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Sep 18 - 24, 2000

IMF reviews budget targets, real economy

The World Bank and the IMF are expected to jointly offer $1.35 billion medium-term programme to Pakistan to help improve its balance of payments position.

Sources told on Tuesday that the World Bank had joined the IMF for talks with Pakistan on a number of important issues, including assessment of the possibility of jointly extending 1.35 billion dollar medium-term programme.

Talks between the two sides continued on Tuesday. The Secretary-General, Ministry of Finance, Moeen Afzal, led the Pakistan team while Ms Sena Ekin led the IMF review mission. Although the mission was reviewing budgetary targets set for 2000-2001, there were indications that Pakistan was likely to be offered around one billion dollar standby arrangement (SBA) by the IMF on a 6 per cent mark-up. And the World Bank would approve 350 million dollar structural adjustment loan (SAL).

The sources said Pakistan had been given to understand that, under the present circumstances, Fund officials might not be able to offer the much-sought- after 2 to 2.50 billion dollar poverty reduction growth facility (PRGF). They said that Pakistan needed to settle some political issues with G-8 countries, specially on CTBT and Kashmir; and that once some broad understanding was reached, specially with the United States, this medium- term 1.35 billion dollar programme could be converted into PRFG.

The discussions focused on monetary sectors, balance of payments and real economy. "What are our reserves at present, what is the current money supply position and what is our interest rate policy are the issues which came under discussion today", said a senior official of the ministry of finance.

Sugar prices

Prices of sugar are unlikely to come down from Rs 27 per kg at retail level in the current month as only three ships are expected to arrive in the remaining 15 days.

Caltex increases furnace oil price

Caltex Pakistan has increased the furnace oil price by Rs 691.18 per metric ton to Rs 11,363 per metric ton from Rs 10,671.72 per metric ton.

The official attributed the price flare up to the price rise in furnace oil by the Pakistan Refinery Ltd on Monday.

Caltex gets its furnace oil supplies from the local refinery while another oil marketing company (OMC) Shell Pakistan also depends on supplies from local refineries.

The clients of Shell Pakistan Limited (SPL) will now pay Rs516.35 per metric ton more from Tuesday to buy furnace oil at the rate of Rs 11,120.50 per metric ton (inclusive of sales tax).

Market sources said the state-run PSO, which manages its stocks from imports by issuing tenders and buys some quantity from NRL, is also considering to adjust the prices. They said the decision is likely to be taken in two to three days.

Net forex reserves $640 million

Pakistan's liquid foreign exchange reserves fell to $1.122bn on Sept 9 from $1.220bn on Aug 31, according to the State Bank statistics released on Thursday. SBP statistics show that on Sept 9 Pakistan had $951m worth of approved forex reserves and $171m worth of balances held abroad in cash and short term securities.

The total reserves of $1.122bn also include more than $482m worth of foreign currency deposits of banks placed with the SBP. This means that net reserves have fallen to $640m. Senior bankers said the reserves fell because of huge debt payments. Pakistan has to make total debt payment of more than $300m during this month.

Poultry meat

The price of poultry meat has become equivalent to the price of beef in the markets as price of broiler live bird fell to Rs50 per kg on Thursday, showing a fall of Rs8 per kg during the last two weeks.

T-bills yield lower

The State Bank lowered the yield by 10 basis points on four-week repo of treasury bills to 7.90% on Friday sending a signal to the market that there was no immediate hiking up of interest rates on the cards. SBP sold Rs 3.30bn worth of T-bills in four-week repo at 7.90% down 10 basis points of the previous cut-off of 8%. It also sold at an open market operation Rs 1.20bn worth of TBs in two-week repo at 7.75% and Rs 250m of T bills in one week repo at 7.25%.

IMF may meet year's deficit

It is unlikely that the IMF will deny "oxygen" to Pakistan but the worry now is about the size and form of the financial package.

Sources said the Fund is expected to provide short-term credit facility and debt relief by Paris Club is to be of similar tenure. Apparently, IMF wants to keep Islamabad under pressure so that it does not drag its feet on stipulated reforms, they added.

Pakistan to get US$25m

The Islamic Development Bank (IDB) on Monday made loans worth more than 278 million dollars for development projects in its member countries, it announced in a statement. Pakistan received 25 million to buy crude oil and refined oil products from other IDB member states.

Fund launched

A group of US-based investors, led by the former caretaker prime minister Moeen Qureshi announced on Saturday the setting up of a Venture Capital Fund for Technology Development in Pakistan which aimed to raise $50 million once it was registered with the US Securities department.

Mr Shahid Javed Burki, former World Bank official would be the president and chief executive officer and Dr Nasim Ashraf would be part of the three-man team heading the fund.


Pakistan Machine Tool Factory an arm of the State Engineering Corporation has recorded a pre-tax profit of Rs57 million during 1999-2000, official sources said on Saturday.

KESC to suffer Rs100m deficit

The rise in furnace oil prices will further deteriorate the financial health of Karachi Electric Supply Corporation (KESC), adding a deficit of over Rs 100 million per month.

In case Rs 600 per metric ton rises in furnace oil, the monthly deficit touches to Rs72m per month and in case of Rs 1,000-1,100 per metric, the deficit soars to Rs 150 million per month, said a KESC spokesman after working out the impact of furnace oil price surge.