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 1. INTERNATIONAL   2. INDUSTRY
 3. FINANCE  4. POLICY
 5. TRADE  6. GULF

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FINANCE

Dec 17 - 30, 2001

Paris Club provides $12bn relief package

The Paris Club on Thursday offered a $12 billion "stock re-profiling" of loans for 38 years under which Pakistan would have to pay nothing in debt servicing during the first 15 years.

"Pakistan is the fourth country after Egypt, Poland and Yugoslavia to get this unprecedented package from the Paris Club," Finance Minister Shaukat Aziz told from Paris.

He described the offer as "beyond expectations" and "something amazing and incredible". He said that since Pakistan was implementing its economic reform programme, the Paris Club decided to favour it in a big way to help lessen its debt. "This all happened due to restoration of our credibility".

"The stock re-profiling of debt for 38 years will eventually provide us 30 per cent debt write-off," the minister said, adding the agreement included $0.5 billion loans write-off and debt swap by Canada, UK, Italy and Germany.

"Now our cash flow will greatly improve which will provide us an opportunity to look after our neglected social sectors adequately," he pointed out.

According to a finance ministry announcement, the total stock of debt affected by this arrangement is in excess of $12 billion. Two-thirds of this debt relate to concessional lending, and will be rescheduled over 38 years, including a 15-year grace period. The remaining involves guaranteed commercial debt, and will be rescheduled over 23 years, including a 5-year grace period.

"This reorganization differs from Pakistan's previous rescheduling agreements not only in that it treats the entire stock of eligible debt, inclusive of previously rescheduled debt, but also in that the repayment terms for concessional loans are nearly twice as favourable as in previous arrangements".

Cash flow savings during the life of the recently approved 3-year IMF Poverty Reduction and Growth Facility are estimated at $2.7 billion, with significant savings during the subsequent decade, thereby removing the spike in debt service commitments.

Slight increase in POL price likely

The Oil Companies Advisory Committee (OCAC) may find it difficult to decrease the petroleum prices for the fifth time in a row on December 15 owing to slight upward trend in global crude oil prices in the current fortnight as compared to previous period.

Refinery operators and oil analysts said the average price of crude fluctuated between $18-20 per barrel in the last 12 days as compared to average price of $19 per barrel during previous fortnight.

They said the average increase in oil prices came to $19.12- $19.20 per barrel as compared to $19 per barrel in the previous fortnight which might compel the oil marketing companies (OMCs) to pass on the increase to general consumers. However, the exchange-rate parity remained stable. On some occasions, rupee gained its position by 10-15 paisa against the greenback.

Banks recover Rs3.3bn in July-Oct

Banks recovered about Rs3.3 billion worth of defaulted loans of Rs1 million and above between July-October this year. Specialized banks and development financial institutions (DFIs) also recovered Rs376 million from their loan defaulters of Rs 1 million and above.

Bankers said these recoveries included cash recovery from, and restructuring of, the defaulted loans. They said the pace of recovery was a bit slow in October. Up till September banks had recovered about Rs2.6 billion and DFIs Rs305 million only. In October banks recovered Rs700 million and DFIs Rs71 million.

Reserves rise to $4.456bn

Pakistan's liquid foreign exchange reserves stood at $4.456 billion on December 8, according to the State Bank statistics released on Thursday.

Of this $2.842 billion was held by the State Bank and $1.614 billion by all other banks.

A spokesman for the central bank said Pakistan would receive on December 20, $86 million from the IMF as first tranche of the $1.3 billion poverty reduction and growth facility. The IMF had approved the three-year PRGF on December 7.

At end-September, Pakistan had $3.3 billion liquid reserves of which $1.7 billion was held by the SBP and $1.6 billion by all other banks.

Parco TFCs

The Pak-Arab Refinery Limited (PARCO) Rs2.5 billion term finance certificates (TFCs) have been "comfortably" over-subscribed, the company said in a statement on Thursday.

SBP cuts yield on T-bills

The State Bank on Wednesday cut the maximum yield on treasury bills by 13 basis points to 8.16 per cent for six months and by 29 basis points to 8.54 per cent for one year.

In weighted average terms, the SBP lowered the yield by 12bps and 20bps respectively on six-month and one-year T-bills. So far this fiscal year the central bank has cut the weighted average yield of six-month and one-year bills by 4.4 per cent and 3.4 per cent respectively.

Gammon profit down

Gammon posted pre-tax profit of Rs12.5 million for the year, down from Rs26.2 million the previous year. Profit after tax stood considerably reduced to Rs0.3 million, from Rs4.4 million in 2000.

MLC posts loss

MacDonald Layton & Company has posted loss of Rs2.5 million, down from loss of Rs11.1 million last year. Against nil income in 2000, the company also managed to complete work of the value of Rs47.5 million during the latest year and earn a profit of Rs8 million on contract.

Treet Corp

The directors of Treet Corporation Ltd, which made a pre-tax profit of Rs94.376 million in the year ended June 30, 2001 , have recommended 50 per cent or Rs5 cash dividend per share of Rs10 each for the shareholders.