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FINANCE

Nov 19 - 25, 2001

Pakistan, US sign $600m agreement

Pakistan and the United States on Thursday signed an agreement under which Washington would provide $600 million in direct budget and balance-of-payments support to Islamabad.

Agreement to this effect was signed by Economic Affairs Division Secretary Nawid Ahsan and US Ambassador to Pakistan Wendy Chamberlin. Finance Minister Shaukat Aziz attended the ceremony.

The ambassador also detailed the "billion dollar plus" package for the people of Pakistan. She said that President George W. Bush had announced an over $1 billion aid package for the people of Pakistan when he had met President Gen Pervez Musharraf in New York on Saturday.

Today, the ambassador said, they signed a memorandum of agreement to provide an important piece for that "one billion dollar plus" package. "It is $600 million and over Rs36 billion in grant aid," she added.

The ambassador elaborated that it was a grant aid for direct budget and balance-of-payments support to assist Pakistan in its foreign exchange needs, adding the US was helping Pakistan to get out of its debt trap and "we are encouraging others in the Paris Club to do the same".

Ms Chamberlin said that Rs36 billion would help Pakistan in its social sector priorities, including education, job creations and health.

She said the US was impressed with the strong support extended by Pakistan to the international community in its fight against terrorism.

She said the aid was being provided to support the government's reform agenda and to mitigate the impact of the economic downturn on the Pakistan economy.

Fuel prices cut

The Oil Companies Advisory Committee (OCAC) on Thursday reduced the prices of diesel and petrol by Rs1.50 and 60 paisa per litre, respectively.

The new prices will remain effective during the fortnight starting on Nov 16 (Friday).

The OCAC also cut the prices of other petroleum products by 1.78 to 4.42 per cent. Diesel will be available at Rs15.09 per litre, down from Rs16.59 per litre sold until Thursday.

Petrol can be filled at Rs29.66 as against Rs30.26 per litre the rate of the just-ended fortnight.

The new price of HOBC is fixed at Rs33.71 as compared to Rs34.32 per litre, while kerosene will now cost Rs14.40 per litre from Rs14.94 per litre. Light diesel oil prices have been reduced to Rs13.40 per litre from Rs14.02 per litre, while JP-4 will cost Rs13.58 per litre as compared to Rs14.11 per litre.

Creditors to bridge $3.2bn financing gap

Pakistan's $3.2 billion financing gap for 2001-2002 will be jointly bridged by the IMF-led bilateral and multilateral creditors and a decision in this respect is expected to be taken by the Fund's executive board in the first week of December.

Pakistan has been assured by the United States that its $8 billion financing gap during the next three year period will be met by bilateral and multilateral donors, official sources told on Wednesday.

Pakistan was told that since it offered necessary support to US-led coalition to fight against terrorism, Islamabad's short- and long-term financial requirements will be adequately met. And in the first place, Pakistan's current year $3.2 billion financing gap will be filled to ease pressure on its balance of payment position.

Paid-up capital limit raised

The Securities and Exchange Commission of Pakistan (SECP) has directed the non-life insurance companies to raise their paid-up capital to a minimum of Rs50 million by Dec 31, 2002 and to Rs80 million by 2004.

$ falls as forward buying suspended

The US dollar that had shot up to Rs62.60 in the kerb market on Wednesday fell to Rs61.60 on Thursday as speculators made panic-selling and also suspended forward buying/ selling for the time being.

The greenback closed at Rs61.40/61.60 for spot buying and selling on Thursday against the previous close of Rs62.40/62.60.

Reserves inch up to $3.619bn

Pakistan's liquid foreign exchange reserves inched up to $3.619 billion on November 10 from $3.607 billion on November 3.

The State Bank statistics released on Thursday show that the forex reserves held by the central bank rose to $2.041 billion from $2 billion a week ago. But the reserves held by all other banks that stood at $1.605 billion on November 3 fell to $1.578 billion on November 10.

Japan to give $300m more grant

Japan decided on Wednesday to provide fresh aid worth $300 million to Pakistan in light of Islamabad's contribution to the war on terrorism, reports said. Japan plans to offer the grant aid to Pakistan over the next two years in addition to the $40 million grant pledged in September, Jiji Press and Kyodo News agencies said, quoting government sources.

T-bill yields cut again

The State Bank on Wednesday slashed the cut-off yield on treasury bills by 11-23 basis points and sucked in Rs7.5 billion from the inter-bank market. Earlier on October 31 the SBP had cut the yield on T-bills by 1.64-1.81 per cent in a follow up of a two per cent cut in its discount rate announced on October 20.

Sweden reschedules

Pakistan and Sweden on Tuesday signed a debt rescheduling accord worth $51.320 million for repayment in 30 semi-annual instalments, from Nov 1, 2004.

Grindlays Modaraba

First Grindlays Modaraba announced cash dividend at 33 per cent for the year ended June 30, 2001, up from 30 per cent paid earlier year. The Modaraba also announced net profit reflecting 10 per cent growth over last year; operating income at over Rs1 billion and recorded highest lease disbursements of Rs966 million.