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Oct 02 - 08, 2000

Govt borrows Rs37 billion in 2 months

The government had to borrow Rs 37 billion from the banking system in the first two months of this fiscal year to bridge a short term gap between income and expenditure.

Senior bankers said the government made a gross borrowing of Rs 43 billion during July-Aug 2000. But it also placed six billion rupees in its debt retirement account in the same time thus reducing its net borrowing from the banking system to Rs 37 billion.

The government keeps the rupee equivalent of foreign debts in its debt retirement account to ensure immediate conversion of this amount into foreign exchange when a debt payment falls due.

Under the annual credit plan the government is supposed to retire Rs 2.2 billion worth of bank credit in the current fiscal year instead of making any fresh borrowing.

In fiscal '99-00 the government had made a net borrowing of Rs 40 billion. That was a big slippage because under the credit plan the government was supposed to retire Rs 15 billion credit instead of borrowing from banks or the State Bank of Pakistan.

A net borrowing of Rs 37 billion in the first two months of 2000-01 is also very unusual because in the same period of last fiscal year the net government borrowing was at Rs 5.6 billion.

Bankers say it is difficult to ascertain the reasons for this heavy borrowing. As the target is set for a year the government keeps borrowing as much amount as required on given times and tries to bring total borrowings within limits at the year-end.

In a sharp contrast to heavy government borrowings the private sector retired Rs 12.2 billion worth of bank credit in the first two months of this fiscal year. In the same period of last fiscal year the private sector had retired Rs 20.10 billion worth of bank credit. The reason for this is simple. In Pakistan private sector credit is seasonal in nature. Normally the private sector retires credit in six months from April to September of each year as these months are leaner in agricultural productivity.

Rupee falls 

The rupee shed 18 paisa more in the inter-bank market on Thursday and closed at 58.30 against the dollar down from 58.12 on Wednesday.

Bankers said the rupee fell on debt payments of at least $15 million. They said the rupee at one stage fell to 58.40 against the dollar for tomorrow value but after a while recovered ten paisa and closed at 58.30.

They said forward premium on one month shot up to 75 paisa over the spot price at one stage but closed at 62-68 paisa up from 48 paisa on Wednesday. Six-month premium oscillated between Rs2.40 and Rs2.60 over the spot price and that of three months remained unchanged at the last level of Rs1.30.

In the kerb market the rupee fell 60.50 and 60.70 for spot buying and selling down from 60.35 and 60.45 on Wednesday. Leading currency dealers said the trend in the inter-bank market mirrored in the kerb market.

Reserves inch up 

Pakistan's liquid foreign exchange reserves rose nominally to $1.065bn on Sept 23 from $1.01bn on Sept 16, according to the statistics released by the SBP on Thursday.

The statistics show that on Sept 23 Pakistan had $861m worth of approved foreign exchange reserves and $204m worth of balances held abroad in cash and short term securities. The total reserves of $1.065bn include some $430m worth of fresh foreign currency deposits of banks placed with the SBP. Net foreign exchange reserves stood at $635m on Sept 23.

Gold up by Rs100 per 10 grams

Gold prices climbed to a record high at Rs 5,380 per 10 grams on Thursday as compared to Rs 5,280 per 10 grams due to rising global prices coupled with frequent devaluation of rupee against dollar.

The international market rose to $277.65 per ounce on Thursday as compared to $272 per ounce the other day.

Loan default up

Loan defaults rose by Rs 5.0 billion in the last fiscal year despite cash recoveries of about Rs 10 billion in a month-long drive against defaulters launched soon after the induction of the present government.

Sources close to State Bank said total non-performing loans of all banks and development financial institutions went up by Rs 27.5 billion in fiscal year 1999-2000.

They said NPL went up to Rs 239.5 billion on June 30, 2000 from Rs 212 billion on June 30, 1999. A loan is categorized as non-performing when it becomes overdue by 90 days or more. The total NPL of Rs 239.5 billion also included Rs148 billion defaulted loans of one million rupees and above.

IFC will offer $100m through PTEF

The International Finance Commission (IFC), will offer $100 million, to help local companies regain access to international markets through the Pakistan Trade Enhancement Facility.

The project will provide a facility to guarantee documentary credits, originated by selected commercial banks in Pakistan.

PSO, Shell, Caltex

Pakistan State Oil (PSO) on Wednesday increased the fuel oil cost by 7.4 per cent or Rs861 per metric tons to Rs12,465pmt (inclusive of sales tax) from Rs11,604pmt.

Shell Pakistan Ltd (SPL) and Caltex Pakistan (CP) have raised the furnace oil prices by Rs 506 per metric ton and Rs 750.75 per metric ton on Tuesday.

WAPDA bonds

The Water and Power Development Authority is going to launch the 8th issue of its bonds worth Rs6.7 billion on Thursday through National Bank branches in Karachi, Lahore and Islamabad. The five-year bond carries a fixed mark-up of 12.5 per cent for the first year and 2 per cent above the SBP discount rate for the remaining years. The floor price would be 12.5 per cent and the cap would be at 16.5 per cent.


Khadim Ali Shah Bukhari & Co Limited (KASB), unveiled financial figures for the year ended June 30, 2000 on Monday, posting 28 per cent growth in operating profit to Rs121.9 million, from a year ago operating earnings at Rs95.1m.