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Apr 17 - 23, 2000

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

Credit talks moving at normal pace

Finance Minister Shaukat Aziz said on Thursday that talks with the International Monetary Fund were proceeding at a normal pace and expressed confidence that the Fund would resume credits to Pakistan by June.

He refuted reports that the talks between the Fund and the Pakistan government had failed saying "it's an on-going process" and "no overnight agreements can be made."

Mr Aziz said in Washington the talks between Pakistani delegation and IMF officials would continue in the light of Islamabad's discussions after which another IMF mission would visit Islamabad next month. "Following that IMF board would meet in June to consider Pakistan's package" he added.

Describing talks between IMF officials and Pakistan as "very productive," he said IMF officials have appreciated the programme outlined by the govemment."

"It's a step by step process," Aziz said, adding "I expect positive results."

Debt accord signed with Norway

Pakistan and Norway on Thursday signed US$11.63 million debt accord, while a similar agreement for $814 million with Japan will be signed by the end of this month.

The agreement with Norway was signed, in pursuance of the agreed minutes of Paris Club signed on Jan 30, 1999.

Under this agreement debt service of US$11.63 million due during the period from July 1, 1998 to Dec 31, 2000 on loans contracted up to Sept 30, 1997 will be consolidated and rescheduled for repayment in 30 semi-instalments, commencing from July 1, 2003.

Meanwhile, according to the official sources, the accord with Japan for rescheduling $814 million debt will be signed by the end of the current month.

Pakistan, in January, 1999, had signed an agreement with the Paris Club for rescheduling of US$3.3 billion debt over a period of 20 years.

ADB agrees to offer $2.8 billion to Pakistan

The Asian Development Bank (ADB) will offer $2.8 billion to Pakistan under a new threeyear programme agreed here on Thursday with the government.

However, the programme (2000-2003) will be continued if it is in line with the loan programmes of the International Monetary Fund (IMF). Satisfactory implementation of the programme is another requisite for its continuation.

"Since Pakistan is still under partial international sanctions, our assistance will mainly confine to basic human needs, development of social infrastructure and poverty alleviation", said the leader of the visiting ADB mission, Marshuk Ali Shah.

Briefing reporters, he said the ADB mission had concluded talks with the government officials on offering a new three-year $2.8 billion lending programme. Out of $2.8 billion, 64 per cent of the assistance amounting to $1.8 billion would be in soft loans, he added.

"In addition to that, the ADB will also provide grant technical assistance of some $23 million."

He said the ADB's "Country Programming Mission for 2000" remained in the country for two weeks and concluded its deliberations with the senior government officials and the representatives of all the four provinces on Thursday.

The proposed programme represented a mix of area development programme, education and health, infrastructure development and deepening of the reforms of the capital market.

The new programme also includes assistance for restructuring of the power sector, legal and judicial reforms and rural micro finance.

Mr Shah said the ADB had not provided any funding in 1998 owing to sanctions. "But we offered $403 million, out of $800 million programme meant for 1999."

Private sector borrowing nosedives

The borrower and the banker tell different stories but the theme remains the same: credit flow towards the private sector is not picking up.

Senior bankers say the private sector made a net borrowing of only around Rs28 billion in a little less than nine months of this fiscal year— between July 1, 1999 and March 15, 2000— against the full year target of Rs104.5 billion. In the same period of last fiscal year, the private sector had received Rs46 billion of bank credit.

Is it a sign of banks becoming poor? Not at all. They offered Rs25 billion of net credit to the government during this period. (In the comparable period of last fiscal year the government had retired Rsl8 billion credit instead of making fresh borrowing). So what else is holding down the growth of private sector credit.

'SBP buying, selling dollars for stability'

The Governor of the State Bank of Pakistan, Dr Ishrat Hussain, has said that the central bank has been selling and buying dollars in the market in the interest of stability. This is a function that every central bank performs and is not unusual for the State Bank, he said.

ADBP earns

Agricultural Development Bank (ADBP) has earned Rs.543.364 million profit for the current financial year, an increase of 77 per cent compared to the last year.

NDFC cuts MIC profits

National Development Finance Corporation (NDFC) has lowered the expected annual rates of profit on its Monthly Income Certificates from 17 to 14.5 per cent. An NDFC document shows that in case of premature encashment the rates of profit applicable will be zero per cent before six months; 8.5 per cent for six months and above; 9 per cent for one year and above; 10 per cent for 2 years and above; 11 per cent for 3 years and above- 12.25 per cent for 4 years and above and 13.75 per cent for 5 years and above.

Union Bank strikes deal

Union Bank has struck a deal with the Bank of America to take over its local operations. Sources said the deal was subject to the regulatory approval by the State Bank of Pakistan.

TFC rating

Pakistan Credit Rating Agency (PACRA) has maintained A+ (single A plus) rating for the TFC issue of the Gatron Industries Limited. A PACRA Press release here on Monday said Gatron was improving its capacity utilization and looked much better from what it was in 1998.