Pakistan: Key Economic Indicators getting from bad to worse

Current account deficit (CAD) during January 2023 was reported at US$242 million as compared to US$290 million in December 2022.

Trade deficit during the month under review was down 11%MoM to US$1.7 billion.

Imports dropped by 7% to US$3.9 billion and exports were down 4% to US$2.2 billion.

A 17%MoM decrease of in CAD is mainly attributed to lower trade deficit of goods.

Remittances declined by 10%MoM to US$1.9 billion. This is likely due to global economic slowdown and difference between Interbank and Open Market/Kerb rates.

Foreign exchange reserves of the country in January 2023 were down 23%MoM to US$8.7 billion.

The reserves held by State Bank of Pakistan (SBP) were down 45%MoM to US$3.1 billion.

CPI inflation in January 2023 surged to 27.6% as against 24.5% in December 2022.

Pakistan total debt & liabilities in 2QFY23 clocked in at 85.18% as % of GDP vs. 84.28% same period last year.

On other hand, external debt & liabilities increased to 38.15% in 2QFY23 vs 37.62% in 2QFY22.

 

Israeli-linked ship attacked in Arabian Sea

An Israeli-linked tanker was slightly damaged in an attack last week by an airborne object while sailing through the Arabian Sea, the ship's manager confirmed on Saturday.

Regional defence and security sources suspect the assault was carried out by Iran, which did not comment on the incident. Tehran has rejected accusations it was behind similar attacks in the past few years.

The Liberian-flagged Campo Square had no cargo when it was hit late at night on February 10, about 300 nautical miles off the coasts of India and Oman, the manager said in a statement.

Shipping databases linked the tanker to Zodiac Maritime, which is controlled by Israeli shipping magnate Eyal Ofer.

"We can confirm that both the vessel and crew are safe and proceeding as per planned passage. There is minor damage to the vessel. We have made the necessary notifications to the relevant authorities," the manager said.

The attack came during antagonism between Iran and the West over Tehran's nuclear activity and its supply of arms - including long-range suicide drones - for Russia's war in Ukraine, as well as months of anti-government demonstrations at home.

British maritime security company Ambrey Intelligence said unmanned aerial systems had attacked two tankers and one bulk carrier in the Arabian Sea and assessed that Tehran had mounted the attack.

Two of the merchant vessels were Israeli-owned, it said, and one was Emirati.

India invokes emergency law to facilitate coal based power plants to up output

India on Monday invoked an emergency law to facilitate power plants that run on imported coal to maximize output ahead of an expected record surge in power usage this summer, according to an internal power ministry notice, reports Reuters.

Many of India's power plants that use imported coal, including those owned by Adani Power and Tata Power in the western state of Gujarat, have not operated at full capacity recently because they have found it difficult to compete with power generated from cheap domestic coal.

In the notice sent to all imported coal-based power plants, the ministry said it expects them to operate at full capacity and sell power to buyers on exchanges. India's imported coal plants have a total capacity of 17 gigawatts.

The directive comes into effect on March 16, giving plants the time to import coal ahead of the expected surge in consumption. It would remain valid till June 15.

The variable tariff for these plants will be fixed by a panel appointed by the government, the notice said, adding that the panel will use the index with lowest cost of imported coal for calculating the variable tariff for every plant.

The ministry expects a peak demand of 229 gigawatts in April and to address that India would need to operate thermal capacity of 193 gigawatts that month.

India expects its power plants to burn about 8% more coal in the financial year ending March 2024, with increased economic activity and erratic weather to continue to boost growth in demand for power.

The emergency law has been invoked for the second time in as many years.

 

Republicans urge Biden to veto anti-Israel UNSC resolution on Monday

Republican members of Congress are calling on President Joe Biden to veto an anti-Israel resolution expected to be brought on Monday to the United Nations Security Council and to unequivocally declare that his administration opposes such unilateral moves at the international forum.

“As the UN Security Council once again moves to consider another one-sided, biased, anti-Israel resolution, it is imperative that the United States maintain its position that only direct negotiations between Israelis and Palestinians can yield progress,” Speaker of the House Kevin McCarthy wrote in a letter to the president that was also signed by Steve Scalise, the Majority Leader and House Foreign Affairs Committee Chairman Michael McCaul.

Members of the Security Council have been negotiating a draft resolution on Israeli settlements in the West Bank drafted by the United Arab Emirates in coordination with the Palestinians.

A vote on the resolution is expected to take place on Monday amid Palestinian fears that it would be vetoed by the United States.

Senator Tom Cotton of Arkansas wrote, “If the UN Security Council takes action on Monday to punish Israel, President Biden should stand beside them and block the ridiculous, politically-motivated measure.”

