. .

Aug 28 - Sep 03, 2000

External debt reaches $29.52 billion, says report

Pakistan's external debt on May 31, amounted to $29.520 billion of which $23.611 billion was long-term and $1.484 billion short term, says a report on the economic situation sent by Pakistan to the international donors this week.

The foreign exchange reserves stood at $1.352 billion at the end of June, against $1.729 billion on June 30, 1999, showing a decrease of 21.8 per cent. The exchange rate (Pak rupee-dollar Interbank) for June averaged Rs52.05, showing a depreciation of 0.7 per cent over the exchange rate of Rs51.70 in June 1999. Foreign currency account situation is reflected by the fact that $68.7 million were converted into rupee and special dollar bonds from frozen FCA in May. Of this, the conversion in rupee amounted to $42.3 million (61.6 per cent) and $26.4 million were converted into special dollar bonds (38.4 per cent).

The balance under FCA scheme is constantly decreasing. In May, the balance amounted to $3.055 million, of which the resident accounts were $1.374 billion (45 per cent) and the remaining 55 per cent belonged to non-resident accounts.

Workers' remittances during 1999-2000 amounted to $983.7 million against $1.060 billion in the previous year, indicating decline of 7.2 per cent.

It says that the current account deficit during July-April 1999-2000 narrowed by 36.1 per cent to $1240 million over the level of $1940 million of the comparable period last year. This was caused by a reduction in trade deficit (FOB) and substantial rise (42.9 per cent) in private transfers.

Foreign private investment during June-July 1999-2000 amounted to $543.4 million as against $449.6 million last year, showing an increase of 8.8 per cent. Of this, foreign direct investment has declined by 0.5 per cent (from $472.3 million to $464 million) and portfolio investment registered an inflow of $73.5 million. Almost 87 per cent FDI came in the power, oil and gas, chemical, pharmaceutical and fertilizer, construction, food and beverage, transport, storage and communication.

$418m pacts signed with IDB

Pakistan on Thursday signed a $385 million financing agreement with the Islamic Development Bank for purchasing oil, an official said.

At present, Pakistan is spending almost $200 million a month for the purpose.

The agreement, signed by Finance Minister Shaukat Aziz and IDB president Dr Ahmad Mohamed Ali, will ostensibly ease pressure on the depleting foreign exchange reserves which, according to the State Bank, stand at $1.1 billion. The reserves include $452 million of foreign currency deposits.

The interest rate on the loan will be 1.05 per cent over the London inter-bank offering rates.

Non-performing loans rise

An increase of 23.2% has been recorded in non-performing loans (NPLs) during 1999-2000, as against the NPLs awarded to private sector in 1998-99, says a report sent by Pakistan to the international donors last Wednesday.

Review of the Economy (1999-2000), submitted to the IMF by the ministry of finance indicates that the NPLs stood at Rs193.2 billion in May 1999, whereas, the amount swelled to Rs238.1 billion by May 2000. The defaulted loans amounted to Rs145 billion in May 1999, which increased to Rs143 billion by May 2000, showing an increase of Rs2.3 billion.

Yield on 1-year TBs rises

The government on Wednesday borrowed Rs1.6 billion from the banking system through sale of treasury bills. The State Bank conducted the sale on behalf of the government.

SBP said it sold Rs500 million worth of six-month T-bills at a maximum yield of 7.38 per cent and Rs1.1 billion worth of bills at 8.09 per cent.

The sale of T-bills had attracted total bids worth Rs8.5 billion of which SBP accepted bills worth Rs1.6 billion and scrapped the rest.

Conversion of frozen FCDs picks up

The constant rise of the dollar in the inter-bank market after the July 20 free float of the rupee has led to faster conversion of frozen foreign currency deposits into rupees and dollar bonds.

Senior bankers said people converted $50m worth of FCDs within one month between July 20 and Aug 21. They said up to July 20 $6.27bn worth of FCDs stood converted into rupees and $1.87bn into dollar bonds. On Aug 21 the two figures rose to $6.31bn and $1.88bn.

Investment projects approved

The Cabinet Committee on Investment (CCI) met on Monday with Finance Minister Shaukat Aziz in the chair and approved various investment projects worth $85 million.

Commerce Minister Razak Dawood stated that this was in addition to the investment of $500 million under way in the textile sector, which would modernize the sector to produce high value-added products to meet the challenges of the international market. This would also create jobs and promote exports, he added.

The meeting reviewed progress on the implementation of 16 investment projects worth $210 million and noted with satisfaction that trans-national corporations like Sony, Cupola, Daihatsu, Hyundai, McDonald and Nike had plans to increase their investment in Pakistan.

Askari General Insurance

Askari General Insurance Company Limited posted 20 per cent improvement over the earlier year, in pretax profit to Rs15.8m and 42 per cent surge in retained premium to Rs88.1m.

FFC-Jordan Fertilizer

FFC-Jordan Fertilizer Co posted pretax loss in the whopping sum of Rs 2,302 million for the six months to end-June, on net sales valued at Rs 1,494 million. After provision of Rs 7 million in taxation, the post taxed loss stood at Rs 2,310 million.

Engro Chemical

Engro, the pretax profit dipped 81 per cent to Rs94.7 million for the Jan-June 2000, from Rs504.4 million in the comparable period of the earlier year. After tax profit stood at Rs72.8 million from Rs385.4 million.

Paid-up capital raised

The newly promulgated insurance law has made it mandatory on every company, associated with life insurance company, to raise its paid-up capital to Rs150 million, wherein for a company with a non-life insurance business, the same has been fixed at Rs80 million.