Forex reserves at $1.526bn
Pakistan's liquid foreign exchange reserves stood at $1.526 billion on
March 4 down from $1.536 billion on Feb 29.
The latest State Bank statement released on Thursday put total approved
foreign exchange reserves at $1.220 billion and balances held abroad around $306 million.
Senior bankers said total forex reserves of $1.526 billion also
includes about $325 million worth of foreign currency deposits of commercial banks with
the State Bank.
Bank for small industries proposed
A joint delegation of Sindh Small Industries Corporation (SSIC) and
Pakistan Small Chamber of Commerce & Cottage Industries (PSCCI) called on the Deputy
Governor, State Bank, A.R. Chughtai and exchanged views on plans to establish a bank for
small and cottage traders.
The chairman PSCCI, Bashir Miandad, told the Deputy Governor, A.R.
Chughtai, that the establishment of a bank to cater to the needs of small and cottage
traders and industrialists, including the investors in medium scale industrial units and
enterprises, was "urgently needed" because the commercial banks were catering
mainly to the needs of large industries.
Pakistan, Japan reach accord on interest rates
Pakistan and Japan have resolved the issues of interest rates on
rescheduled debt worth over $800 million, paving the way for inking debt relief pact.
Official sources told, "negotiation regarding fixation of interest
rates on rescheduled loan has been finalised between the two countries."
With the settlement of issues regarding interest rates, the source
expressed the hope that the rescheduling accord between Pakistan and Japan could be signed
The agreement has to come from Japan, sources continued maintaining, on
receipt of the agreement it would be sent to law division for further vetting.
Debt relief accord valuing over $800 million will be signed between
Pakistan and Japan before April 30 as there was now no pending issues in this regard,
SBP move to keep yield on treasury bills down
The State Bank on Wednesday could raise only Rs76 million worth of loan
for the government from money market against the target of Rsl2 billion.
Senior bankers said SBP had to reject Rs8.4 billion worth of bids for
treasury bills because it wanted to contain the cost of government borrowing amid demands
of higher yield by the banks.
They said the auction of T bills that SBP conducted on behalf of the
government attracted bids worth Rs8.476 billion of different maturities. Of this SBP
accepted Rs76 million bids for one-year T bills at 7.89 per cent and rejected the rest.
As usual SBP gave no reason for scrapping the bids but senior bankers
said it was not willing to sell T bills at higher rates.
After reducing its discount rates from 13 to 11 per cent in late
December 1999that triggered rate cuts by leading banksSBP has kept the yield
on T bills down. It has done this to drive banks to employ surplus funds in the credit
market. But the inter -bank market has remained tight for a host of reasons. Results of
Wednesday auction shows that SBP would not allow any increase in the yield on T bills in
SBP had set a pre-auction target for selling T bills at Rs11.99 billion
which proved to be quite illusive amid tight liquidity conditions in the inter-bank
Senior bankers said the market was so short of liquidity that banks had
to borrow Rs8-10 billion of overnight funds from the State Bank to meet their daily
requirements. On Tuesday banks had borrowed Rsl3 billion from the SBP.
Bankers said a net inflow of Rs10.8 billion due on Thursday might
slightly improve the liquidity conditions but they feared that the present spell of
liquidity crunch may linger through this month.
Call rates up in inter-bank market
People have started taking out large sums of money from banks to buy
sacrificial animals. Senior bankers say this is bound to intensify the liquidity crunch in
the inter-bank market.
The market has been short of liquidity for past two weeks with call
rates hovering above 10 per cent.
On Monday the rates moved in the band of 10.75-10.95 per cent. Senior
bankers said call rates rose as some banks had to borrow short term money from the State
Bank to meet daily requirements.
KESC lost Rs 23bn
The Karachi Electric Supply Corporation (KESC) losses in the 18 months
amounted to Rs 23.128 billion, showing a deficit of Rs 8.332 billion compared to same
period last year owing to high fuel prices and theft of electricity. According to
corporation's report in the six months ended December 31, the revenue, which include
energy sales, recorded a small rise of 9.09 per cent to Rs 13.776 billion compared to Rs
12.628 billion of the corresponding period a year ago. The company has incurred a loss of
Rs 3.809 billion in six months as against Rs 2.960 billion in the corresponding period
last year, showing an increase of Rs 849.295 million.
SBFC recovers Rs700m
Small Business Finance Corporation (SBFC) has recovered Rs 700 million
in the first seven months of the current fiscal calendar against hefty defaulted loans
worth Rs 9.7 billion, reflecting dismal recovery by 7.2% .
Traders fear over Rs1bn losses
The government has been warned of losses of over one billion rupees in
revenues if a proposed duty concession is granted to the raw material used by the
Pakistan Commodity Traders Association (PCTA) has written a detailed
letter to the Secretary of the National Tariff Commission (NTC), apprising him of the
negative consequences of the government move for a reduction of custom duty to only 10 per
cent ad valorem from present 25 per cent on Polypropylene (PP) tape yarn grade material
for manufacturing PP woven sacks.