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May 21 - Jun 03, 2001

Accord with six donors this month: Rescheduling

Pakistan will ink rescheduling loan accords with Spain, Austria, Italy, Germany, France and UK this month. Pakistan has already signed two agreements with Finland and Norway last month while another agreement with Denmark was inked last week under rescheduling of loan, official sources said on Wednesday.

All requirements of loan treaties with Canada have also been completed, the sources said.

The process of signing rescheduling agreements with eighteen donor countries would be completed by August this year, as the Paris Club has allowed rescheduling of bilateral loans worth $ 1.8 billion for nine months (Jan to Sept 2001).

Process for the reconciliation of loan figures has already commenced with the donor states, maintained the sources adding, the rescheduling of loans in fact is "consolidated rescheduling" for nineteen months including ten months (from March 1, to December 31, 2000).

The sources said that the reconciliation process with five donor countries had been completed. Rescheduling of $ 1.8 billion debt will continue to help improve country's cash flow besides posting cushion against the loan repayment till September this year.

Pakistan, the sources said, will start repayment of rescheduled loans from October next, depending on their maturity.

The Official Development Assistance (ODA) under the rescheduling agreements is repayable in 20 years with ten years grace period.

While repayment period of commercial loans would be 18 years with three years grace period under rescheduling treaties, the sources stated.-APP

State Bank mops up Rs 9.1bn

The State Bank on Thursday sucked in Rs9.1 billion of excess liquidity from the inter-bank market in two week and six week repos of treasury bills at 11 and 11.24 per cent.

SBP said it raised Rs6.1 billion through two-week repo of T- bills and Rs3 billion through six-week repo. Bankers said the yield on two-week repo of T-bills was higher by 50 basis points adding that SBP had raised the yield to suck in maximum excess liquidity from the market to lend some stability to the rupee.

Bankers said the yield on six-week repo was also higher than expected. SBP had last enhanced the yield on T-bills repo in its open market operation on March 29. It had raised the yield on two week repo by 1.25 and 1.75 per cent to 10.5 and 11.5 per cent.

Government meets bank borrowing target

The government has met the target set for its net borrowing from banks two months before the end of the fiscal year and fiscal managers say chances for a reversal in the trend are slim.

Senior bankers said net government bank borrowing that stood at Rs18 billion at the end of the first week of April totalled minus Rs18 billion by the end of the month. In other words the government retired Rs36 billion of net bank credit within three weeks. Under the $596 million IMF standby credit programme the government is to keep its net bank borrowing at Rs14.5 billion at the end of the current fiscal year in June.

Bankers said gross bank borrowing in the first 10 months of this fiscal year stood at Rs48 billion but since the government placed Rs66 billion in its special debt repayment account its net bank borrowing fell to minus Rs18 billion by end of April.

Rupee falls sharply

The rupee on Thursday fell sharply against the US dollar in inter-bank market as some local and foreign banks bought $15-$20 million to meet their customer's demand.

Bankers said the rupee closed at 62.52/62.55 to a dollar down 18 paisa overnight: On Wednesday the rupee had closed at 62.32/ 62.37 for spot buying and selling against the dollar.

So far this week the rupee has lost about 1.3 per cent of its value against the greenback in the inter-bank market.

Reserves shoot up

Pakistan's liquid foreign exchange reserves shot up to about $2.298 billion on May 19 from $2.185 billion a week ago. This means a huge build-up of $112 million in the forex reserves within a week.

According to a State Bank statement, total reserves included $1.230 billion held by the central bank and $1.067 billion held by all other banks. On May 12 the State Bank had liquid foreign exchange reserves worth $1.136 billion, whereas all other banks combined had $1.049 billion.

Mari Gas Field

The Economic Coordination Committee (ECC) of Cabinet has allowed Mari Gas Company Limited a 30 per cent Rate of Return on shareholders' funds, up from the current 22.5 per cent, and the company has also been permitted to generate $20 million per annum for exploration outside the Mari Gas Field.

FSA okays HBL-ABL subsidiary

The Financial Services Authority (FSA) in the UK has approved the setting up of a subsidiary through merger of Habib Bank and Allied Bank operations. Sources said on Monday that the subsidiary would be a private limited company with a paid-up capital of 25 million pounds. The company, incorporated in the UK, would have 90.5 per cent HBL equity and 9.5 per cent ABL stake.

EFU Life earns

The Board of Directors of EFU Life Insurance Limited has approved the annual accounts for the year ended December 31, 2000 and passed over dividend, reflecting Rs 15.118 million profit for the year. According to the results, however, a sum of Rs 41.443 million was brought forward from last year, reducing the loss carried forward to Rs 26.325 million.

Blueprint for co-financing

Pakistan is targeting to have $29 billion strategic investment partnership with friendly countries like China by the year 2010 in three important sectors - energy, steel and engineering and textile.

This includes $15 billion additional investment through co- financing and co-manufacturing in the energy sector, particularly power generation, $8 billion in steel and engineering sector and $6 billion in the textile sector, a blueprint titled "Strategic Sectors for Investment" prepared by the federal government early this month, reveals.