quicker than many anticipated, according to Euan Graham, an Ember electricity data analyst.

Ember estimates demonstrate the rapid growth of solar energy: in 2024 alone, new solar capacity will surpass the 540 GW of additional coal power added globally since 2010.

Expected to add 334 GW, or 56 percent of the global total in 2024, China continues to lead the globe in this industry.

According to the survey, it is followed by the US, India, Germany, and Brazil. These five nations will account for 75% of the new solar capacity in 2024.

According to the research, maintaining the sector’s growth required grid capacity and battery storage.

“Providing enough grid capacity and developing battery storage is critical for handling electricity distribution and supporting solar outside of peak sunlight hours as solar becomes more inexpensive and accessible,” the statement stated.

“Solar power might continue to surpass forecasts for the remainder of the decade if these issues are resolved and development is sustained.”

Business

The PSX has resumed operations, achieving a gain of 970 points.

Published

1 day ago

Farwa

The optimistic close at the PSX was propelled by rumors preceding the International Monetary Fund (IMF) executive board meeting on September 25, at which the approval of a $7 billion Extended Fund Facility (EFF) is expected, stated Ahsan Mehanti of Arif Habib Commodities.

Strong economic indicators, such as increasing remittances, escalating exports, and a declining trade deficit, further bolstered investor confidence. Furthermore, the Asian Development Bank’s (ADB) commitment to a $2 billion yearly concessional loan until 2027, along with a robust rupee, significantly contributed to the market’s favorable performance, he stated.

Widespread purchasing at the PSX was noted among blue-chip stocks, with major players like Mari Petroleum (MARI), Engro Fertilizers (EFERT), United Bank Limited (UBL), Meezan Bank Limited (MEBL), and Fauji Fertilizer Company (FFC) recording substantial increases. According to Topline Securities, these stocks collectively resulted in a significant 682-point increase in the index.

Pioneer Cement Limited (PIOC) announced its fiscal year 2024 results, revealing a profits per share (EPS) of Rs 22.79 and a cash dividend of Rs 10 per share. This announcement contributed to the favorable sentiment in the market.

Trading volume surpassed 400.2 million shares, resulting in a total turnover of Rs15.9 billion. Worldcall Telecom Limited (WTL) topped the volume chart, transacting more than 32.2 million shares.

The Large Scale Manufacturing Index (LSMI) demonstrated a year-on-year (YoY) gain of 2.4% in July 2024. This expansion was propelled by multiple critical areas.

Tobacco experienced a significant increase of 90.2%, establishing it as the foremost contributor to the LSMI growth. Conversely, the automotive sector witnessed a substantial increase of 72.0%, indicating robust demand and output.

The transport equipment category experienced an 11.7% increase, signifying robust growth in the manufacturing of transport-related machinery and equipment. The other manufacturing sector experienced a gain of 10.7%, positively impacting the overall LSMI.

Nevertheless, not all industries exhibited strong performance. The leading decliner was the fabricated metal sector, which experienced an 18.4% decrease, signifying a contraction in metal product manufacturing. The electrical equipment industry experienced a substantial decline of 19.4%, indicative of reduced output levels.

In July 2024, the LSMI decreased by 2.1% on a month-on-month (MoM) basis. This fall signifies a minor contraction in manufacturing operations relative to the preceding month, although the favorable year-on-year growth.

Business

As of August 2024, Pakistan’s current account is in surplus.

Published

1 day ago

Farwa

Pakistan’s current account deficit was $161 million as of August 2023, according to figures from the central bank.

The current account deficit for the months of July and August of this year was $171 million, compared to $939 million for the same time in the previous fiscal year.

According to experts, the 40% rise in remittances is the primary cause of the current account surplus.

August saw US$ 2.9 billion in offshore remittances to Pakistan, according to experts.

Comparing July of this year to July of last year, total exports increased by 11.3% YoY to $3.01 billion. In contrast to the $3.08 billion in exports the month before, it decreased by 2.2%.

Compared to the $4.99 billion in imports recorded in July of previous year, total imports increased 12.2% YoY to $5.6 billion. Imports decreased by 1.3% over the previous month.