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