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July 09 - 15, 2001

Gross reserves rise to $3 billion

The State Bank Governor Dr Ishrat Husain said on Thursday that gross liquid foreign exchange reserves of Pakistan had risen to $3 billion.

Speaking as chief guest at a meeting of The English Speaking Union of Pakistan he said the total reserves included $1.6 billion held by the central bank and $1.4 billion held by all other banks.

He made it clear that the $1.6 billion reserves of SBP were net of cash reserves on foreign currency deposits of the banks.

Under the terms of the $596 million IMF standby credit programme SBP was required to enhance its liquid reserves up to $1.6 billion by the end of June this year.

The governor said that with the increase in foreign exchange reserves the rupee might become stable adding that a higher level of reserves would act as a deterrent against speculation. He also said that Pakistan would get the third tranche of the $596 million IMF standby credit next week but did not disclose its size.

Pakistan has already got two tranches worth $192 million and $132 million out of the $596 million standby credit that the IMF approved for Pakistan at the end of November 2000. The third tranche is being released on the basis of the performance of Pakistan economy between January-March 2001.

The governor said that during the outgoing fiscal year Pakistan had secured $596 million from the IMF; $350 million from the World Bank and $333 million from the Asian Development Bank.

Answering a question he said the rupee had depreciated sharply (by 18.5 per cent) in fiscal 2000-01 partly because it had been kept overvalued in fiscal 1999-00 as the State Bank had placed a cap on the inter-bank exchange rates. The governor explained that the reason why the rupee depreciation had not raised overall exports accordingly for the simple reason that textile exports that constitute 66 per cent of the total exports remained subject to quota restrictions. He said non-textile exports, however, rose by 24 per cent, which was a proof that the rupee depreciation had benefited the exports.

State Bank mops up Rs4.5bn

The State Bank of Pakistan on Thursday mopped up Rs4.50 billion from a fairly liquid inter-bank money market in one-week and four-week repo of treasury bills at 11 and 11.50 per cent.

Senior bankers said the SBP sucked in Rs1.7 billion through one- week repo and Rs2.8 billion through two-week repo of the bills at its open market operation.

They said the State Bank's open market operation (OMO) had generated total bids worth Rs9.95 billion Rs3.35 billion for one-week repo and Rs6.60 billion for four-week repo. But the State Bank accepted bids worth Rs4.5 billion and scrapped the remainder.

Bankers said even after the OMO the market was highly liquid with overnight call rates as low as 1-3 per cent.

Pakistan needs $6bn aid, says WB report

The World Bank's (WB) report Country Assistance Strategy (CAS) 2002-2004 which will set priorities and help determine level and type of funding to Pakistan, will be submitted to the bank's board for approval by December this year or Jan 2002, WB sources said.

The WB officials, visiting the country recently, have indicated that Islamabad needs a financial package of some $6 billion. The amount is estimated for three years that may have to be cobbled jointly by International Monetary Fund, World Bank and the Asian Development Bank.

NIT declares dividend

The Board of Directors of National Investment Trust (NIT) has announced another dividend of 65 paisa per unit for distribution to its unit holders for the year ending June 30 this year.

A press release on Thursday said the net value of NIT funds has grown by 20 per cent from Rs14.3 billion in July 1999 to Rs17.2 billion by end June this year.

UBL loan stuck up

Out of the total over Rs1.5 billion stuck-up loan portfolio of UBL in the NWFP, a major chunk of over Rs400 million is collectively recoverable from the Gadoon Amazai industrial estate, sources said.

SBP asks banks to float bonds

The State Bank has advised commercial banks to float ten-year bonds to mobilize funds for housing loans to match assets with liabilities, sources said.

Official policies are being so designed as to develop the bond market as a source for alternative project financing which has suffered because development financial institutions (DFI) do not have the funds and commercial banks are shy of undertaking risks of long-term financing. Banks also prefer to raise short-term deposits that cannot sustain long-term financing.

Sindh gets Rs5.9 billion

The Sindh government received a sum of Rs5.9 billion on Monday from Islamabad with a promise of more funds to flow in the next few days.

This inflow of funds from Islamabad is part of the last instalment of Sindh's share in the federal tax pool and transfers accruing from the collection of excise and development surcharge on oil and gas within the province.

China to extend loan

China has agreed to extend loan on soft-term for phase-I of Gwadar deepsea port, estimated to cost around $250 million.

Official sources told that a team of experts, led by the Chinese communications minister, evaluated a number of projects but selected Gwadar deepsea port.

BoP rated A, A1

The Pakistan Credit Rating Agency (PACRA) has assigned long-term rating of "A" (single A) and short-term rating "A1" (A one) to the Bank of Punjab.

Banks to get 2.86pc return

The State Bank said on Saturday it would pay banks and non-bank financial institutions 2.86 per cent return in July on the 20 per cent special cash reserves on their foreign currency deposits. The return fixed for June was 3.06 per cent.

Citibank earns profit

Citibank has earned a record Rs1 billion operating profit in Pakistan during 2000, according to bank's Annual Report released on Saturday. In 1999 the bank had earned Rs500 million operating profit.