Rs11.4bn mopped up from
The State Bank on Thursday mopped up Rs11.4 billion from a fairly
liquid inter-bank money market by selling treasury bills for three months with 7.0 per
cent cut off at its open market operation.
Bankers said the OMO attracted Rs34.5 billion worth of bids for
outright sale and three-month and five-month repo of T-bills but the SBP only accepted
Rs11.4 billion worth of bids for 3- months and scrapped the rest.
They said as the OMO sucked in much of the liquidity in the market call
rates closed at 12 per cent after oscillating wildly between 6.0012.90 per cent for some
time. On Wednesday the rates ranged between 0.75-2.50 per cent.
Corporates may get cheaper bank credit
Efficient corporates may have easier access to cheaper funds if the
government does not suck in the bulk of more than Rs 150 billion inflow in the inter-bank
market due in August September.
Senior bankers told that Rs 54.30 billion worth of inflow was expected
in August and that of Rs 96.65 billion in September with the maturity of treasury bills
and federal investment bonds.
Senior executives of both local as well as foreign banks said banks
with surplus liquidity would cut their corporate lending rates by 1-2 per cent for 1-6
month tenors. But they said since the demand for credit from the private sector was not
likely to rise significantly they might have to reinvest surplus funds in treasury bills.
Corporate lending rates which differ from bank to bank and from client
to client currently range between 9-13 per cent for 1-6 months.
Senior bankers say they would be able to cut these rates to 8-11 per
cent if the government does not suck in the bulk of Rs 150 billion inflow due in August
$ 150m Tepi loan's second tranche likely by fiscal year-end
Pakistan may receive second tranche of $150 million trade, export
promotion and industry (Tepi) loan from the Asian Development Bank (ADB) by the end of
this fiscal year, sources close to the ADB said on Wednesday.
The sources disclosed that an ADB mission is reaching here next week to
review progress on the loan. "It is a regular visit aimed at the review of the issues
and progress related to the Tepi loan," they said.
The Bank has already given $150 million first tranche of Tepi loan to
Pakistan in March 1999, out of its commitment of $300 million Tepi loan and the second
tranche would be released at the end of 1999-2000.
The Tepi loan is a three-year programme that was launched in March 1999
with the release of first tranche and it is expected to complete within the agreed
framework, they added.
It is learnt that the ADB was fully satisfied with the Tepi loan
progress and its proper implementation by the government. "There is no complication
regarding this project and it is going well," the sources added.
They also said that during the upcoming visit the ADB mission will also
finalise the Insurance Guarantee Scheme (IGS) with the government.
Term sheet on debts received
The government has received the term sheet signed by all commercial
lenders to Pakistan on Monday, clearing the way for $510 million short-term debt
Sources said Finance Minister Ishaq Dar had received the document on
Monday, also signed by the European bank, which was earlier holding back the deal.
According to the agreement, a three-year Trade Maintenance Facility
(TMF) would replace the existing indebtedness of the Government of Pakistan with interest
rates ranging from one to one-and-half per cent over LIBOR.
But Pakistan will have to clear all debt arrears of over $50 million
immediately, accumulating since September, 1998.
Sources said Faysal Islamic Bank of Bahrain had shown willingness to
act as an agent for three-year TMF. Government was earlier facing difficulty to find an
agent bank. Middle Eastern banks have played an important role to broker the deal between
Pakistan and the commercial lenders under the London Club.
Pakistan has sought a total $860 million short-to-medium term debt
rescheduling which also included about $350 million medium-term loan by the National Bank
CIDA provids C$20m aid to Pakistan
The Canadian International Development Agency (CIDA) has agreed to
provide development assistance worth Canadian C$ 20 million to various projects in
Pakistam during next financial year.
The agreement to this effect was signed between CIDA and the Pakistani
Economic Delegation, headed by Mr Zaheer Ahmad, Joint Secretary Economic Affairs Division.
The significant aspect of the development assistance from Canadian
Government is that it has been announced despite the economic sanctions against Pakistan
even though it is mainly in the humanitarian\social sectors.
Banks place $145.7m with SBP in June-July
Commercial and investment banks in Pakistan placed $145.7 million worth
of foreign currency deposits (FCDs) with the State Bank during June 5 to July 31 which
kept foreign exchange reserves at $1.576 billion at end-July.
The SBP revealed the figures in a letter issued to the banks here on
On June 30 the reserves stood at $1.730 billion including the $67
million the banks had invested with the SBP during June 5 to June 30. Thus the reserves
showed a net decline of $154 million within one month.
Senior bankers said banks placed more than $78 million worth of FCDs
with the SBP for one-week, one month and three months in July alone at 4.50 per cent, 4.65
per cent and 4.80 per cent annual interest. Neither the SBP nor the banks themselves gave
the maturity-wise break up of the total placement.