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FINANCE

Mar 25 - 31, 2002

Remittances reach $1.3bn in 8 months

Overseas Pakistanis sent back home a little more than $1.3 billion during the first eight months of this fiscal year (July 2001-February 2002). In the same period of last fiscal year they had sent only $637 million.

The State Bank said on Monday that home remittances including encashment of foreign exchange and foreign currency bearer certificates as well as Hajj remittances totalled $1.317 billion between July 2001-February 2002. The SBP said in a press release that in February 2002 Pakistan received $236 million up 202 per cent over the $78 million home remittances received in February 2001.

The cumulative remittances of $1.317 billion received in the first eight months of this fiscal year also shows an increase of about 107 per cent over the $637 million remittances received in the same period of last fiscal year. The pace of home remittances picked up after the tightening of anti-money laundering laws in the US and elsewhere in the wake of the September 11 events.

The remittances that are the second largest source of foreign exchange earning after exports have been on the rise also due to narrowing down of the difference between the inter-bank and open market exchange rates.

Before September 11, 2001 the spread between the inter-bank and open market exchange rates had been more than Rs2 per dollar but it slid to a few paisa by the end of last month.

When the difference between the two rates was high overseas Pakistanis were suffering losses in sending money back home through legal channels. The falling gap between the inter-bank and open market rates has saved them from booking such losses and lured them into remitting money through banks rather than through hundi.

WB to give $350m by June end

The World Bank will provide $350 million Structural Adjustment Credit (SAC-2) by June 30 this year to help improve Pakistan's Balance of Payment (BOP) position.

According to sources in the local multilateral agencies, the amount of SAC-2 could be a little higher and will be disbursed as a "single tranche", like that of SAC-1 that amounted to $350 million. The SAC-1 was disbursed in August, 2001.

Quite like SAC-1, SAC-2 also carries just 0.7 service charges to be offered from the International Development Agency (IDA) window. However, the World Bank expected the government's social spending targets to be in line with the Poverty Reduction Strategy Paper (PRSP) prepared with the help of major international donor agencies. The sources said the World Bank had also indicated making available additional funds for health and education.

Rs59bn recovered

National Accountability Bureau (NAB) has recovered Rs59 billion from bank defaulters and Rs2 billion on account of corrupt practices from government functionaries. This was disclosed by NAB chairman Lt-Gen Munir Hafeez at a meeting on "Performance of NAB and its future" at NIPA on March 14.

Banks to refer Rs55bn default cases to CIRC

Four leading nationalized financial institutions are expected to refer shortly around 431 fresh default cases worth Rs55.767 billion to the Corporate Industrial and Restructuring Corporation (CIRC) for restructuring and auction.

Official sources told that these include 198 cases worth Rs28.799bn against which suits have been filed but not decreed and hearing has been executed in 233 cases worth Rs26.968bn.

NCBs lending rate moves up

Weighted average lending rate of the three state-run banks (namely National Bank, Habib Bank and United Bank) inched up from 13.78 per cent at end-December 2001 to 14.08 per cent at end-January 2002.

Senior bankers involved in interest rate management attribute it to faster repayment of low-cost loans at the year-end. "The weighted average lending rate of state-run banks has risen due to faster recovery of loans," said chief financial officer of one of these banks. State-run banks restructure and reschedule their non-performing loans more in December than in other months. They also make more cash recoveries at the year-end. "This lowers the weightage of low-priced loans in overall lending rate structure and makes the average lending rate look a bit higher in January."

KSE gives impressive figures

Net foreign portfolio investment was recorded at an impressive Rs1.131 billion in February, reflecting a 23-month high point, figures released by the Karachi Stock Exchange on Monday showed.

But while certain market players were celebrating the return of the foreign investor, others poked holes in the method of collection of foreign investment data by the bourse and hence its credibility.

Banks to get $318m FCY deposits back

From next month the State Bank would start returning to the banks more than $318 million foreign currency deposits that they had placed with the SBP and got their rupee equivalent.

The SBP issued a circular to all banks on Monday telling them that from April 1 they would not be required to surrender to the central bank the foreign currency deposits raised by them under the scheme called F.E. 31.

Japan likely to cut interest: Shaukat

Finance Minister Shaukat Aziz said on Saturday the new joint Japanese-Pakistan Economic Forum, set up during President Musharraf's visit, would consider new Official Development Assistance (ODA) for Pakistan and the reduction of interest rates on Japanese loans to Pakistan. Shaukat, who flew in directly from Tokyo to New York en route to Monterey, Mexico, to attend the global conference on Financing for Development told: "We have asked the Japanese government and it has agreed to consider reduction in interest rates on loans given to Pakistan," and added: "They (Japanese government) cannot write off debt; it's not in their constitution."