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Mar 26 - Apr 01, 2001

SBP move to meet IMF target

The State Bank needs to suck in Rs 15-20 billion from inter-bank money market within this month to meet a crucial IMF target. And in doing so it may have to reemploy some rather harsh tools that it had used in December last to suck in excess liquidity from the inter-bank market that had resulted in skyrocketing of inter-bank lending rates at the end of the year.

Bankers said senior SBP officials including Economic Advisor Dr Naseer told treasurers of more than half a dozen large local and foreign banks on Wednesday that SBP must suck in Rs 15-20 billion more from the inter-bank market before the end of March. They said the officials told the bankers this was necessary to keep net domestic assets of SBP within the target set by the IMF.

Under the terms of the $596 million IMF standby credit, SBP was initially supposed to keep its NDA at minus Rs39.6 billion at end-March 2001 but later on the IMF relaxed it to save banks from getting into trouble: the revised target for NDA is about Rs 8 billion.

Bankers say containing excess liquidity at this stage SBP will not only help SBP meet this target but also stabilize the rupee that has been on the slide for several days.

The rupee on Thursday shed six paisa more to a US dollar in inter-bank market to close at 60.80/60.85 for spot buying and selling. The rupee has depreciated by more than one per cent in last one month mainly due to slower inflow of export proceeds amidst rising dollar buying for debt servicing and oil imports.

Bankers said SBP officials had told them that the central bank might have to reemploy some of the tools it had used to meet its NDA target of minus Rs 26.3 billion at the end of December 2000. They said the officials implied they might again ask the banks to buy special treasury bills out of the rupee equivalent of their foreign currency swap funds that are placed in special deposits account (SDA) with SBP: the central banks has rolled over 75 per cent of these funds worth $1 billion dollar for the second time for two years-it had first rolled them over to avoid default after Pakistan had gone nuclear in May 1998.

Rupee weaker in kerb

The US dollar gained 20 paisa more against rupee in open currency market on Thursday: it also gained five paisa in the inter-bank market on higher demand and lower supply.

Money changers said the dollar that had crossed the Rs64 barrier on Wednesday before closing at Rs63.70/63.75 for spot buying and selling closed at Rs63.90/63.95 on Thursday. They said for some time the dollar shot up to Rs64.20 on speculative buying but finally closed just below Rs64.

They said the dollar has been on the rise in kerb after the fall of the rupee in inter-bank market that has not only led speculators to buy more dollars, but also tempted small savers to do the same.

Bankers said the rupee lost five paisa more to a US dollar on Thursday and closed at 60.80/60.85 for spot buying and selling in inter-bank market.

Second tranche

Pakistan has signed and sent back a letter of intent (LoI) to the IMF headquarters in Washington to get disbursed 138 million dollar second tranche, out of 596 million dollar standby arrangement (SBA), within this month.

"I had signed and sent back this LoI to Washington, which has been also been circulated to the concerned staff members of the IMF", said the Minister for Finance, Shaukat Aziz.

He toldDawn here on Wednesday that he had talked to a senior IMF official by telephone in Washington on Tuesday night and was told that the LoI had reached there on Monday.

Pakistan had earlier received the first tranche of 190 million dollars in December last year. According to the schedule, third and fourth instalments will be disbursed by the IMF in June and September this year when the programme period would end.

Bonus for shareholders

Bank Al-Habib has announced 20% 'bonus' for its shareholders for 2000. Briefing the shareholders, Ali Raza D Habib said the deposits of the bank as on Dec 31, 2000 were Rs17,822.6m — an increase by Rs3,709m — as compared to the corresponding year, and its profit before tax as Rs403.2m.

Gold prices soar

Gold prices on the local bullion market have risen by Rs82 per 10 grams during the last two days, partly in line with the rising dollar and partly to increase in demand from other trading centres.

On Monday, gold price was quoted at Rs5,388 per 10 grams, while it soared to Rs5,470 on Wednesday and "its safe level could be above Rs5,500 if the current run-up of the dollar is not contained," claims a leading bullion trader.


M/s Sadiq Woollen Mills Gujrawala has made the highest bid of Rs31 million for the processing unit of Lasbella Textile Mills at an open bidding held on Monday. The second highest bidder was Ghani Textile Mills Karachi which made an offer of Rs30 million.

Gas prices up

The government on Saturday announced an increase in the prices of natural gas ranging from 14.39 to 37.39 per cent for domestic, commercial and industrial consumers.

ADB to offer $450m

The Asian Development Bank (ADB) has decided to offer 450 million dollars to Pakistan during the current year for undertaking a number of development projects.

The ADB sources said on Saturday that projects had been identified by the government which were currently being looked into by the bank for clearance.

Mahmood Textile Mills

Mahmood Textile posted pretax profit amounting to Rs457m for the year 2000, which reflected a huge increase of 169% over the pretax profit of Rs170.5m the previous year. After tax profit was up by 179% to Rs421.3m, from Rs150.9m.