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Nov 20 - 26, 2000

Roll-over conditions irk foreign banks: Swap deposits

The second roll-over of foreign currency swap deposits is being based on the same terms and conditions that had applied on first roll-over in late 1998. But some of them are not acceptable to all foreign banks.

Bankers said foreign banks are meeting SBP Governor Dr Ishrat Husain on Wednesday in an attempt to get some of the terms and conditions revised adding that the chances for revision are slim. An SBP letter says that SBP will allow a payment of LIBOR plus one per cent on the rolled-over deposits and apply a 5.5pc forward cover fee on the same.

It says the SBP would pay a spread of 2.25pc above the cost of the rolled-over deposits if their rupee equivalent is placed with it at the time of the roll-over for a fixed one year maturity.

Banks had rolled-over 80pc of about $1.5bn worth of foreign currency swap deposits in late 1998 on the same terms. Pakistan paid the remaining 20pc of them on the maturity. That roll-over is to end on December 15 after which at least $1bn payment would fall due on these deposits between December 2000 and March 30, 2001. A second roll-over is necessary to help Pakistan manage its balance of payments and avoid default on foreign exchange liabilities.

Foreign banks believe that for working out the interest on the rolled-over deposits LIBOR plus one per cent is a low base. "The rate at which Pakistani LCs are confirmed is about 4pc. In other words the country risk is four per cent," said a foreign banker adding that the cost of rolled-over deposit should be more than LIBOR plus one per cent.

They are also think that the terms and conditions of the roll-over set for the first year should not be applied on the second year (as indicated in the SBP letter sent to the banks on this issue.)

Income tax revenue rises by Rs123m

Despite receiving less IT returns this year, the Central Board of Revenue (CBR) has collected Rs1870 million of revenue against them, showing a net increase of Rs123 million over the preceding year.

This was stated by Wakeel Ahmed, Member Tax policy and Spokesman of Central Board of revenue (CBR) while addressing a press conference on Thursday. Sarfaraz Khan member Sales tax was also present on the occasion.

Wakeel Ahmed Khan said that upto October 30, the total number of IT returns filed were to the tune of 647,345 against which the CBR collected Rs1.87 billion of revenue.

As against it, he said during the same period of last year, a total of 972,873 returns were filed and Rs1747 million of taxes were collected against them.

Wakeel Ahmed said that the last date for the tax return was earlier October 31 which was later extended to November 20,2000.

Rupee falls further

The rupee extended losses on the second day in the inter-bank market on Thursday and closed at 57.40 to a dollar against the previous close of 56.40.

Bankers said the rupee fell on increased corporate buying for private debt payment as well as improved demand from the importers.

They said lifting of cash margin on import letters of credit early this week has raised the import demand for the greenbacks.

Some bankers said another reason for the fall of the rupee was that a number of exporters held back export earnings hoping for a better return.

PIA fares up

PIA has announced an increase of 10 per cent in fares on its domestic flights from Nov 23. The increase became unavoidable due to rise in the international oil prices, said a press release.

Fazal Textile

Fazal Textile Mills Limited announced on Thursday that the board had decided to buy-back minority shares at Rs55 per share "on the basis of present market rate" and opt for voluntary de-listing of its securities from the stock exchanges.

Investment opportunity

The Sharjah government has invited the Pakistani business to explore the investment opportunities, being offered at the Sharjah Airport International Free (SAIF) Zone.

Speaking at a meeting with President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Fazlur Rehman Dittu at Federation House on Thursday, the Deputy Director General of SAIF Zone Authority Sheikh Saqer Al Qassimi said that Sharjah has become an attractive place for foreign investors.

PSO fuel oil price cut

The Pakistan State Oil (PSO) has reduced the price of imported high sulphur furnace oil (HSFO) by 6.25 per cent to Rs12,507 per metric ton from Rs13,352 (ex-Zulfiqarabad Oil Terminal).

Cotton prices

Cotton market on Tuesday maintained a firm trend as prices rose further, but physical business remained on the higher side as spinners were not inclined to take a breather.

Some of the deals in the ready section were done at Rs2,525 per maund as some of the leading spinners again indulged in big-lot business to grab the fine quality floating stock.

Credit limit raised

The State Bank of Pakistan (SBP) has enhanced the cash credit limit for PASSCO, from existing Rs408 million to Rs1.05 billion, for procuring paddy crop from the growers of Sindh and Punjab.

Ishrat hopeful

State Bank Governor Dr Ishrat Husain said on Saturday Pakistan is unlikely to seek short term commercial debt (in foreign currency) and will continue to manage its balance of payments through other sources.

At the same time he said he hoped that the IMF board of executive directors would approve a ($580 million) standby loan for Pakistan on November 29.

Rs109m Chinese loan

China has agreed to provide an interest free loan of Rs109 million to the federal agriculture ministry to expand, improve and modernize the plant quarantine services in Pakistan.

The total cost of this five-year project has been calculated at Rs150 million. The remaining cost would be contributed by the government of Pakistan as its agreed share.