Congressman Max Miller, a new Jewish republican from Ohio, wrote, “This resolution is the UN’s latest attack on Israel’s sovereignty. Biden must veto this measure in the Security Council and reaffirm that the United States will always stand beside our ally.”

On Saturday, Secretary of State Antony Blinken called Palestinian Authority President Mahmoud Abbas to discuss the upcoming Security Council session on the situation in the Middle East. 

During the phone call with Blinken, Abbas stressed the need to compel Israel to stop all its unilateral measures, including settlements, house demolitions, incursions into cities, villages, camps and Al-Aqsa Mosque, and killings, the PA’s official news agency Wafa said.

Senator Bill Hagerty of Tennessee said, "Rather than focus on grave threats posed by China, Russia, Iran and North Korea, the UN continues its anti-Israel obsession. Biden should stand with Israel and veto this resolution. Do not repeat the shameful Obama-Biden abstention on UNSCR 2334 in December 2016."

And Senator Jim Risch of Idaho said, “The Biden Administration must use its veto in the UN Security Council to defend our ally number one srael. This resolution will not lead to peace and only furthers anti-Israel actions at the UN."

 

Russia and Ukraine major source of wheat for Bangladesh

According to reports, Russia and Ukraine have become major source of wheat for Bangladesh after India’s ban of its shipment, thanks to a United Nations and Turkey brokered grain deal that allowed moving the cereal from Ukraine over the Black Sea.

Importers said they started importing wheat from both countries a couple of months after the deal in July last year which enabled them to offset a shortfall in imports resulting from India’s ban in May last year.

The neighbouring country had become a major source of wheat for Bangladesh as businesses found imports cheaper and convenient due to the shorter shipment period, low freight cost and geographic proximity, said the US Department of Agriculture in a report on Bangladesh earlier.

The report said India accounted for 67% of Bangladesh’s total wheat import, followed by Canada, Ukraine, Australia and Russia in marketing year 2021-22.

“Our imports from the Black Sea region came almost to a halt for several months after the war began,” said Abul Bashar Chowdhury, chairman of BSM Group, a Chattogram-based commodity importer.

“Now, Ukraine and Russia are gradually becoming a major source for low protein wheat,” he said.

Bangladesh produces around 1.1 million tons of wheat against an annual requirement of 7.5 million tons, meaning the rest is imported.

In fiscal year 2021-22, the country imported more than 4 million tons of wheat. And between July 01, 2023 and February 15, 2023 this fiscal year, the import amounted to 1.7 million tons in total, according to data by food ministry.

Russia, Ukraine and Canada were now major sources of the grain after the Black Sea deal, said Md Aminul Islam, managing director of Nabil Group, one of the largest importers of wheat.

Overall import from the three countries would be around 1.4 million tons so far this fiscal year, he said.

“Availability of wheat is not an issue now. There are supplies in the international market,” he said.

“The problem is now opening of letters of credit for banks’ lack of interest amid dollar shortage. Wheat imports will increase if this problem is over,” Islam said.

The Black Sea Grain Initiative brokered by the United Nations and Turkey last July allowed grain to be exported from three Ukrainian ports, reports Reuters.

The agreement was extended by a further 120 days in November and is up for renewal again in March, it says.

However, it takes longer now for importing wheat from Ukraine because of several checks on the way, said Taslim Shahriar, senior assistant general manager of the Meghna Group of Industries.

“It will be great if the war ends,” he said.

He said the situation in the Ukraine-Russia region was important for Bangladesh as the region was a key source of wheat.

So, further extensions of the Black Sea grain deal are vital for a smooth supply of wheat to Bangladesh, Taslim added.

Negotiations will start in a week on extending a United Nations-backed initiative that has enabled Ukraine to export grain from ports blockaded by Russia after its invasion, said Reuters on Friday quoting a senior Ukrainian official as saying.

The Black Sea Grain Initiative created a protected sea transit corridor and was designed to alleviate global food shortages, with Ukraine’s customers including some of the world’s poorest countries, said Reuters.

Developing nations such as Somalia and Eritrea also rely heavily on imports of wheat from Russia, it said.

“Renewal of the deal is important for us. Otherwise, it will be a problem for us too,” said Islam of Nabil Group which imported nearly 350,000 tons of wheat so far this year.

The company imported 1.8 million tons of the grain in 2022, he added.

 

Israeli envoy expelled from African Union summit

As African leaders gathered on Saturday in the Ethiopian capital for the two-day African Union (AU) summit, aiming to jumpstart a faltering trade deal and focusing on challenges of armed conflict and food crisis, an Israeli diplomat was expelled out of the AU assembly.

An AU official told AFP that the diplomat who was asked to leave had not been invited to attend the meeting, with a non-transferable invitation only issued to Israel’s ambassador to the African Union, Aleli Admasu.

“It is regrettable that the individual in question would abuse such a courtesy,” the official said.

