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Jul 03 - 09, 2000

$533.8m net outflow on WB, IMF debts

Pakistan, in its position as a heavily indebted country notwithstanding, became the net exporter of capital to the tune of $533.8m on account of the debt owed to the World Bank and International Monetary Fund in '99-2000, according to an official source.

With the commitments and disbursements of aid declining, the net inflow of resources from the World Bank amounted to $250m but a result of the debt service payment to it of $514.2m, Pakistan suffered a net negative outflow of $264.2m.

Pakistan received no aid from the IMF in the outgoing financial year. Nevertheless, it had to pay $329m on account of its outstanding debt.

The situation was mitigated somewhat by the fact that the inflow from Asian Development ($423.1m) exceeded the debt service payment of $363.5m by $59.5m. This reduced the net outflow capital to $533.8m.

The net transfers of aid in the decade of the 1990s averaged at $593m per annum. The highest net transfer (after payment of principal and debt) occurred in '91-92. It was $853m. By '96-97, it had turned negative by $34m, thanks to decline in disbursements and growth in debt service liabilities.

In the years preceding debt-rescheduling in '98-99, the debt service snow-balled from $1316m in '90-91 as against disbursements amounting to $2045m to $2353m as against disbursements amounting to $2800m in '97-98. In '90-91, Pakistan was left with $729m or 36% of inflow. As the debt service liabilities soared at the rate of 8.5% per annum, the net inflow six years later (that is, in '97-98) was down to 16% of disbursement.

MoU for $100m ADB loan signed

Asian Development Bank (ADB) has agreed to support establishment of a Microfinance Bank (MFB) and the development of microfinance sector in Pakistan. Through a Memorandum of Understanding (MoU) signed between the visiting ADB team and the Ministry of Finance on Saturday, it was agreed that the ADB would provide a loan of $100m on soft terms for a period of 32 years with an initial grace period of 8 years at an interest rate of 1 to 1.5%.

The MFB will be set up as a private-public partnership and the major part of equity will come from commercial banks. Government will create an Endowment Fund for social mobilization and capacity building among the poor.

The Board of Directors of MFB which will comprise of professionals, with due representation from women will be fully autonomous in running the affairs of the Bank.

Six LPG cos to pay Rs287m dues

Six LPG companies have entered into an agreement with National Accountability Bureau (NAB) by agreeing to pay their dues worth Rs287 million.

These companies reached this out of court settlement after marathon negotiations with the NAB authorities regarding the cases against them for ex-Dhodak allocation. These include Eirad Company Limited, Wak (Pvt) Ltd, Lub Gas (Pvt) Ltd, Mehran Gas Company, Balochistan Gas Company Ltd and Ranja Enterprise (Pvt) Ltd.

Security Papers BMR

The National Bank of Pakistan will open a Rs942 million letter of credit on behalf of Security Papers Ltd for the import of machinery required for BMR of the printing plant of SPL. NBP acting President Muzaffar Iqbal and SPL Chairman Nur Ahmad Shah signed an agreement in this regard here on Tuesday.

SPL Chairman Nur Ahmad Shah told that the BMR would cost Rs1.242 billion of which NBP would arrange Rs942 million by opening LCs for import of machinery: SPL on its part will arrange Rs300 million to meet other expenses relating to BMR of three-decade old printing plant. Shah said after the 18-month BMR the plant would be producing 2000 tonnes of printing paper per year: currently it produces only 1400 tons.

The NBP credit line of Rs942 million will be repayable within six years.

Lending rate falls

Weighted average deposit rate of all banks declined from 8.47 per cent in December 1997 to 7.30 per cent in December 1999. In the same period their weighted average lending rate fell from 16.62 to 14.40 per cent.

Dollar up 35 paisa

The US dollar rose to Rs55.30 and Rs55.35 for spot buying and selling in the open market on Tuesday from Rs54.90 and Rs55.00 on Monday. Bankers and top currency dealers said the rupee fell as people swarmed to buy greenbacks in panic fearing further downward adjustments in exchange rates in the inter-bank market before the close of fiscal year on June 30.

HBL deposit scheme

State-run Habib Bank has launched a deposit raising scheme named Summer Prize Bonanza: From the president to the peons of the bank all can participate in the ongoing scheme that would continue till mid-September.

United Bank Limited

UBL is shown to have swung back to a pretax profit of Rs1.3 billion for the year ended Dec 31, 1999, from a significantly huge loss of Rs6.6 billion a year ago. Operating profit for the year ended Dec 31, 1999 stood at Rs1.4 billion, which reflects phenomenal growth over the profit of Rs133m made a year ago from operations.

Mergers & Acquisitions

PICIC: Pakistan Industrial Credit and Investment Corporation is likely to strike a purchase deal with an Omani group by next month to acquire its shares in Gulf Commercial Bank.

Shell: Royal Dutch Shell said on Friday it will sell its oil and gas exploration operation in Pakistan as the investment was not providing enough return to shareholders.

Union Bank: The State Bank on Friday issued orders about acquisition of the Bank of America business in Pakistan by Union Bank.

Shares acquired: Dewan Salman Fibre Limited confirmed on Friday its acquisition of 200 million majority shares, of Rs. 10 each, in Dhan Fibres Limited at a total consideration of Rs. 4.2 billion.

Modarabas: First Confidence Modaraba has drawn out plan to merge with First Crescent Modaraba, the management companies of the modarabas notified the stock exchange on Friday.

Rs400m surplus

The National Insurance Corporation (NIC) has declared a surplus of Rs 400 million for 1999 and it also contributed Rs 558 million during the year towards income tax.