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May 01 - 07, 2000

  1. International
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Japan reschedules debt

Japan, one of the Paris Club members, has agreed to reschedule and consolidate Pakistan's $822 million (86.3 billion yen) loan in July 1, 2010.

In this regard, three agreements were signed on by Saddaki Numata, ambassador of Japan to Pakistan, and Nawaid Ahsan, additional secretary in charge of Economic Affairs Division, on behalf of their governments.

An official announcement said that, in pursuance of the agreed minute of Paris Club, signed in January 1999, negotiations were held between the governments of Pakistan and Japan on the rescheduling and consolidation of debt owned by the former to the latter.

Under the agreements, debt service of yen 86.3 billion ($822 million) due during the period from August 1, 1998 to December 31,2000, on loans contracted up to September 30,1997, have been rescheduled and consolidated.

According to the terms and conditions agreed, OCEF (Overseas Economic Cooperation Fund) yen loans (67 billion yen) will be repaid in 20 equal semi- annual instalments, commencing from July l, 2010, at the interest rate of 1.8 per cent per annum.

Similarly, JEXIM ( Japan Export Import Bank) loan ( 5.6 billion yen) will be repaid in 20 equal semi-annual instalments commencing from July 1, 2010, at the interest rate of 2.8 per cent. Likewise, JEXIM's untied loan ( 9.3 billion yen) will be repaid in 30 semi-annual instalments, commencing from July 1, 2010, at the interest rate of 4.9 per cent per annum

While JEXIM guarantees (1.7 billion yen) will be repaid in 30 semi-annual instalments, commencing from July 1, 2010, at the interest rate of 4.4 per cent per annum.

However, it has been clarified that the Japan Bank for International Cooperation (JBIC) was established in October 1999 as a result of merger of the Overseas Economic Cooperation Fund and the Japan Export Import Bank.

$1.2bn ADB loan for uplift plan

Asian Development Bank (ADB) will provide about $1.12 billion to Pakistan for the projects aimed at poverty alleviation over the next three years without waiting for the lifting of international economic sanctions, Mr M.F.W. Zijsvelt, resident representative of ADB stated here on Wednesday.

Speaking at a press conference to present the bank's report, "Asian Development Outlook 2000" (ADO 2000), he said poverty alleviation and economic growth were the two areas that would be the focus of ADB's lending problem in future.

Accordingly, 40 per cent of the $2.8 billion programme loan agreed upon recently between the bank and the government of Pakistan for the period 2000-2003 has been earmarked for removal of poverty.

Govt borrows Rs25bn

The net government borrowing for budgetary support rose to Rs25.4 billion in the first nine months of this fiscal year against its target of retiring Rsl5 billion worth of credit in the entire fiscal year.

Bankers close to ministry of finance say the government made a total borrowing of Rs75 billion between July 1, 1999 and April 1, 2000 but at the same time it deposited Rs50 billion in a special account for foreign debt payment.

The government maintains a debt payment account with the State Bank in which it deposits the rupee equivalent of rescheduled foreign debts.

Foreign investment

The country has attracted a total private foreign investment of $392.8 million in the first nine months of the current fiscal year.

This shows a net increase of $18.9 million over the investment of the same period last year.

The private foreign investment inflow into Pakistan during (July-March, 1998-99) had been recorded at $373.9 million which included $369.2 million in the foreign direct investment (FDI) and $4.7 million in the portfolio investment.

Forex reserves down

Foreign exchange reserves declined by $17 million and stood at $1.461 billion on April 22, while the figure was $1.478 billion on April 15 when the State Bank of Pakistan last released its weekly statement of affairs.

Foreign debt stands around $36.75bn: Moeen Afzal

Pakistan's total foreign exchange liabilities amount to $36.75 billion, Moeen Afzal, Secretary General of the Finance and Economic Affairs Ministry disclosed on Thursday at a pre-budget seminar organized by the Management Association of Pakistan.

Quoting an interim report of the Debt Committee headed by the State Bank of Pakistan Governor Dr Ishrat Hussain he said the bulk of this liability is what he said "proper debt" amounting to $33.4 billion.

The remaining liability of $3.3 billion is government's obligations towards the non-residents and the institutions.

Interest on crop loans cut

Banks will charge 12 per cent interest on their lending to federal and provincial governments for buying of agricultural crops and inputs under a fresh State Bank order.

The State Bank said on Thursday it has cut the rate of mark-up for commodity operations to 12 per cent.

A SBP circular (BPRD no 8) announced that the new rate will be applicable from April 1, 2000.

The circular said that the mark-up for commodity operation was fixed at 16.5 per cent in July 1997. It did not say whether this rate was reduced afterwards but senior bankers said it was. They said until now they were charging 14 per cent mark-up—and not 16.5 per cent—on commodity operation.

The term commodity operation covers lending of money by banks to state-run organisations and provincial food departments for the purchase of agricultural crops like wheat and rice well as for buying of inputs like fertiliser.