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May 07 - 13, 2001

US likely to lift curbs on Pakistan

Pakistan has been assured that the Bush Administration will soon look into the issue of lifting international sanctions against it. "I was assured by US Secretary of Treasury Paul O'neil that he would take up the issue of lifting sanctions against Pakistan with Secretary of State Colin Powell," claimed Finance Minister Shaukat Aziz on Thursday, adding "they have promised to review sanctions against Pakistan."

Speaking at a news conference after a week-long visit to the US where he had also met senior officials of the World Bank, IMF and IFC, he said he had held wide-ranging discussions with the US authorities. But the key meeting, he stated, was with the Secretary of Treasury at which they discussed increasing bilateral co-operation with special reference to removing sanctions against Pakistan.

"We informed the US officials that sanctions are counter-productive and increasing poverty in Pakistan and due to these sanctions we cannot get investment. These sanctions deter normal commercial activity". Mr Aziz said he had not discussed political issues relating to the lifting of sanctions. "Perhaps there are other forums where political conditions could be discussed," he said, adding that he had confined himself to informing the US authorities that sanctions were harming the common man and increasing poverty.

The minister had met Senator Brownback and other important people and received an encouraging response to get the sanctions removed against Pakistan. He had also discussed with USAID authorities a concessional lending for Pakistan. Mr Aziz said the US government had also been urged to help Pakistan in getting support from International Financial Institutions (IFIs).

About his meetings with the World Bank and IMF officials, the minister said that Bretton Wood institutions were extending all possible financial support to Pakistan. Giving details, he said the country was likely to get the third tranche of $130 million, out of $596 million Standby Arrangement (SBA) within this month.

Banks to get 3.4% return in May

The State Bank would pay banks and non-bank financial institutions 3.4 per cent return in May on the 20 per cent special cash reserves on their fresh currency deposits.

From April 2, the State Bank freed up foreign currency deposits of banks placed with it and allowed them to use the same freely in local or international markets. But in doing so it asked them to maintain 25 per cent of their total foreign currency deposits as cash reserves in foreign currency: the central bank promised to pay the banks a monthly return on 20 per cent of this amount being special reserves.

For the month of April, the State Bank had fixed the return at 4.08 per cent and had also announced the formula for working out the return every month. SBP had told banks that the return would be equal to one-month LIBOR (London inter-bank offered rate) at the last working day of the preceding month minus one per cent service charge. Since one-month LIBOR closed at 4.4 per cent on April 30 the State Bank has decided to pay 3.4 per cent return on special reserves in May.

Myanmar visit to cement ties: Musharraf

The chief executive, Gen Pervez Musharraf, ended a three-day official visit to Myanmar on Thursday, saying it had brought both sides closer and would lead to improve co-operation.

Gen Musharraf told a news conference before leaving for Vietnam that the fact that both Myanmar and Pakistan were ruled by the military helped the two countries understand each other better. "It was a most fruitful, profitable and mutually beneficial visit," Gen Musharraf said at Yangon's international airport.

"It's our desire to get closer to Myanmar and I'm sure a similar desire was demonstrated by the (Myanmar) government." Gen Musharraf expressed the confidence that both Pakistan and Myanmar had great potential for strengthening economic and trade relations, which would attain a boost in the near future.

India-Pakistan officials to meet in Colombo

The Saarc Secretary-General, Nihal Rodrigo, said on Thursday that foreign secretaries of India and Pakistan will certainly meet on the sidelines of a two-day meeting of the association's standing committee at Colombo, commencing from June 8 next.

Speaking at a luncheon meeting at the Foreign Correspondents' Club, he said that the preparatory meeting of the senior officials would be held on June 6 and 7."Foreign secretaries of India and Pakistan will certainly meet on the sidelines of the Saarc standing committee meeting," he remarked.

Attock Oil

BCCI liquidators and Dr Gaith Pharaon, a Saudi businessman, have reportedly reached to, an out-of-court settlement, allowing the Saudi businessmen to keep Attock Oil Company after the payment of approximately $75 million, its learnt from lawyers dealing with the case in Pakistan. Attock Oil Company is the parent holding company which has controlling shares in Attock Refinery Limited (AOL) and Pakistan Oil Fields (POL) with 65 per cent shares.

Gas pricing mechanism

The World Bank has asked Pakistan to change pricing mechanism for natural gas production, transmission and distribution which entails different "confidential" gas tariffs for different parts of the country and consumers. The aide memoire "accelerating the development of domestic gas reserves" of the bank submitted on April 20, 2001, also asked the government to get out of the allocation and dedication of gas reserves business.

Exporters stop $ buying from kerb

A number of exporters have stopped buying foreign exchange from the open market to sell the same in inter-bank market as export proceeds after April 14 the deadline set for selling of overdue export bills. This is one of the factors that has kept the rupee stable in the second half of this month.