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POLICY

Jan 03 - 16, 2000

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Rs400m ADB aid to schools suspended

The ADB has suspended its Rs400 million assistance to an education project under which 140 primary schools of Balochistan would have been upgraded to middle level, following reports of misappropriation of funds by officials.

The aim of the project was to make 7,700 students of those girls schools continue education at middle level. By upgrading their schools, the ADB planned to reduce girls dropout rate at middle level in Balochistan where female literacy rate is lowest in the country.

Sources in the federal education ministry said the assistance had been suspended for a few months and the provincial government had been asked to remove "bottlenecks" immediately so that the suspended amount could be released.

SBP says data on defaulters incomplete

The State Bank of Pakistan (SBP) has said that the data submitted by banks against defaulters was not in accordance with its requirements.

"Data submitted is not in accordance with the prescribed format. Information is not placed in correct column and key data like NIC number, address, father's name etc is missing," observed State Bank in its letter to heads of all chief executives of banks and development finance institutions (DFIs).

Credit rating

The Pakistan Credit Rating Agency (PACRA) has assigned a mutual fund rating of AA(f) (double A) to the Unit Trust of Pakistan (UTP).

The rating, a PACRA announcef ment said, denotes the ability of the fund to consistently outperform, its peers with strong capacity to respond to future opportunities or stress situations.

PACRA has recently developeds the rating methodology for mutual funds with the objective of providing an independent opinion on thes financial strength of a mutual fund.

All govt contracts remain unaffected

The government announced on Wednesday that all its financial commitments and obligations to the foreign governments, banks, financial institutions and other entities remained unaffected by the judgment of the Shariat appellate bench of the Supreme Court on Riba.

The government made it clear that recovery proceedings currently in hand either in courts or by the creditors would remain unaffected.

In its first official reaction to the SC judgment passed on Dec. 23, the government said all banking transactions, contracts, agreements, commitments, obligations, investments in and by banks and returns thereupon were completely protected.

"All laws currently applicable to financial contracts, agreements transactions, etc. will continue to remain in force as before until new laws are framed by the competent authority to replace the old laws for which a timeframe has been given by the judgment itself, which is June 2001."

The government further said: "The commitments of the federal government to individuals, organizations, banks or other entities, in terms of their investments and returns, are fully protected and will continue to remain so in future until these are modified appropriately in the light of the recommendations of the commission for transformation."

It added that financial relations of the government with the State Bank and those of and between provincial governments and local authorities would be carried out on the same lines as at present. Appropriate changes in these arrangements would be recommended by the commission for transformation.

The standards currently applicable to individuals, firms corporations, organizations and other bodies for accessing the money and capital markets would remain in force until these standards were amended by the law.

Amendment to NAB ordinance on the cards

The government has decided to amend the National Accountability Bureau Ordinance, making it obligatory for the public office holders to explain that statutory regulatory orders (SROs) or directives issued by them are in the larger interest of the public.

Prosecutor General Accountability (PGA) Farouqe Adam Khan told that by amending the ordinance more "teeth" would be provided to the NAB to give effect to the law for which it was promulgated. The amendments to the NAB ordinance 1999 are likely to be made in the next twenty-four hours.

Foreign debt to be retired thru sale of state units

Finance Minister Shaukat Aziz will preside over a high-level meeting on Tuesday to finalize the government's new strategy for disinvestment of state enterprises.

The ministers for petroleum, industries, commerce and senior officials would be attending the meeting to approve the new road map for the privatization.

The chairman of the Privatization Commission, Saleem Altaf told "We are proposing a piece of legislation to make sure that the sale proceeds of the privatization are used only for debt retirement and not for development purposes".

In an interview here on Monday, he said the military government has decided to retire 65 per cent of the most expensive short term external debt through privatization, shortly.

SDR 673m received from IMF

Pakistan has received from the IMF a total of SDR 673.8m out of Structural Adjustment Facility (ESAF) and the stand-by arrangements by the end of December 1999.

Negotiations to commence in the second week between the Fund experts and the Islamabad Public Finance managers would be focusing on modalities for release of SDR 379.11m (ESAF plus EFF) money committed but still withheld by IMF for 'nonfulfilment of conditionalities' by Pakistan, say sources.

Out of 682m SDR (Special Drawing Right) approved under ESAF on Oct 20, '97, with the expiry date of Oct 19, 2000, a sum of SDR 265.37m has so far been drawn by Pakistan. Out of SDR 454.92m, with the same approval and expiration dates, a sum of SDR 113.74m has been drawn so far. The total drawn amount so far from the stand-by arrangement approved at SDR 562.59m on Dec 13, '95, is SDR 294.69m.