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FINANCE

Sep 27, 1999

  1. International
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IPPs issue forces IMF to hold $280m

IMF Managing Director Michael Camdessus confirmed on Thursday that the disbursement of $280 million tranche to Pakistan had been "somewhat delayed".

Answering a question at his opening press conference at the IMF/World Bank annual meetings in Washington, he said Pakistan had not fulfilled some of the conditions it had pledged to do.

"There are difficulties with a few conditions. That is why the disbursement which was expected has been somewhat delayed," the MD said.

His remarks came two days after World Bank President James Wolfensohn told his opening news conference that the IPPs issue was an obstacle to the IMF and World Bank lending to Pakistan and unless it was resolved the lending would not resume.

Mr Camdessus said the talks between the IMF and Pakistan would continue next week when we would see the Pakistan authorities during the annual meetings.

"We will see if they can clarify these things so that we can continue extending to Pakistan the support it needs," he said.

The talks he was referring to were with Finance Minister Ishaq Dar who was due here on Thursday to attend the World Bank/IMF meetings. During the IMF's periodic reviews, Mr Camdessus said, it was found that Pakistan had not fulfilled some of the conditions that were pledged.

One of the main conditions was the imposition of the GST but the Pakistan government had tried to resolve it in a peculiar way and it was not yet clear how the IMF would react to the solution found by Pakistan.

The IPPs issue is basically a World Bank issue but since the bank and the IMF work in close coordination, Pakistan has to fulfil all the conditions of both these organizations to get a goahead by the IMF's executive board.

Higher priced bonds to raise funds

The government has raised the denominations and prize money of all series of prize bonds in what is being seen as a desperate government move to raise nonbank borrowings.

The government on Wednesday issued a notification introducing bearer prize bonds in six denominations—from Rs 200 per bond to Rs 40000 per bond. Between them fall the bonds denominated in Rs 750; Rs 1500; Rs 7500 and Rs 15000.

The new denominations of the prize bonds replace the old ones denominated in Rs 100; Rs 500; Rs 1000; Rs 5000; Rs 10000 and Rs 25000.

SBP leaves liquidity in money market

The government on Wednesday borrowed from a fairly liquid interbank market only Rs 5.7 billion through auction of treasury bills against pre-auction target of Rs 20.4 billion.

Bank treasurers said the auction conducted by the State Bank had attracted Rs 21.4 billion worth of bids of which bids worth Rs 5.7 billion were accepted and the rest were scrapped.

The SBP said it sold three-month T-bills worth Rs 1.0 billion at a maximum yield of 8.95 per cent; six-month T-bills worth Rs 4.1 billion at 10.24 per cent and Rs 608 million worth of one-year T-bills at 10.73 per cent.

Hubco

Pakistan's Hub Power Co Ltd (Hubco) will post lower profits and is unlikely to offer a dividend when its directors meet in London on Thursday to approve its annual results, analysts said on Wednesday.

They said the company, locked in a tariff row with the government, was expected to announce lower profits because of higher furnace oil prices — set by the government — and a lowerthan-expected intake of power by state-utility WAPDA, its sole customer.

The analysts also said that a large portion of Hubco's net profit would include an amount WAPDA has not paid and did not intend to because of the tariff dispute.

IBRD gives $1.1m to KPT for project studies

The World Bank has released an interest-free loan of $1.1 million to Karachi Port Trust to finance consultancy studies on four different development projects included in sixth port modernization plan worth $350 million.

KPT sources told that KPT had already hired four foreign consultants with local affiliations who are supposed to work out the specifics of the four projects within six to twelve months.

They said the $1.1 million project preparatory finance offered by the World Bank was part of a $187.75 million loan KPT would secure as foreign currency component of the $350 million required for the sixth port modernization plan. The rest of the amount is to be generated by the KPT on its own.

Net asset value of ICP funds fall

The Net Asset Value of the ICP Mutual Funds showed further erosions during the last one month despite occasional flutters witnessed on the stock market followed by strong institutional support and modest increase in their share values.

Although, shares held in the portfolios of some of the mutual funds, notably in the energy and banking sectors showed smart rallies in line with the general market trend amid news of settlement of power tariff issue with Hub-Power and good corporate announcements. Their positive impact was not evident on their Net Asset Value or the market prices, figures released by the ICP for weekend on Sept 3,1999 showed.

Having most of the leading blue chips in its fold, the 16th ICP Mutual Fund was the sole exception, which finished with a premium of 8.43 per cent, while all others lost in value, according to information available from the ICP.