Nov 27 -
Dec 03, 2000
Foreign debts decline as capital inflows fall
Pakistan's stock of external debt to official
creditors has declined, as its growth rate turned negative in the last
fiscal, after three years of slow-down in the inflow of loans and
A sharp drop of $950 million in short- and
medium-term expensive debts exceeded the increase of $733 million
long-term loan and credits, lowering the debt stock by $217 million at
the end of June 2000.
Sources said the State Bank had just paid $263
million or 25 per cent of the outstanding foreign commercial
loan/credits of $1.1 billion. The previous payment on this count was 20
per cent of the then outstanding of $1.6 billion.
SBP sources said the repayment of costly commercial
debts would also facilitate debt rescheduling by the Paris Club. The
State Bank says Pakistan is eligible for a debt rescheduling and
rollover of $2.2 billion, about half of which, officials expect, would
come from the Paris Club.
Contrary to general perception, the Paris Club
rescheduled debts amounting to $1.3 billion in January 1999, and the
relief on larger amount of $2.6 billion was arranged outside the Club
framework, including the quasi-London Club, says the SBP annual report
According to the report, the long-term debt rose to
$23.834 billion in fiscal 2000 after remaining stagnant at just over $23
billion since fiscal 1997. There has been a sharp drop in short- and
medium-term debt from $6.572 billion to $5.622 billion.
Central bankers, however, expect outstanding debt to
go up once the IMF resumes its funding which is expected to be followed
by credits from the World Bank and the Asian Development Bank. The Fund
has informed Islamabad that its executive board would meet on Nov 29 to
approve standby credit.
Islamabad seeking loan
The government has mobilized a rolling commercial
loan of 100 million dollars from a consortium of foreign and local banks
and it is negotiating a similar loan of 150 million dollars from the
Islamic Development Bank (IDB).
This is half of the 500 million dollars of commercial
loan which the government has been prospecting since the last two months
under a contingency plan pending the approval of the 580 million dollars
of relatively softer IMF loan by the Fund's Board later this month. Both
these loans, the 100 million dollars from the commercial banks and the
yet to be finalized 150 million dollars from the IDB are being arranged
under what is called the Trade Enhancement Facility. And both carry
tough commercial rates and conditions.
Govt retires Rs12bn in four months
The government made a net retirement of Rs 12 billion
bank credit for commodity operations in the first four months of this
fiscal year i.e. July-October 2000.
Senior bankers say the government has to make a net
retirement of Rs 40 billion bank credit for commodity operations during
this fiscal year. In other words the government cannot make any fresh
borrowing for commodity operations between July 2000-June 2001.
But it does not mean that the government will have no
money to finance commodity operations during this fiscal year. In fact
the government will retire an X amount of bank credit for commodity
operations first and borrow the same amount from banks to finance
commodity operations. That will keep its net fresh borrowing at zero
level at the end of this fiscal year.
PICIC okays Rs3bn plan
Pakistan Industrial Credit and Investment Corporation
has approved a lending plan of over Rs 3 billion for textile and sugar
industry. The Corporation will disburse Rs 2 billion for balancing,
modernization and reconstruction (BMR) of textile sector and Rs 1.5
billion as short term capital (working capital). The mark-up for BMR
would be around 14 per cent for five years for textile sector, while
working capital would be sanctioned to sugar and textile factories.
Govt cuts bank borrowing
The government has started reducing its bank
borrowing in an effort to meet the performance criteria that it has to
meet to qualify for an IMF standby loan.
Senior bankers said gross government borrowing stood
at Rs39 billion between July-October 2000. But as the government had
placed Rs17 billion in its debt retirement account in the same period,
its net borrowing totalled Rs22 billion.
Up to September, the gross government bank borrowing
stood at Rs53 billion and net borrowing at Rs39 billion as the
government had placed Rs14 billion in debt retirement account.
Fuel oil prices
Caltex Pakistan has also reduced the furnace oil
prices by four per cent to Rs12,979 per metric tons from Rs 13,508pmt.
Earlier, Shell Pakistan Limited (SPL) had slashed the
furnace oil prices by Rs902.75 per metric tons to Rs12,437.75pmt from
Rs13,340pmt while Pakistan State Oil (PSO) on November 17 had reduced
the price of imported high sulphur furnace oil (HSFO) by 6.25 per cent
to Rs12,507pmt from Rs13,352pmt.
Banks lending rates
All five key banks have raised their internal lending
rates by half a per cent to two per cent in line with the increase in
treasury bills yields. T-bills yields moved up last month when the State
Bank tightened monetary measures to shore up the rupee.
The privatization commission will approve sale of
nine per cent shares of Muslim Commercial Bank in its meeting, scheduled
for November 25 in Islamabad.
A total of Rs405 million deposits have been recorded
under the services tax in the July-October period of the financial year
2000-2001. The CBR had set itself a target of Rs1.5 billion in the first
quarter, during which a sum of Rs245 million was received under this
tax. In the month of October, the CBR had projected receipts of Rs500
million, whereas a total of Rs160 million were reportedly received.