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 5. TRADE  6. GULF



May 06 -12, 2002


The World Bank will offer highly concessional assistance to Pakistan totalling one billion dollar by June 30 this year.

"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 dollar.

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 development project.


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 unchanged.

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 billion.

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 respectively.


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 month.

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.


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.


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.


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 2001.

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 end-March 2002.


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.