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FINANCE

Dec 10 - 16, 2001

Govt asks banks to cut lending rates

A high-level meeting on Wednesday directed the commercial banks to reduce their interest rate as the State Bank has already cut its discount rate by 4 per cent.

The meeting, chaired by Finance Minister Shaukat Aziz and attended by Governor State Bank, Dr Ishrat Hussain was of the view that there was no justification for commercial banks not to reduce their mark-up rate specially when the central bank had considerably cut its discount rate.

Official sources said that the meeting noted that since lending rates were not being reduced by the commercial banks, business community was reluctant to take part in any meaningful business activity despite various incentives already providing to it by the government.

The meeting especially directed the presidents of Nationalised Commercial Banks (NCBs) to take a lead in reducing their interest rate so that other commercial banks, both local and foreign, could also be asked to follow the same.

"The reduction in lending rate is necessary to stimulate growth and attract investment in the country," the finance minister was quoted as having said in the meeting.

The sources said that the governor, State Bank also said that banks' interest rates were needed to be rationalized specially after the reduction in the discount rate of the central bank. The State Bank had reduced its discount rate by 4 per cent during July to October this year.

The sources said that the meeting was told that central bank's intervention was necessary to have an aggressive monetary policy for increasing private investment.

Generally, it is alleged that inefficiency in the commercial banks and lack of harmonious discount rate were the major causes of having low private sector investment in the country.

Germany to give DM300m aid

Germany has decided to offer DM300 million assistance to Pakistan which included DM100 million for debt swap.

This debt swap is for two years, and as such DM50 million will be offered this year and another DM50 million will be made available next year. The amount of debt would now be spent for development purposes.

Also, the new German aid included DM75 million of fresh loan/grant for economic assistance as well as DM110 million for reprogramming of old assistance. This was decided in Bonn on Wednesday during negotiations between finance minister Shaukat Aziz and German authorities.

Great potential for investment in oil, gas sector

Minister for Petroleum and Natural Resources, Usman Aminuddin said on Wednesday oil and gas sector offered a host of investment opportunities and widespread potential for the foreign investors, and Pakistan would welcome Chinese participation in exploration activities.

He was talking to a seven-member delegation from Chinese National Oil and Gas Exploration and Development Corporation (NOCDEC) headed by its Vice President Madam Wang Shali.

They discussed matters pertaining to investment opportunities in Pakistan's oil and Gas sector.

SBP buys $900m from banks

The State Bank purchased at least $900 million from the inter-bank market in the last two months. Bankers close to SBP said the central bank bought a small part of the amount in forward but they could not quantify it.

The State Bank statistics released on Thursday put the total liquid foreign exchange reserves at $4.4 billion as on December 1. Of this, the SBP held $2.8 billion and all the banks $1.6 billion.

PSO declares 60pc final dividend

The Pakistan State Oil (PSO) distributed final dividend of 60 per cent or Rs six per share during 2000-2001.

PSO's sales in 2000-2001 rose by 25.7 per cent and the company earned a record gross profit of Rs6.4 billion, up by 12.4 per cent over the preceding year, says a PSO press release.

Rupee gains

The rupee gained 25 paisa for selling in the inter-bank market on Thursday and closed at Rs60.62/60.67 per dollar against the previous close of 60.90/60.92.

Senior bankers said the rupee rose due to higher inflow of export proceeds amidst low demand from importers.

Millat Tractors acquires Rex Barren

Millat Tractors Limited, the producers of Massey Ferguson brand of tractors, have acquired the assets of Rex Barren Batteries Limited for Rs13.55m, by making the highest bid at the auctioneers the Corporate & Industrial Restructuring Corporation (CIRC).

PARCO floats Rs2.5bn TFCs

Pak-Arab Refinery Limited (PARCO) has floated its first public issue of term finance certificates worth Rs2.5 billion.

Of the total issue, Rs2 billion has been subscribed by banks, financial institutions and provident funds. The initial public offer (IPO) of Rs500 million will be available for subscription on Dec 12, 2001.

$54.77m paid as WRP in two months

In a short period of two months, the country had to pay a huge amount of approximately $54.77 million as War Risk Premium (WRP) imposed by the foreign shipping lines since Oct 1, 2001, exporters said.

Despite the fact that there had never been a risk in the shipping lines nor at the two ports Karachi Port and Qasim port the foreign shipping lines had exorbitantly imposed surcharge ranging from $100 to $200 per TEU and $4 to $5 per ton for bulk cargo.

Taking into account the annual turnover of bulk cargo and containers traffic at the two ports, a poor country like Pakistan in a short period of 60 days had already paid around $54.77 million towards war risk premium, exporters lamented.