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Mar 13 - 26, 2000

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

FCY deposits may be used for local investment

The State Bank of Pakistan has started using the yield on foreign currency deposits placed with it as a tool to force banks to use them for investment in the local corporate and trade sector.

SBP has cut the yield on one-week placement of FCY deposits to 4.25 per cent for the month of March from 4.45 per cent in February forcing the banks to place them in longer tenures.

The yield on one-month and three-month deposits remains intact at 4.50 and 4.80 per cent this month.

Senior bankers close to SBP say the rate cut has come as part of a broader SBP plan aimed at driving banks to use the foreign currency deposits for lending to local businesses or investing in the local industry.

They say it was part of the same plan that SBP had reduced the yield on one-month placement of FCY deposits to 4.50 per cent in February from 4.65 per cent in January.

"We are forced to place foreign currency deposits in one month or three months because the yield on one-week has fallen," said treasurer of a bank. He said the yield on one week deposits was so low that almost all banks would roll them over into one month or three months.

That is exactly what SBP wants the banks to do because it will reduce the one-week liability of SBP giving it more space to move in a tight foreign exchange market. Besides, this would also drive banks to use their foreign currency deposits for lending to local private sector or invest them locally.

Senior bankers close to SBP say banks have so far placed with SBP $322 million 80 per cent of which are in one-week tenure. This very short term nature of these deposits means that the SBP has to keep handy a sum of around $65 million daily in case the banks do not roll over their deposits.

The State Bank has stopped banks from investing fresh foreign currency deposits abroad after June 3, 1999 but it allowed them to employ these deposits within Pakistan or place with the SBP.

Ban on duty-free CBUs in offing

The federal government will not allow duty free import of CBUs (completely build-up units) of any kind of public transport under the new automobile policy to be announced in the first week of May.

"The policy document will cover this point comprehensively allaying fear of the local automobile industry that like the previous government which gave duty waiver to Daewoo, the present set-up may continue such exemptions selectively", sources close to the policy makers told.

NDFC begins sending surplus staff home

The National Development Finance Corporation (NDFC) has decided not to renew contracts of its employees once they expire.

Sources said a dozen employees who had completed their contractual period were informed of this decision on Thursday.

The National Development Finance Corporation, which has a total strength of around 500, will not renew the contracts of nearly 35 to 40 of them.

Mikal named deputy chairman PC

The government has appointed Mikal Aziz deputy chairman of the planning commission.

Mr Mikal has told the government that he would be available after 20th of this month, according to official sources.

Mr Mikal is son of the late Aziz Ahmad, who was foreign minister during the first PPP government.

10pc increase in drug prices likely

The Economic Coordination Committee (ECC) of the cabinet reportedly agreed to the health's ministry's proposal for raising drug prices by 10 per cent at its last meeting.

However, the ECC decided to refer the matter to the cabinet for a final decision, it is learnt.

Official sources told that the committee had considered the proposal of the health ministry for the upward revision of drug prices.

Three-year rolling plan to initiate new projects

The government has decided to start a "three years rolling plan" to complete important existing development projects as well as to undertake new projects in the absence of 9th Five Year Plan.

Official sources told that the 9th Five Year Plan will continue to be held in abeyance and will be replaced by a three-year rolling plan now being finalized jointly by the officials of the ministry of finance and the Planning Commission. The plan was expected to be ready by April this year.

The 9th plan could not be completed despite the fact that two years have already passed due to various reasons including inter-provincial differences and centre/ provinces dissimilarity of views on many issues.

Microsoft office opens

Microsoft, the world software giant, formally launched its operations in Pakistan by opening its office in Karachi.

"We are very proud to announce that our Pakistan office is officially open for business and we have embarked on a long-term commitment to help develop Pakistan's IT industry," Microsoft's regional General Manager, Bahram Mohazzebi told a press conference here.

APTMA for free trade cotton policy

All Pakistan Textile Mills Association (APTMA) has urged the government to take all sectors of the cotton economy into confidence before finalising the new cotton policy.

In a statement issued to the press by chief executive of APTMA Khalid Amin said that it was imperative that the policy of free trade in cotton be continued and any deviation from this would hinder the marketing of the cotton crop.

He said that over the years, all sectors of the cotton economy, including the cotton growers have demanded international prices for their produce and APTMA was surprised that they are now disowning this policy.

ADBP to change credit policy

The Agricultural Development Bank of Pakistan (ADBP) plans to change the existing credit policy as part of its efforts to revamp the organization.

Official sources told that under the new restructuring plan of the ADBP, a lot of changes will be made in the existing credit policy by plugging loopholes. It will be implemented after the approval of the federal cabinet.

New ADBP chairman Muhammad Mian Soomro has been entrusted the job of undertaking the restructuring of the ADBP specially by having a strong and strict monitoring system.