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FINANCE

Oct 25, 1999

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

Bank loans

Ioannis Karmokolias, senior economist, International Finance Corporation (IFC), Washington feels local Pakistani banks are hesitant to extend long term credit to private parties due to the legal system, which is cumbersome.

Karmokolias made this remark during a meeting held on Friday, with president FPCCI, FazalurRehman Dittu and some managing committee members, here at Federation House.

He said, the banks lack confidence about the repayment of loans in case of defaults as the legal system is very cumbersome and costly.

During the meeting the FPCCI president recommended that IFC should extend line of credit to major commercial banks.

Forex reserves up

Pakistan's foreign exchange reserves rose by $49 million to $1.517 billion on October 16 from $1.468 billion on October 9.

The latest State Bank report shows that on October 16 Pakistan had approved forex reserves worth around $1.250 billion whereas its balances held abroad totalled $267 million.

On October 9 the approved reserves totalled $1.264 billion and the balances held abroad stood around $204 million.

HBL recovery targets

Habib Bank Limited (HBL) will recover more than Rs 14 billion in next two months to reduce the total outstanding loans to below Rs 30 billion by the end of the year, said the bank's president, Mr Shaukat Tarin.

"All the loan defaulters will be treated at par and no latitude will be given to anybody during our campaign to recover bad debts", Tarin added.

He said wilful loan defaulters had really bugged the bankers in the past but now they will not be able to do so.

He said till today, HBL has made a cash recovery of Rs 11 billion from its total debt of Rs 68 billion in the last two years which is 20 percent of the total amount, whereas the combined recovery of National Bank of Pakistan (NBP) and United Bank Limited (UBL) is Rs 13 billion only.

Credit rating downgraded on financial pressures

A major credit rating company on Wednesday down-graded Pakistan's $250 million PTCL one notch, Duff & Phelps Credit Rating (DCR) announced.

It gave the reason as the "increasing financial pressures that could arise out of the current political situation in Pakistan, namely the potential loss of multilateral loan disbursements, as well as the uncertainty regarding the government's ongoing debt reschedulings".

PTCL's Future Telephone Receivables Securitization was down graded from 'BB+' (Double-B-Plus), Rating-Watch-Down to 'BB' (Double-B), Rating Watch-Down, Duff said.

Additionally, from a cash flow perspective the company believes the overall receivables due from AT&T, Sprint, British Telecom, Deutsche Telecom and other international carriers will see some deterioration over the next several years.

PTCL is the exclusive provider of international telephone service within Pakistan and is currently owned 88 per cent by the government of Pakistan.

The PTCL future-flow transaction securitizes the net settlement receivables due from six international carriers.

While these telephone settlements are due from Pakistan as well, the net receivables continue to favour Pakistan because the level of calls originated outside Pakistan is far greater then calls originated within Pakistan.

Instead of remitting these payments directly to Pakistan, the securitization legally obligates these international carriers to make these payments directly into an offshore collection account.

A portion of these collections are then used to repay international investors and the remaining is directed back to PTCL and the government of Pakistan.

KESC to get Rs 3bn as sales tax refund

The Ministry of Finance will reimburse over Rs 300 million to the Karachi Electric Supply Corporation (KESC) as refund of GST, which is not meant to be passed on to the consumers, it is learnt.

Sources said that the ministry has agreed to refund the sum KESC has to pay under GST to its fuel and energy suppliers. The total amount of GST payment to these agencies comes to around Rs 3,150 milion, which is an extra burden on the already cash-starved utility.

The Finance Ministry will refund the GST to KESC at the end of financial year.

Rs1bn collected under USAS

Income Tax collection under Universal Self Assessment Scheme '99-2000 totalled Rs 1bn by Oct 15, the last date extended for depositing from Sept 30, '99.

The total assessees who filed Income Tax, Wealth Tax under USAS for the assessment year were close to one million, it is learnt Satuiday from CBR officials.

Last year, the total amount collected under USAS was Rs 654m. The amount collected this year under the scheme was Rs346m (34.6%) more than the amount collected last year.

Yakub urges banks to support stock market

State Bank Governor Dr Muhammad Yaqub asked five major banks on Saturday to lend their support to the stock market. He also asked the management of Karachi Stock Exchange to make the most of whatever institutional support comes in and restore the confidence of the investor.

SBP chief held separate meetings with the board of directors of KSE and representatives of three state-run and two partly-privatized banks wherein the challenges facing the economy after the military takeover was discussed.

Participants of the meetings said SBP chief told KSE management as well as top bankers that economic fundamentals were strong enough to ward off any problems and asked them to ensure that the capital market regains the lost confidence of the investors.