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Feb 21 - 27, 2000

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

NIT to pay dividend

National Investment Trust (NIT) would pay to its unit holders a sum of Rs one billion in interim dividend, Chairman & MD declared. The interim dividend, which would be distributed at the rate of Re 0.55 per unit for the first half of the financial year to end-Dec '99, was exceedingly on the higher side, when compared to Re 0.47 paisa paid for all of the previous year.

TMAP seeks loans

The Towel Manufacturers Association of Pakistan (TMAP) has asked the government to make available soft loans to manufacturers of towel, toilet linen, bathrobes etc at the rate of 5% to increase the export of this high value-added item.

'Oil hike may spur interest rate cuts'

Pakistan's plans to further cut interest rates to boost investment and lower domestic debt servicing costs could be threatened by rising world oil prices, bankers and analysts said on Wednesday.

The government cut interest rates by two percentage points early in January, spurring a nearly 30 per cent jump in the Karachi Stock Exchange this year and fuelling hopes that further cuts would help shore up Pakistan's faltering economy.

"The inflation cycle is now back on its way up...there may not be an immediate threat but if oil prices continue to remain high the scope for further cuts in interest rates would be limited," Saqib Sherani an economist at ABN AMRO Bank, told Reuters.

Oil prices have climbed above $30 a barrel, their highest since January 1991 when Iraq invaded Kuwait.

Sherani said a decision by the government—which sets domestic fuel prices—to boost prices in December when world prices hit $24 a barrel had already started to stoke inflation.

The Federal Bureau of Statistics said on Monday the consumer price index rose 0.2 per cent in January from December, and was up 3.43 per cent from January 1999.

"If international oil prices continue to remain above $28, inflation is likely to be in the range of 4.5 per cent to five per cent by the end of the fiscal year (in June)," Sherani said.

Bankers in Karachi said higher inflation rates could put a halt to government plans to push commercial banks' prime lending rates down to 12 per cent, from the current 14 to 16 per cent, which are already down from close to 20 per cent a year ago.

The treasury head at one foreign bank said signals from the central bank suggested the plan was to push the six-month government treasury bill yield down to around 6.5 per cent a year in the next couple of months, from a cut-off yield of 7.9869 per cent in an auction last week.

SBP eases curb on lending to Modarabas

Banks can now offer financing facilities to modarabas with credit ratings of B-3 without prior clearance of the State Bank of Pakistan.

The latest SBP instruction on this subject is that banks will continue to seek prior permission of SBP for offering financing facilities to the modarabas whose credit rating is below B-3. The SBP issued this instruction to all banks through a circular. But it did not explain B-3.

SBP had instructed banks in September 1996 to seek its prior clearance before offering financing facilities to modarabas amid reports suggesting that bank financing to modarabas was creating an imbalance in the market.

World Bank suspends $100m loan for railways

The World Bank has suspended $ 100 million Railways restructuring and privatization loan after the railways ministry shelved the programme. Top official sources told that the Bank's decision was conveyed to the government on Tuesday.

The decision was firmed up after a detailed meeting on Monday at the Privatization Commission (PC), attended by 0a two-member delegation of World Bank comprised of Julia Fraser and Luis Thompson, chairman Railways Lt. General Javed Ashraf (Retd) and top PC officials.

France to invest in oil, gas exploration

The Consul General of France in Karachi, Gilles Bonnaug said that his country would make huge investment in oil and gas exploration activities in Pakistan and for this purpose a French company had joined hand with a local company.

Rs 1,500 prize bonds fetch Rs 71.3 bn

The first draw of Rs 1,500 prize bonds, in A to L series, was held here on Tuesday in which 11 numbers were announced which had won Rs 2 million each. Provincial Industries Minister Dewan Mohammed Yusuf Farooqui inaugurated the balloting.

During the past four months prize bonds of Rs 1,500 denomination in A to L series were sold which fetched Rs 71.30 billion to the national exchequer.

The minister in his short speech said the prize bonds scheme has provided incentives for savings and an alternative source of generation of funds for the government.

He appreciated the extensive use of computers in the National Savings Department and said that all those NS offices which have no computers must be computerized.

UBL service charges increase

United Bank Ltd has enhanced minimum charges for domestic remittance of money through bank drafts and mail as well as telegraphic transfers.

People remitting more than Rsl million within Pakistan through bank draft are now supposed to pay a flat commission of Rs250. Up to Dec 31, 1999 UBL charged no commission on such remittance.

The new UBL tariff of bank charges that became effective from January this year also requires people remitting Rs100,000 to Rsl million through bank draft to pay a commission of Rs100. Up to December 31 there was no commission on remittance of this size through bank draft. People remitting Rs10,000 to Rs99,900 by mail or telegraphic transfers are now supposed to pay a minimum fee of Rs50 instead of Rs25: those remitting up to Rs10,000 are to pay Rs25 instead of Rs20.