While condemning the severe expulsion of a senior diplomat from the AU summit, Israel accused arch-foe Iran of orchestrating the move with help from Algeria and South Africa.

A video circulating on social media shows guards escorting the Israeli foreign ministry’s deputy director general for Africa, Sharon Bar-li, out of the AU assembly taking place in Addis Ababa.

A spokesman for the Israeli foreign ministry described the incident as severe, noting Bar-li was an accredited observer with an entry tag, a claim denied by an AU official.

The ministry spokesman said it was saddening to see the African Union taken hostage by a small number of extremist states like Algeria and South Africa, which are driven by hatred and controlled by Iran.

African states should oppose these actions, which harm the African Union movement and the entire continent, the spokesman insisted.

When asked about Israel’s accusations that South Africa and Algeria were behind the move, Vincent Magwenya, spokesman for South African President Cyril Ramaphosa, told AFP at the summit, “They must substantiate their claim.”

Israel attained observer status at the AU in 2021 after decades of diplomatic efforts, drawing protest from powerful members including South Africa and Algeria, which argued that it flew in the face of AU statements supporting the Palestinians.

Last year, unease flared over the accreditation of Israel as an observer at the AU, with the Pales­tinians, who also have an observer status at the body, urging it to be withdrawn. The 2022 summit suspended a debate on whether to withdraw the accreditation and a committee was formed to address the issue.

The row erupted when Moussa Faki Mahamat, head of the African Union Commission, accepted Israel’s accreditation, triggering a rare dispute within a body that values consensus. The AU has not said whether Israel’s status would be up for discussion at this year’s summit.

Israel previously held observer status at the Organisation of African Unity (OAU), but was long thwarted in its attempts to get it back after the OAU was disbanded in 2002 and replaced by the AU.

Most of the summit’s sessions will be held behind closed doors at AU headquarters. But eyes will be on the bloc to see if it can achieve ceasefires in the Sahel and the eastern DRC where the M23 militia has seized swathes of territory and sparked a diplomatic row between Kinshasa and Rwanda’s government, which is accused of backing the rebels.

At a mini-summit on Friday, leaders of the seven-nation East African Community called for all armed groups to withdraw from occupied areas in the eastern DRC by the end of next month.

“We cannot walk away from the people of DRC; history will be very harsh on us. We must do what we have to do,” Kenya’s President William Ruto told the meeting.

Created in 2002 following the disbanding of the Organization of African Unity, the AU comprises all 55 African countries, with a population of 1.3 billion people.

While the bloc has been credited with taking a stand against coups, it has long been criticized as ineffectual.

UN Secretary-General Antonio Guterres, who is visiting Ethiopia, addressed the assembly while Rwandan President Paul Kagame presented a report on the reform of AU institutions. Palestinian leader Mahmud Abbas was also expected to deliver a statement, according to a draft agenda.

Iranian heavy crude oil price rises over 3% in January 2023

Iranian heavy oil price increased by US$2.45 in January 2023 registering slightly more than 3% increase as compared to December 2022, according to OPEC’s latest monthly report published on February 14, 2023.

The Iranian heavy crude oil price reached US$81.56 per barrel in the first month of 2023, compared to US$79.11 per barrel in December 2022.

According to the report, the country’s average heavy crude price came to US$85.59 in 2022.

The average price of Iranian oil in the first month of 2023 registered a decrease of US$4.03 compared to the same month in 2022. The price of Iranian heavy crude in the first month of 2022 was US$85.59 per barrel, at an average.

The report put Iranian crude output for January 2023 at 2.557 million barrels per day (bpd) indicating a 22,000 bpd decrease as compared to the figure for the previous month.

Based on OPEC data, the country’s average crude output in the last quarter of 2022 was reported at 2.567 million bpd indicating a nearly 2,000 bpd rise as compared to the average figure for the year’s third quarter.

OPEC basket price also increased by US$1.94 or 2.4 percent to settle at US$81.62 a barrel in January 2023 as compared to the earlier month.

Iranian heavy crude oil prices had followed an upward trend from the beginning of 2022 up to June, however, following the increase in production by OPEC members and the fading of the pandemic impacts on the global economy, the prices started to fall in late 2022.

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

Earlier this month, Iranian Oil Minister Javad Oji said the country’s income from the sales of oil, natural gas, gas condensate, and petroleum products in the first 10 months of the current Iranian year increased by 40% as compared to the same period last year.

Addressing an open session of the parliament on February 01, Oji said that 70 million barrels of gas condensate were exported in the mentioned time span.

According to the official, the goals set in the current year’s national budget bill for the exports of oil and gas will definitely be achieved by the yearend.

He noted that the National Iranian Oil Company (NIOC) has already sold enough oil and gas and petroleum products to realize the budget goals by 100%, however, collecting the revenues needs more time.

Back in January 2023, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.