. .
A



 1. INTERNATIONAL   2. INDUSTRY
 3. FINANCE  4. POLICY
 5. TRADE  6. GULF

A

FINANCE

June 17 - 23, 2002

FOREIGN DEBT REDUCED TO $36BN: ISHRAT

State Bank Governor Dr Ishrat Hussain has said that the stock of external debt and liabilities had been reduced from $38 billion in October 1999 to $36 billion this month for the first time in the history of the country.

Speaking at a pre-budget seminar on Monday the SBP Governor said that the country had also repaid expensive commercial and short term debt to the extent of $4.5 billion and contracted new soft term concessional loans of $2.5 billion instead. The country had also generated current account surplus for the first time in many decades and had enough reserves to cover six months' exports. The inflation rate had slowed down from 5 per cent in 1999 to less than 3 per cent at present.

He said that the government had not only reduced the debt but also paid back $5.8 billion to the foreign lending agencies over and above the total loans provided to the country since October 1999.

The lending agencies provided $5.9 billion to Pakistan during the period and received $ 11.7 billion in the form of repayments.

He said that the biggest quantum leap in the forex reserves had taken place between July 2000 and June 2001 i.e, well before September 2001. The reserves had increased to $ 3.8 billion during the period. The pace of increase slowed down between July 2001 and May 2002 despite all the external grants, saving in oil imports and huge inflow of workers' remittances. The reserves have increased to $5.56 billion during the last 11 months.

He said that the impression that the Poverty Reduction and Growth Facility of the International Monetary Fund and Structural Adjustment Credit facility of the World Bank had not been made available to Pakistan due to its support to the US campaign against terrorism was far from the truth. Negotiations with both the institutions had been concluded and documents circulated for the approval well before September 11.

NWFP YET TO GET RS4.2BN HYDEL PROFIT

With the current financial year is about to end, the NWFP is yet to get over Rs4.2 billion on account of net hydel profit from Water and Power Development Authority (Wapda), according to sources.

"The financial condition will become more serious if the province does not get the remaining payable amount from Wapda before the close of current financial year," sources added.

As per the 1996 National Finance Commission award the province is liable to receive Rs14.328 billion on account of net hydel profit (from Wapda) during the financial year 2001-02.

Although for the sake of laying claim the provincial government has projected Rs14.328 billion revenue receipts in its current financial year's budget document, the province was not supposed to get anything beyond Rs6 billion capped share amount under the same head in line with the last eight financial years.

WB OKAYS $500M LOAN

The World Bank has approved a structural adjustment credit interest-free loan of 395.5 million SDRs, or $500 million, for Pakistan.

This is said to be the largest WB loan received by Pakistan so far, which was given a $350-million credit last June as part of the structural adjustment program.

The new loan was approved by the bank's board of directors at a meeting on Tuesday, and an agreement relating to it was due to be signed in the evening.

The loan will go to support the Pakistan government's structural reform agenda, and sectors picked by the World Bank for utilization of the loan include governance reforms and human development.

PC WANTS MCB TO RAISE BID FOR UBL

The Privatization Commission is expecting the Muslim Commercial Bank & Associates to further raise its bid to acquire 51 per cent government-owned shares in the United Bank Limited.

Informed sources said on Tuesday that the MCB, which currently did not have its foreign operations, could immensely benefit from the acquisition of UBL's majority shares along with the transfer of management.

CHEAPER CRUDE OIL SAVES RS6BN

The importers of crude oil, in July-May, netted an unearned profit of over Rs6 billion due to 14 per cent drop in its international prices a boon denied to the public.

Analysis of the trade figures released by the Federal Bureau of Statistics shows that over 6.42 million tons of crude oil was imported at the rate, on average, of $171 (Rs10,548) per ton, whereas during the corresponding period of previous year, the average rate was $199 or Rs11,495 per ton that is at 28 US dollars (Rs947) per ton less.

CREDIT LINE FOR IDBP

The State Bank of Pakistan is expected to provide Rs1.6 billion line of credit to Industrial Development Bank of Pakistan (IDBP) before the end of this month.

SLCL, LEASE PAK MERGER OKAYED

The Board of directors of Security Leasing Corporation Limited and Lease Pak Limited have approved merger of the two companies with effect from July 1, 2002.

CDC SERVICES SHARES RISE

Number of shares in Investor Account Services of Central Depository Company of Pakistan Limited (CDC), where investors can have direct control of their accounts, had increased to over one billion shares, CDC said in a press release issued on Monday.

RUPEE GAINS 15 PAISA IN KERB

The rupee on Monday gained another 15 paisa against the dollar on the open market amid falling demand for the US currency. The rupee was quoted at Rs.60.35 and 60.45 for buying and selling respectively as compared to weekend Rs.60.55 and 60.60, progressively sliding from its recent peak level of 60.70 and 60.75.

On the inter-bank, the rupee also stood firm, with fractional either-way changes, although inter-bank call rates showed a significant improvement around 7 per cent from the previous 4 to 5 per cent, dealers said.