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 5. TRADE  6. GULF



Dec 03 - 09, 2001

Drug prices up by 3 to 4 per cent

The federal cabinet on Wednesday approved a 3 per cent increase in the prices of essential drugs and a 4 per cent jump in those of decontrolled category.

The cabinet approved the prices of the drugs on the recommendation of the ministry of health.

Federal Health Minister Dr Abdul Malik Kasi told that the increase in medicine prices was due for quite some time. "The government has increased the prices keeping in view the interests of both the consumers as well as the manufacturers," he added.

He said the Pharma Bureau, a representative body of drug manufacturers, had been asking for an upward revision in prices due to a rise in utility tariffs, cost of different raw materials and devaluation of the Pakistani currency.

When pointed out that the increase would hit the consumers hard, the minister said the pharmaceutical companies had been demanding a 12 per cent jump in drug prices in keeping with a formula allegedly agreed between them and the previous PML government. However, the government allowed 3 per cent increase in the controlled category and 4 per cent in the decontrolled one, he said.

The minister, however, declined to comment whether this increase would remain effective for a year or more. Meanwhile, Dr Inamul Haq, ex-director general health, when asked to comment on the across-the-board raise in drug prices, said it was not justified as there were many raw materials the import prices of which had been increased, but there were many also the prices of which had been decreased.

He said the prices of drugs should be increased on case-to-case basis by calculating the actual impact of the imported inputs and other overheads instead of an across-the-board raise.

He claimed that the profitability in the majority of drugs available in the market was 50 per cent or thereabouts. Therefore, this ad hoc price increase was not justified.

Reserves rise to $4.319bn

Pakistan's liquid foreign exchange reserves stood at $4.319 billion on November 24, up from $3.621 billion a week earlier.

The latest State Bank figures released on Thursday, shows that the total $4.319 billion reserves included $2.742 billion held by the SBP and $1.577 billion held by the banks.

The reserves had got a major boost on November 20 when the US gave Pakistan $600 million aid as part of a $1 billion package for its support to US-led war in Afghanistan. The inflow of $600 million had raised the reserves to the highest ever mark of $4.217 billion on November 20. Bankers said what added $102 million more to the reserves in next four days bringing the total reserves to $4.319 billion was SBP's dollar buying from banks.

Govt gains most from discount rate cut

The government has benefited most from a four per cent cut in the State Bank discount rate so far this fiscal year.

Senior bankers say the government has raised Rs90 billion or so from the banking system by selling treasury bills during July- November 2001 though its net borrowing has been less than 50 per cent of this amount.

They say the cut in the discount rate followed by lowering of treasury bills yield reduced the government's cost of borrowing.

Whereas the central bank cut the discount rate from 14 to 10 per cent since July, it lowered the maximum yield on three-month and six-month T- bills by 4.20 per cent to 7.9 per cent and 8.3 per cent respectively. The yield on one-year T-bills also fell by three per cent to 8.9 per cent. This huge fall in the treasury bills yield has sharply cut the government's cost of borrowing but it is difficult to work out how many billions of rupees the government has saved on interest payment.

SBP sells Rs10.2bn T-bills

The State Bank on Wednesday sold only Rs10.2 billion worth of treasury bills of different maturity against the target of Rs21.2 billion.

Bankers said the central bank sold below the target amount of treasury bills to let banks keep part of the Rs20 billion plus inflow due in the market on Thursday. They said this gesture of easing of the liquidity crunch helped the bank square their positions and no discounting took place on Wednesday.

Rupee up in kerb

The rupee gained 10 paisa more against the US dollar in the open market on Thursday and closed at 61.20/61.40 for spot buying and selling against the previous close of 61.30/ 61.50.

Lending rate

The State Bank has asked the banks to see if they can set a benchmark of lending rates for their customers. And the central bank has sought a report on this subject from a sub-committee of Pakistan Banks Association headed by country manager of ABN Amro Naveed A. Khan.

Sources close to the committee say some committee members are of the view that instead of linking the customers lending rates to the SBP discount rate of treasury bills rate the banks should introduce their own prime lending rates. But opinions are still divided on it.

National Tanneries

On Monday, National Tanneries of Pakistan Limited unveiled financial figures for the latest year ended June 30, 2001, posting 10 per cent improvement in sales to Rs301.3 million, from a year ago sales at Rs274.4 million. Profit before tax, nonetheless, slumped by 13 per cent to Rs6.0 million, from Rs6.9 million.

Exide Pakistan

The Exide Pakistan Limited had recorded 7 per cent growth in operating profit to Rs60.7 million for the year ended March 31, 2001, from a year ago operating profit at Rs56.5 million.

Shell Gas LPG

The Shell Gas LPG posted pre-tax profit of Rs19.5 million for the year ended June 30, 2001, which was at about the same level as last year. After tax profit, improved 23 per cent to Rs19.2 million.