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Oct 18, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf


Net Asset Value of ICP Mutual Funds Fall

This has reference to a news item published in PAGE dated September 27 — October 3, 1999 on page 3 with the caption "New Asset Value of ICP Mutual Funds Fall".

The news item has based its information on the data provided on 3rd September 1999, which has been compared with the data a month earlier. In the news item, it was mentioned that smart rallies in Energy Sector and Banking Sector were not evident in the Net Asset Values of our Mutual Funds. We may mention here that during this period the KSE 100 Index fell by 8% from 1266.71 points to 1166.40 points, whereas the NAV of our Mutual Funds decreased by only 5.4% (Average).

Rsl6.2bn collected

The Central Board of Revenue collected only Rs 16.2 billion in Withholding Tax in the first three months, against a target of Rs 20 billion for the quarter and Rs 85 billion for the financial year.

In the first quarter of 1998-99, the CBR had collected Rs 17.9 billion (for the year Rs 72.5 billion), and the shortfall against the last year's same quarter's WT collection is Rs 1.9 billion (9.5%)

SBP buys bills

The State Bank of Pakistan (SBP) Thursday conducted two-way Open Market Operation (OMO) and purchased bills worth Rs 8 billion.

The bills were that of l-week and l-month reverse repo with a cut-off yield of 10.50% and 10.25% respectively. The SBP, however, rejected bids worth Rs 2.4 billion for market treasury bills.

Forex reserves

Pakistan's forex reserves stood at $1.468bn on Oct 9, said a central bank report Thursday.

A weekly report of State Bank of Pakistan (SBP) said the approved foreign exchange reserves in the country were estimated at $1.264 bn while approved foreign exchange reserves held outside stood at $ 203.514m.

Govt's negative bank borrowing short of target

The government failed in keeping its negative bank borrowing at the revised target of Rs 62 billion in 1998-99 as actual negative borrowing stood at Rs 25 billion at the end of the last fiscal year.

Sources close to the ministry of finance told that in the last fiscal year the government placed Rs 93.4 billion in its special account for debt retirement whereas it borrowed Rs 68 billion from the banking sector. Thus the year closed with a net negative borrowing of Rs 25.4 billion.

Former Finance Minister Ishaq Dar had told the nation in his budget speech on June 12 that the Government had retired Rs 62 billion worth of bank credit in fiscal 1998-99. The budget documents also put the negative bank borrowing of the government at Rs 62 billion in 1998-99. But sources close to the ministry told that the actual government borrowing stood at Rs 68 billion at the end of June 1999 against placement of Rs 93.4 billion by the government in its special debt retirement account with the State Bank.

Thus in financial jargon the contraction in money supply was Rs 25 billion in fiscal 1998-99 against targeted Rs 62 billion. "This would result in higher inflation," said a senior executive of a state-run bank.

Sources close to the ministry of finance say multilateral agencies have taken note of the slippage in keeping the negative borrowing at the desired level adding that this was one of the factors impeding immediate release of the fourth tranche of a $1.56 billion loan.

For fiscal 1999-2000, the government had fixed the negative bank borrowing target at Rs 13.6 billion.

The analysts say the release of fourth tranche of an IMF loan may be further delayed for the same reason. Sources close to the ministry of finance say during the first quarter of the current fiscal year the government borrowed around Rs 20 billion from the banking system.

Rs3.2bn sale of new prize bonds

Government has attracted Rs3.2bn in 11 days with the sale of freshly introduced Rs l5,000/- denomination prize bond, the Central Bank officials said.

The issuance of Rsl5,000/prize bond begin from Oct 1 and till Oct 11, the branches of State Bank of Pakistan (SBP) from across the country reported sale of Rs3.2bn worth of these bonds.

These bonds, meant to phase out Rs10,000/- denomination bonds, are currently being sold only through the designated branches of SBP.

The higher denomination bonds were introduced by the Government at the end of last month by the government. The new bonds will be issued in the denominations of Rs 200/-, Rs 750, Rs 1,500, Rs 7,500/-, Rs 15,000 and Rs 40,000/- bearer type.

These bonds are replacing the bonds with denomination of Rs 100, Rs 500, Rs 1000, Rs 5000, Rs 10000, Rs 25,000/- respectively.

All the old bonds are supposed to be encashed by holders by June 30, 2000 and that no draw will be held for these bonds after Dec 15, '99. The minimum holding period for these bonds shall be two months.

Rs550m Swiss loan for small enterprises

Switzerland will provide Rs 550 million during the next fiscal year to develop small and medium enterprises in Pakistan.

The money will also be spent for priority areas such as the humanitarian sector and the development of national resources.

This was decided at an Annual Bilateral Consultations for development assistance 1999 between Pakistan and Switzerland in the Economic Affairs Division.

The discussions were held in a cordial atmosphere and some of the issues relating to development projects were discussed and thrashed out in detail.

Foreign investment declines in first quarter

Foreign portfolio investment has declined by more than 100 per cent and foreign direct investment decreased by 70 percent during first three months of the current fiscal as compared to the same period last year.

Sources said that the UK, the main contributor of foreign investment in Pakistan, has withdrawn its portfolio investment of $ 47 million and direct investment of $ 40 million during first two months of the current fiscal.

The portfolio investment was $ 27.3 million in the year 1998-99 and direct investment was $403 million while the investors from 12 foreign countries have withdrawn their portfolio investment from Pakistan. The country has received only more than $30 million during first three months of the current fiscal.

Sources said the investment from the USA was around $25 million from UAE less than $15 million and from Japan was $ 12 million. The investment from Germany, France, Hong Kong, Italy, Saudi Arabia, Canada, the Netherlands and Korea and some other countries was $30 million which shows poor sign of investment.

The USA and the UAE have invested only $15 million in portfolio investment during first three months of the fiscal.