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 5. TRADE  6. GULF



April 29 - May 05, 2002


The IMF wants more spending of foreign exchange, whose increased inflow has inflated the dollar reserves and triggered a stronger rupee.

While the government takes pride in building up unprecedented reserves of $5.4 billion, the IMF officials are of the view that "a more aggressive absorption of foreign exchange inflows may be warranted to avoid further appreciation of the rupee."

The government is targeting a reserve of $6 billion by June-end this year, though an IMF mission report indicates that the authorities share the Fund's view on increased absorption of foreign exchange inflows "with sterilization as needed to keep the monetary aggregates on target."

Appreciating that the State Bank has made good use of large official grants and private capital inflows to build reserves, the Fund officials are of the view that "it has not fully avoided an appreciation of the currency that may complicate export recovery. And reserve money growth has accelerated to levels that warrant close watch over the coming weeks and months."

Incidentally, the IMF staff appraisal mission, also sees that with capital inflows receding and imports returning to normal levels, upward pressure on the exchange rate is expected to subside supporting exports, which, it says, would start to recover in the coming months.

The IMF staff review report, however, concedes that among other factors home remittances improved because of "the growing confidence in the rupee and in the domestic financial system." And the latest country survey of the Economist on Pakistan says that "estimates of the extent of the remittances through the hawala system range up to $11 billion. At least $3 billion could be routed through official banking channel within the next three years."


Pakistan attracted $287.4 million foreign direct investment in the first nine months of this fiscal year of which $164.1 million came from the US.

"This means Pakistan can easily achieve the revised target of $355 million for the entire fiscal year," said a senior official of the ministry of finance.

The inflow of $287.4 million contractual FDI between July 2001 and March 2002 comes as a big source of relief for the country that attracted only $322 million in the entire fiscal (July/June 2001/02).


The government has decided to increase the rate of return to gas utilities SNGPL and SSGC and revalue their assets to maximise privatization proceeds and private sector investment in gas infrastructure.

A senior government official told that the decision has been taken on the recommendation of the World Bank that would also finance a study for the assets revaluation of gas utilities and updating the financial targets according to market rates.

Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) are currently operating on the basis of a fixed rate of return on net assets, before interest charges and taxes.


Gold prices on Wednesday touched all time high in the current year at Rs6,000 per 10 grams as a result of rising global prices. The yellow metal had been under pressure in the current month, reaching new peak of Rs5,958 per 10 grams on April 2.


The State Bank on Wednesday again signalled to the financial market that keeping interest rates stable is the need of the hour.

The SBP sent this signal by selling only Rs3 billion 10-year Pakistan Investment Bonds against total bids of more than Rs8.9 billion. When the State Bank had announced the auction two weeks ago it had set the sale target exactly at Rs3 billion.


The US dollar that had slipped below Rs60 in the inter-bank market on Tuesday inched up again to settle at Rs60.02/Rs60.04. Senior bankers said the US unit managed an immediate recovery as buying rose sharply at Rs60 a dollar.


Hubco: The Hub Power Company Limited (Hubco) announced net profit of Rs1.8 billion for the quarter ended March 31, 2002. Net profit of Pakistan's biggest Independent Power Plant (IPP) for the nine months (July-March 2001-02) stood at Rs4.7 billion.

FFC: Fauji Fertilizer Company Limited posted pre-tax profit of Rs1.21bn and after tax profit at Rs761.8 million for quarter ended March 31, 2002.

Pakistan Telecommunication: For the nine months (July-March 2001-02), Pakistan Telecommunication Company Limited posted pre-tax profit of Rs20.88 billion, reflecting 11 per cent growth over pre-tax profit of Rs18.82 billion in the corresponding period of the previous year.

Engro: The fertilizer producer posted after tax profit of Rs140.2 million for the Q1 ended March 31, 2002, reflecting a sharp fall from after tax profit of Rs340.2 million in the corresponding period of 2001.

PICIC Commercial Bank: For quarter to end March, the bank reported 29 per cent improvement in pre-tax profit to Rs74.1 million, from Rs57.5 million in the same quarter of 2001.

Sui Southern Gas Company: SSGC reported 5.3 per cent increase in after tax profit to Rs957.5 million for the nine months to end-March 2002, from Rs909.7 million in the comparable period of earlier year.

Fauji Cement: The beleaguered cement company produced net loss of Rs44.9 million for the quarter ended March 31, which went to widen its accumulated deficit to Rs2.094 billion. The company is plagued by the huge financial charges of Rs129.9 million, which wiped out all of the operating profit of Rs84.5 million.

PNSC: The national flag carrier posted net profit for the Q3 ended March 31, at Rs182.1 million (before taxation and minority interest). For the nine months (July- March 2001-02), the shipping company reported profit of Rs470.8 million.