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May 29 - June 04, 2000

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

Forex purchases from kerb to fund project

The State Bank has allowed a leading company engaged in manufacturing of synthetic fibre to purchase from the inter-bank market and remit abroad 30 per cent of Rs 4 billion in foreign currency.

The company would place this amount with an overseas bank for getting confirmed a Rs 4 billion letter of credit it is opening here to import machinery for expanding its synthetic fibres manufacturing facility.

Bankers say the company intends to buy the remaining 70 per cent of Rs4 billion in foreign currency from the kerb market and remit it abroad in instalments through its fresh foreign currency accounts being maintained in Pakistan.

This reflects the growing significance of the kerb market in meeting the foreign exchange requirements of the country.

The State Bank has already purchased more than $1.3 billion from the kerb market in the first nine months of this fiscal year to meet its foreign exchange obligations.

Bankers said the company had finalized the terms of LC with a consortium of banks comprising state-run and private local and foreign banks. They said that the company had approached the State Bank through the consortium of banks to seek permission for remitting abroad 100 per cent of the Rs 4 billion worth of LC in foreign currency to serve as a cash collateral for getting the LC confirmed.

But SBP officials allowed the company in question to purchase and remit abroad 30 per cent of the amount from the inter-bank market. Normally SBP allows 10 per cent cash payment against LC but since the deal between the company and its foreign supplier required 100 per cent advance payment it raised the limit to 30 per cent.

Senior bankers say the consortium of banks that is involved in this deal includes (i) Habib Bank (ii) National Bank (iii) United Bank (iv) Allied Bank and a couple of other local and foreign banks.

FIM to merge with LTVCM

The First Interfund Modaraba (FIM) said it proposed to merge with LTV Capital Modaraba (LTVCM) and the process was expected to be completed by the end of 2000.

SBP calm, forward $ buying up

The tumbling of the Indian rupee on Thursday has fuelled forward buying of the US dollar in the inter-bank market here but in spot transactions the Pak rupee stood firm at 51.90 to a dollar.

Senior bankers said the State Bank kept its unofficial cap on spot exchange rates unchanged at Rs 51.90 per dollar and did not indicate in any way that the cap may be lifted or put at a higher level.

Reserves at $1.368bn

Gross liquid foreign exchange reserves stood around $1.368 billion on May 20 down from $1.416 billion on May 13.

The latest State Bank statement released on Thursday reveals that on May 20 total approved foreign exchange reserves stood at $1.160 billion whereas balances held abroad in cash and short term securities totalled $208 million.

The gross forex reserves include some $330 million worth of foreign currency deposits of banks placed with the State Bank.

Nafees Mills to raise its capital

Legler Nafees Denim Mills Limited — a company on the textile composite sector — proposes to raise its paid-up capital by 43 per cent to Rs359.1 million, from Rs251.6 million "without issue of right shares to the company's existing shareholders".

The major local sponsor, Nafees Cotton Mills Limited would pick up 4 million shares "against share subscription money" while a foreign investor in the company S.p.A of Italy would be issued 6.750 million shares, against their receivables in the company, equivalent to Rs67.50 million.

The Italian stakeholders, who have two of the seven nominees on the company board, is said to have "given their firm and irrevocable consent" to the debt-equity swap.

Big five banks may get Rs7bn loan for Pasmic

The federal government has agreed in principle to issue a subordinated loan of Rs 7 billion to the big five network banks, repayable in seven years with half the mark-up guaranteed by the Pakistan Steel Mills Corporation (Pasmic) and the rest by the GoP.

A restructuring package of loan overdues of Pasmic amounting to Rs 19 billion was said to be finalised by the Governor, State Bank of Pakistan, Dr Ishrat Hussain, and the Secretary-General, Finance, Moeen Afzal.

The package envisages repayment of the principal amount of Rs 12 billion by the Pasmic in 15 years on a mark-up of one per cent above the average treasury bills rate of past six months.

Japan's aid to Pakistan

Japan's Foreign Ministry said on Tuesday that the government has committed up to 953,000 US dollars in grants to Pakistan for tetanus vaccinations for infants.

The ministry also said the government decided to extend about 33.8 million dollars in grants to Laos for improving a national highway, constructing a human resource centre and easing its debt burden.

The aid for Pakistan will fund vaccinations for some 8.2 million people.

The ministry said the grants are for humanitarian purposes.

Move to sell Pak Saudi Fertilizers

Privatization Commission has invited the prospective investors for pre-qualification to participate in the privatization process of Pak Saudi Fertilizers Limited (PSFL).

It is an opportunity for local and foreign investors to own one of the most profitable fertilizer units being operated in the public sector, says a press release issued by PC here on Friday.

The sales turnover of the unit exceeded Rs 3.8 billion during 1998-99 and the share of the company in local urea market has been around 15. Total pretax profit of the unit during 1998-99 exceeded Rs 2 billion and the total profit for last five years has been about seven billion rupees.