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Nov 08, 1999

  1. International
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  4. Policy
  5. Trade
  6. Gulf


Engro Chemical Pakistan Ltd has achieved the highest ever urea production in a quarter and declared a 2nd interim dividend of Rs.2/- per share.

SBP sells Rs28.35bn T-bills

The government on Wednesday borrowed Rs 28.35 billion from inter-bank money market through sale of treasury bills of different tenures. The bills were sold by the State Bank on behalf of the government.

The State Bank said the auction of T-bills had generated bids worth Rs 40.15 billion of which bids worth Rs 28.35 billion were accepted. SBP said it sold Rs 21.40 billion worth of six-month T-bills at a maximum yield of 10.35 per cent and Rs 6.50 billion worth of one-year T-bills at 10.99 per cent. SBP said it also sold Rs 450 million worth of three-month bills at 8.86 per cent.

Over $1 bn US investment likely  

Companies in the USA are waiting to invest more than $1 billion in Pakistan if the IMF programme is back on track, disclosed diplomatic sources.

Sources told that some companies and individuals are eager to invest in Pakistan, but are looking for risk insurance cover on their investment. Generally the US investors go for two kinds of risk cover, i.e. political and financial, neither was available for Pakistam in the recent past.

The political risk is provided through Overseas Private Investment Corporation (OPIC) of USA, which is a state body.

The financial risk on investment is covered by different insurance companies, which due to poor credit rating of Pakistan were not forthcoming till an IMF programme is in place.

Banks see demand for credit falling

Demand for credit in Pakistan has fallen off despite low interest rates, signalling a slowing of the economy and spewing trouble for financial sector profits, bankers and analysts said on Tuesday.

They said the lack of credit demand from the private sector and uncertainty about government credit requirements would keep Pakistan's banking system liquid and interest rates down.

'These are signals of a weak economy, and as things are going we expect overall demand to remain stagnant for a year or more,' said Jehanzeb Naseer, head of research at investment bankers Jardine Fleming Pakistan Ltd.

Bankers said growth in credit demand had fallen since the May 1998 nuclear tests which resulted in economic sanctions.

Banks responded earlier in the year by cutting their prime lending rates by three percentage points to as low as 15 per cent.

Analysts said another indication that overall demand in the economy was falling was the inflation rate.

Consumer prices rose 3.35 per cent in the 12 months to September, the lowest rate of growth in 12 years.

Analysts said more disturbing was that credit demand from textile and cotton traders, which usually soars from September with the start of the cotton-picking season, has been much lower than in previous years.

Pakistan expects a bumper cotton crop of up to 11 million 375-lb bales in fiscal 1999/2000 that starts in July, more than two million bales more than the previous year.

The cotton and textile industries not only contribute a major share of Pakistan's gross domestic product, but also account for more than 65 per cent of its export earnings.

Rupee gains 10 paisa in kerb

The Pak Rupee gained 10 paisas against US dollar in the kerb market Tuesday as demand for dollar subsided further, dealers said.

The dollar was being bought and sold at Rs 54.15/54.20 as compared to overnight rates of 54.25/54.30 a day earlier.

Rs 15,000 bonds fetch Rsl2bn

The newly introduced Rs 15,000 denomination prize bonds have attracted Rs 12.22 billion as investment from people across the country.

According to statistics obtained here on Monday from the State Bank, these Rs 15,000 prize bonds were issued on Oct 1 and till Oct 31, this denomination's bonds worth Rs 12.22 billion were sold out.

The Rs 750 denomination prize bonds, put on sale from Oct 15 attracted purchasings worth Rs 2.97 billion till Oct 31.

The Rs 750 prize bonds were in such a demand that State Bank had to arrange additional supplies.

$ 7.3 billion withdrawn from FCA

The foreign currency depositors withdrew or converted into dollar bonds an amount of US$7.317bn till Oct 31 from their foreign currency accounts which were frozen on May 28, 1998.

The US $ 2.3 B are now left in the old foreign currency deposits according to official statistics obtained here Monday.

According to a break-up, the depositors have withdrawn US $ 5.701 B in rupee terms and converted US $ 1.616 B in special dollar bonds.

The foreign currency deposits had amounted to US $11 B and out of that US $1.4 B are swap funds.

Banking sources attributed the speedy withdrawal of funds from old accounts to its diversion to the prize bonds the State Bank of Pakistan introduced in the first week of September with a revised denomination.

Forex reserves up at $1.596bn

The State Bank said on Saturday Pakistan had foreign exchange reserves worth $1.596 billion on Oct 30. It disclosed the figure to the banks in a circular letter issued to inform them about the rates of return on placement of foreign currency deposits in November.

On Oct 16, four days after the military take-over, forex reserves totalled $1.517 billion.

HBL to close small branches in UK

State-run Habib Bank Ltd (HBL) said on Monday it would be closing some of its existing smaller branches in the United Kingdom but it did not disclose their number.

An HBL press release said the closing of smaller branches would enable the bank to increase its focus on improving and upgrading a more central or main branch for each region and to meet the requirements of Financial Services Authority (FSA). The Authority is the regulator for the banks in the UK.