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FINANCE

Dec 06, 1999

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

$512m debt rescheduling deal likely

Pakistan and its creditors will sign a deal on December 12 to reschedule $512 million of Pakistan's debts, Faysal Islamic Bank of Bahrain said on Thursday.

"We are almost in the final stage of signing (the) Pakistan Trade Maintenance Agreement (PTMA). We are expecting to sign the rescheduling on December 12 in Islamabad," FIB President and Chief Executive Officer Nabil Nassief told.

Govt borrows Rs 1.925bn

The government on Wednesday borrowed Rs 1.925 billion from the inter-bank money market through sale of treasury bills of different maturities.

The State Bank said it sold Rs 1.825 billion worth of one-year T-bills at a maximum yield of 10.89 per cent and Rs 50 million worth of bills at 10.15 per cent. It said it raised Rs 25 million more by selling treasury bills of three-month maturity at 8.86 per cent.

The SBP said the auction of the bills had attracted total bids worth Rs 7.925 billion of which bids worth Rs 1.925 billion were accepted and the rest scrapped.

Banks place $271.7m with SBP

Fresh foreign currency deposits placed by the banks and other financial institutions with the State Bank from June to November 1999 totalled $271.7 million at the end of last month.

The State Bank said on Wednesday the net cumulative placement with the State Bank of foreign exchange amounted to $271.7 million on Nov 30. It said foreign exchange reserves (that included the foreign currency deposits placed with SBP) totalled $1.618 billion on the same date.

Accord signed with Sweden

Pakistan has entered into agreement for rescheduling of $93 million Sweden's debt with the conclusion of negotiations with the visiting Swedish delegation to Islamabad.

The visiting team initialled a bilateral agreement for consolidating the debts and its repayment would be made in 30 semi-annual installments commencing July 1,2003 at the interest rate equivalent to six months LIBOR plus 0.5 percent spread.

The agreement would be formally signed when the Kingdom of Sweden approves it.

HBL profits expected to improve: Moody's

Moody's Investment Service says it expects improvement in Habib Bank profitability as a result the steps taken to clean up balance sheet, cost cutting and progressive strengthening of its franchise. "Continuing weakness in the operating environment characterized by low credit demand moderates these positive factors, however" says a Moody's report on Habib Bank.

Financial position of banks to be improved

After making a cash recovery of about Rs6 billion and rescheduling Rs20 billion plus loans during the recently concluded month-long drive against the loan defaulters, the five top banks of the country are well poised to improve their balance sheets, show more income and declare higher profits than the year 1998.

Presidents of four of all these five banks claimed to have improved upon their ratios of nonperforming loans with those of the total advances, and a rough calculation shows that it would come down from over 23 per cent in 1998 to somewhere 20 to 21 per cent in 1999.

For the year 1999, Habib Bank is indicating a profit of Rsl.7 to Rs2 billion as against Rsl.2 billion in 1998. The United Bank hopes to earn about Rs l billion profit as against Rsl33 million operational profit in last year. Both the two partly privatized banks, the Allied Bank and the Muslim Commercial Bank are looking profit beyond Rs500 million up to Rsl billion, while a senior executive of the National Bank of Pakistan hopes to maintain the 1998 profit position.

While these presidents are looking for a further one to two per cent cut on lending rates (from existing 17 and 18 per cent to 16 and 17 per cent) in the foreseeable future, none offered any good news for the savers (saving account holders) who would continue to get, by and large, the same rate of returns, given to them previously with no relief on 10 per cent tax on dividend and levy of Rs4 excise duty on every single leaf of the cheque books. Top bankers hope that the government would indicate a cut in lending rate with a package of supply side measures to be unfolded on December 15 by the present regime.

UBL lending increase

State-run United Bank said on Saturday its fresh lending rose by 130% in '99 till Sept. It said its portfolio of clients comprising 213 industries had a variety of sectors including energy and natural resources, textiles, transport, leather, jute, retail and services and pharmaceuticals and real estate, a UBL press release said.

Rescheduling accord signed

Pakistan signed agreements with Germany and Norway for the rescheduling of its more than 265 million dollars worth of loans, reports said.

The German government has agreed on extension periods of 18 to 20 years with grace periods of three to 10 years on its $254-million loan.

The finance ministry initialled agreements with the Norwegian government for the rescheduling of an $11.63 million loan.

The accord with Germany applies to commercial credit claims, guaranteed by the German government, of $116 million and claims arising from Official Development Assistance (ODA) of $138 million.

The interest rate for the ODA claims is a concessional low rate of 1.75 per cent and the interest rate for the commercial credit claims is lower than the original ones.

The agreement between Pakistan and Norway would be signed as soon as it was cleared by the government of Norway, it was officially announced here.

Under the agreement debt service of $11.63 million would be consolidated and rescheduled for repayment in 30 semi-annual instalments commencing from July 2003.

This amount was due between July 1, 1998 and Dec 31, 2000 on loans contracted up to Sept 30, 1997.