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Nov 29, 1999

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

US debt relief for Pakistan: Accord signed

The Clinton administration has consolidated and rescheduled Pakistan's loans amounting to $926 million.

A bilateral agreement was signed here on Friday between Pakistan and the United States to reschedule $926m dollar debt. By doing so the US has followed the decision of the Paris Club which restructured Pakistan's $3.3bn debt on Jan 30 last.

Under this agreement debt service of $926m, being the largest amount in debt relief amount, due during the period from July 1, 1998, to Dec 31, 2000, on loans contracted up to Sept 30, 1997, have been consolidated and rescheduled on the following terms:

a) US AID project, commodity and PL-480 loans will be repaid in 20 equal semi-annual instalments commencing from July 1, 2010.

b) An interest rate of 2.47 per cent per annum will be charged on US Aid loans (Project and commodity), while 2.88 per cent per annum on PL-480 credits.

c) The debt of CCC wheat credits and US Eximbank is to be repaid in 30 semi-annual instalments commencing on July 1, 2003.

d) The rate of interest of CCC credits shall be based on the US treasury average market yields in effect on the date of signature of agreement for 18 years loan maturity plus one half of one per cent. This is estimated approximately 6.25 per cent.

e) For the debt of US Eximbank the rate of interest shall be the per annum rate equal to be one half of one per cent over the interest rate applicable to US treasury short-term borrowing which is in effect on the first date of such interest period. This rate for the period from Jan 1, 1999, to Jan 30, 1999, shall be 5 per cent.

f) For defence and housing guarantee programme debt the repayment is to be made in 30 semi-annual instalments commencing on July 1, 2003. The interest rate for defence loans and housing guarantee will be based on US government cost of borrowing for a comparable maturity in effect at the entry into force of this agreement plus one eighth of one per cent which is approximately 5.875 per cent.

Forex down

The foreign exchange reserves of Pakistan dropped slightly to 1.605 billion dollars on Nov 20 as compared to $1.610 billion on Nov 13.

Treasury bills

The State Bank mopped up Rs 5.5 billion with the outright sale of treasury bills in its weekly open market operation on Thursday. The cut-off yield was calculated at 10.15 per cent. The SBP rejected bids worth Rs 9.950 billion.

Rupee gains

The Pak Rupee on Thursday gained 5 paisa against dollar which settled at Rs 51.85 as against overnight rate of Rs 51.90 in the inter-bank floating market on low demand for the greenback, treasury officials said.

The treasury officials at various banks attributed the fall in demand of dollar to decline in the opening of fresh import letters of credit.

In the kerb market, however, the situation was quite reverse as Pak Rupee lost 8 paisa against dollar in the open currency market to close at Rs 54.20/54.33 for buying and selling.


Merger in modaraba

The planned merger of First Crescent Modaraba (FCM) with Al-Ata Leasing Modaraba (ALM) has been approved by the Lahore High Court, the Corporate Secretary of FCM notified the stock exchanges on Wednesday.

The swap ratio has been determined as 0.9662 certificate(s) of the par value of Rs 10 each in First Crescent Modaraba, to be issued to the certificate holders in Al-Ata Leasing Modaraba, against each certificate of Rs 10 held by them in ALM.

The book closure date for ALM has been notified as between Dec 16 and 22, both days inclusive.

ICP okays dividends

The board of directors of the Investment Corporation of Pakistan (ICP), which met here on Thursday, approved dividends ranging between 15 to 50 per cent on 15 of its Funds.

Among fifteen of the 26 ICP funds (including SEMF) that returned dividends, 9th ICP produced the highest at 50 per cent followed by 8th at 35 per cent; 13th at 25 per cent; 4th and 6th at 20 per cent each; SEMF Series "A" at 18 per cent; 3rd, 11th and 12th at 15 per cent each and 2nd, 7th, 10th, 19th and 20th at 10 per cent each.

German team arrives for debt rescheduling

A 6-member official delegation from Germany arrived here on Monday to hold negotiations for rescheduling an estimated $285 million debt under the Paris Club arrangements, official sources said here.

"The delegation will hold talks with the officials here from Nov 23 to 25 to sign agreement for rescheduling $285 million debt of Pakistan," sources said.

According to the sources, the German Ambassador to Pakistan Hans-Joachim Daerr will also attend the negotiations.

Teams from Norway and Sweden are also scheduled to visit Pakistan for the same purpose by the end of this month, sources further informed.

"The Norwegian delegation is to arrive here on Nov 27, while the officials from Sweden are scheduled to visit Pakistan on Nov 29 and 30 for negotiations and signing agreement on debt rescheduling." An amount to be rescheduled with Sweden is around $ 81 million, the sources added.

Pakistan, in January last, signed an agreement with the Paris Club for rescheduling of $3.3 billion debt over a period of 20 years. 

General Tyre posts 37pc growth in profit

The General Tyre and Rubber Company of Pakistan Limited posted 37 per cent growth in after tax profit for the year ended June 30,1999 to Rs 102.1 million, from a year ago taxed profit at Rs 74.6 million.