May 06 -12, 2002
WB TO GIVE $1BN LOAN ON LOWEST INTEREST RATE
The World Bank will offer highly concessional
assistance to Pakistan totalling one billion dollar by June 30 this
"Pakistan has been a star performer and that
is why the World Bank, for the first time, plans to extend one billion
dollar on an unprecedented low interest rate," said Acting
Country Director of the World Bank in Pakistan, Mr Abid Hussain.
He told reporters on Tuesday at the end of a
two-day Pakistan Development Forum (PDF) held in Paris, that the World
Bank's board was expected to meet in Washington on June 11 to approve
six International Development Agency (IDA) loans worth one billion
Abid said that IDA loans will be offered just at
0.75 per cent service charges and, "I tell you that Pakistan is
the first country in the world to be offered this new one billion
dollar funding on almost zero mark-up rate because of trying to
implement a reform agenda".
He said that 500 million dollar will be offered as
part of the Structural Adjustment Credit (SAC-2). This loan, he said,
will be extended for 35 years with 10 years' grace period and will be
disbursed in single installment to help improve the balance of payment
position. He said that 300 million dollar will be extended for Banking
Sector Adjustment Loan.
Abid said that 90 million dollar Structural
Adjustment Loan will be extended to the Sindh government. Similarly,
75 million dollar Financial Adjustment Credit will be offered to the
NWFP, he added.
"Twenty-five million dollar are being lined up
for the State Bank of Pakistan as part of the technical
assistance,", Abid Hussain said. He added that 20 million dollar
will be disbursed to Azad Kashmir government for a community
SBP WANTS TO KEEP INTEREST RATE STABLE
The State Bank has once again signalled to the
market that it would not let the interest rates destabilize. This time
the central bank has sent the signal by sucking in Rs32.9 billion from
the inter-bank market through sale of treasury bills against the
target of Rs22 billion — and by keeping the cut-offs almost
The State Bank on Thursday sold Rs34.2 billion
treasury bills of different maturities — and drained out Rs32.9
billion from the system. The auction of the bills had generated Rs44
billion bids whereas the State Bank had set the sale target at Rs22
Bankers said the huge response to the T-bills
auction enabled the SBP to suck in the bulk of excess liquidity
without letting the maximum yields fall. The SBP kept the cut-offs on
six-month and one-year T-bills almost unchanged at 6.43 per cent and
6.99 per cent. At the last auction held on April 17 the cut-off on
six- month and one-year T-bills stood at 6.45 per cent and 7 per cent
$ BONDS ENCASHMENT IN FULL SWING
Encashment of special US dollar bonds goes on
despite the withdrawal of five per cent rupee redemption bonus for
those who want to get the rupee equivalent of these bonds.
The State Bank figures show that people encashed
$33 million worth of these bonds within the first three weeks of last
The government had announced in late March the
withdrawal of five per cent rupee redemption bonus and the decision
was to take effect from April. But many bond holders say their banks
denied the bonus even in the cases where request was made for the
encashment before April.
The SBP figures show that the amount of net
outstanding US dollar bonds fell to $1.069 billion in the week ending
on April 20 down from $1.102 billion at the end of March 2002.
The encashment of $33 million bonds in the first
three weeks of April raises the total amount of the bonds encashed
since October last to $317 million. At end-September 2001, dollar
bonds worth $1.386 billion were in circulation. But on April 20, 2002,
the amount fell to $1.069 billion.
SBP BUYS $3BN
The State Bank has purchased more than $1 billion
from the open market in the first nine months of this fiscal year
(July 2001-March 2002). In full fiscal year (July/ June) 2000-01 the
central bank had bought $2.16 billion from the kerb market.
PETROL, DIESEL PRICES UNCHANGED
The Oil Companies Advisory Committee (OCAC), for
the third time in a row, has kept the prices of petrol, diesel, HOBC
and kerosene "unchanged". However, the committee has
increased the prices of light diesel oil by 3.82 per cent to Rs14.39
per litre from Rs13.86 per litre, says a press release of the OCAC.
Pakistan Industrial Credit & Investment
Corporation Limited (PICIC) claims to be the largest private sector
development finance institution with an equity of Rs1.9 billion —
that it says is set to cross Rs2 billion by the end of June this year.
BANKS MAKE FASTER RATE-CUTS
All the banks combined lowered the weighted average
lending rate by 1.44 per cent in the first quarter of this fiscal year
in response to the easing of the monetary policy that started in July
The latest State Bank statistics show that lending
rate of all the banks combined fell from 13.41 per cent at
end-December 2001 to 11.97 per cent at end-March 2002. This brings the
total cut the banks made in their lending rates in the first three
quarters of this fiscal year to 1.77 per cent: At end-June 2001 the
rate stood at 13.74 per cent that came down to 11.97 per cent at
GOLD PRICE CONTINUES TO RISE
Gold prices rose to the highest level of the
current year to Rs6,115 per 10 grams on Saturday from Rs6,060 per 10
grams owing to bullish price trend in global markets.