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 5. TRADE  6. GULF



Jan-14 - 20, 2002

WB may increase aid to $750 million

The World Bank is considering increasing its annual level of assistance to Pakistan from $500 million to $750 million in the coming fiscal years to help achieve macro-economic stability in the country.

The increased combined funding line could be provided by both the International Bank for Reconstruction and Development (IBRD) and the International Development Agency (IDA), depending on the pace of depth of structural reforms. So far, Pakistan has largely opted for IDA lending which is concessional and is offered on 0.5 per cent service charges.

The bank's officials said that Pakistan should continue to be a blend country, eligible to seek both IBRD and IDA lendings. In future, Pakistan could seek IBRD lending but it is offered on 6 to 7 per cent interest rate and its repayment time is 18 years compared to IDA's 45 years.

Another World Bank lending window - the International Finance Corporation (IFC) which is currently focussing on managing its existing portfolio, will consider several new investments in the finance and gas sector where foreign investment is needed to help develop proven gas reserves.

The IFC will explore other opportunities to support private provision of infrastructure if the policy environment improves, and is ready to support the privatisation process through advisory and investment work. In this behalf, Multilateral Investment Guarantee Agency's readiness to support infrastructure projects also depends on the policy environment and the development effects the project would generate.

Pakistan has been informed that MIGA would like to expand its portfolio into manufacturing, Information Technology (IT) and other priority areas such as Small and Medium Enterprises (SMEs).

Pakistan, which has earlier been disbursed $350 million Structural Adjustment Credit in June 2001 in one single instalment, was likely to be extended SAC-2 of the same amount by the World Bank. The officials of the ministry of finance were pursuing the issue.

On-line banking

The Governor State Bank, Dr Ishrat Hussain on Thursday, highlighting the need of Information Technology in the Banking industry, said the central bank would provide all facilities, besides offering different incentives to the banks for going on line.

Speaking at The Indus Entrepreneurs (TIE) Banking Bazaar, he said most of the central banks in the world had already adopted IT culture while SBP had spent $24 million on the first phase of its IT plan that would be completed by December 2002. Another $12 million would be spent on the second phase of this project, he added.

A total of 31 vendors, suppliers and software companies are participating in the exhibition organized by TIE at a local hotel.

Dr Ishrat Hussain said that the completion of the first phase of the IT project would enable SBP to have on-line communication with the major players of the financial industry.

'Curbs on banks in US promote Hundi'

New restrictions imposed by American banking regulatory authorities on banks belonging to Muslim countries has further promoted 'Hundi or Hawala' business, claimed Malik Bostan, president, Forex Association of Pakistan.

Talking to APP here on Thursday, he said the banks in the US could not accept cash for onward transfer and the client had to submit money order or pay order to the bank.

"Documentation has forced a remitter to turn to Hundi wala in America," chief of the 400 member Association said. He urged the authorities to allow licensed moneychangers to transfer funds up to $10,000.

The NBP and other Pakistani banks have merged operations in the United States to remit funds under new rules.

According to the NBP, the average monthly inflow of remittances from America through banks stand at Rs1.5 billion.

Sigma Leasing

It is unfortunate that not a single shareholder came forward to subscribe to the Sigma Leasing Corporation Limited's issue of 5 million right shares in the ratio of one-for-two (50 per cent). All of the shares valued at Rs50 million were picked up by the sponsors, who were underwriters to the issue.

Italy wants 90m euro debt used on refugees

Italy has cancelled about 90 million euros of Pakistan's foreign debt making it conditional for Islamabad to use the finances to assist Afghan refugees, its learnt from UN sources.

According to the sources, the joint decision made by Italian foreign minister Renato Ruggiero and finance minister, Giulio Tremonti, is part of the Italian government's political-cum-financial strategy in favour of Pakistan and Afghanistan.

Forex body warns of counterfeit euro notes

Pakistan Forex Association has warned of counterfeit euro currency notes entering the local market from outside to destabilize Pakistan's currency and economy.

Trading of the euro has begun in the kerb on a limited scale for about last one week and simultaneously the operators of the counterfeit currency have also become active.

Crescent Leasing

Crescent Leasing Corporation Limited (CresLease) posted 37.3 per cent growth in after-tax profit to Rs42.3 million for the year ended June 30, 2001, from a year ago taxed profit at Rs30.8 million.

Investment hits new low, says ADB
By Our Staff Reporter

Despite the government's best efforts and the successful implementation of the IMF's Standby Arrangement (SBA), investors' confidence has still not been restored, says the local chief of the Asian Development Bank.

"The investment rate has plummeted to the lowest level since the 1950s. The falling investment rate has adversely impacted the economic growth rate, which averaged 3.5 per cent over the last three years. As a result, given Pakistan's high population growth rate (2.2 per cent), real per capita income declined from $473 in 1998 to $429 in 2001 because of the sharp depreciation in the Pakistan rupee," he maintained.