Dec 25 - 31, 2000
ADB okays $707m for
The Asian Development Bank (ADB) has approved a record level of
assistance worth $707 million for seven projects in Pakistan.
Senior Economic Advisor of the ADB Naved Hamid said that out of the
approved amount, $150 million were recently disbursed and another $100 million would be
disbursed by March next year.
Speaking at a news conference on Thursday along with ADB's senior
Project Implementation Officer Katsuji Matsunami, Hamid said the rest of the funding would
be disbursed in 2002 after the clearance of the International Monetary Fund
All the seven loans were approved in the energy sector restructuring,
export promotion, poverty reduction, judicial and legal reforms and debt and risk
He said $350 million had been approved for the energy sector, which
also included $250 million for the restructuring of Karachi Electricity Supply Corporation
(KESC) and the $100 million would be offered for the corporatization of Water and Power
Development Authority (WAPDA). Other major objectives include improving governance and the
legal and regulatory framework, strengthening the capacity of the National Power
Regulatory Authority (NEPRA), and creating an enabling environment for a competitive
market. In addition, a soft loan of $5 million in technical assistance is being provided
to build up capacity for energy sector.
There would be a $150 million loan for promoting the development of the
microfinance sector of Pakistan and the aim is to finance 1.6 million small income
generating activities and 4,500 small scale community based infrastructure projects,
during the next six years.
"And then another $150 million are approved to boost Pakistan's
export by improving trade financing for small and medium sized enterprises," he said.
A partial risk guarantee up to maximum aggregate liability of $150 million was also
approved to reduce risk associated with the letters of credit issued by Pakistani banks to
import goods for export production. The project, he said, is expected to increase
Pakistan's export by around $350 million annually and help create 135,000 new jobs.
State Bank injects Rs12 billion
The State Bank on Thursday injected Rs12.25 billion into cash-starved
inter-bank money market. But that had a little impact on lending rates in the face of an
outflow of Rs19 billion from the market through maturity of previous injections.
Senior bankers said the SBP injected Rs12.25 billion for one week in
reverse repo of treasury bills at 11 per cent. But that failed to hold high lending rates
down. Bankers said overnight repo and call rates moved in the range of 12.5-13 per cent
and 14-14.5 per cent, respectively.
In plain words, the central bank purchased treasury bills from banks
for one week and paid them Rs12.25 billion in cash. It will sell the bills back to the
banks at the same rate after one week. This arrangement known as reverse repo of
securities helps central banks in keeping the inter-bank money market liquid when
Citi-group units arrange $45m loan
Bahrain-based Citi Islamic Investment Bank, a unit of Citigroup, said
on Wednesday it and Citibank Pakistan had arranged a $45 million Islamic financing
facility for Pakistan.
A bank statement said the one-year facility, for Pakistan State Oil
(PSO), was signed on Wednesday in Bahrain.
"The facility will be used by PSO for establishing letters of
credit with Citibank Karachi for the import of petroleum products...," the statement
Six other banks and financial institutions took part in the syndicated
loan which carries an annual interest of 1.85 per cent over London Interbank Offered Rate
Pakistan State Oil (PSO) distributed 100 per cent cash dividend
resulting in record cash pay out of Rs1.4 billion to the shareholders.
The AGM was told that the company posted before tax profit of Rs3.6
billion, up by seven per cent over last year's Rs3.4 billion. After tax profit was Rs2.2
Fixed rate on DSS to go from Jan 1
The government has planned to abolish the guaranteed fixed rate of
return on Defence Savings Certificates (DSCs) issued from January 1, replacing it by
market-driven yields on long-term government bonds, serving as a benchmark.
Besides, exemption from taxation on any new investment on all National
Saving Schemes (NSS) instruments will be withdrawn from start of next fiscal year and
these will be taxed in the same manner as other financial instruments.
Subsequently, the linked DSCs rates will be adjusted on six monthly
basis in response to fluctuations in the bench-mark yields. The DSCs constitute about 40
per cent of the total stock of NSS instruments.
IMF wants autonomous State Bank
The International Monetary Fund has asked Pakistan government to
guarantee the control and autonomy of the State Bank in the areas of reserve management,
monetary, credit and foreign exchange policies.
The IMF has also asked the government to ensure that the SBP governor
and its central board members were not dismissed without legal cause or granting them the
right to due process of law.
SBP allows evening banking
The State Bank has allowed evening banking facility at all banks in the
country to facilitate the people, specially business community, with banking hours from
2.30pm to 8:30pm.
It had been a longstanding demand from the general public and business
community to provide evening banking facility as they were encountered various problems,
particularly for the payment of utility bills, the SBP said on Saturday.
The State Bank on Saturday allowed banks and non-bank financial
institutions to develop and offer deposit schemes offering insurance cover to their
But according to a circular issued by SBP banks or NBFIs will not make
it mandatory for the depositors to get insurance cover. Nor they will discriminate such
depositors in terms of the rates of return on the deposit schemes.