FCY deposits may be used for
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
"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
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
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
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.