. .
A



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

A

FINANCE

June 24 - 30, 2002

DONORS PROMISE $2BN FOR NEXT THREE YEARS

Pakistan has been promised $2 billion annually for the next three years jointly by the World Bank, the IMF and the Asian Development Bank, says a senior government official.

"Our thinking is to get loans on high concessions from the three donors and use them for retiring expensive debts," said Mr Moeen Afzal, Secretary-General, Ministry of Finance.

Speaking at an economic forum arranged on Monday by the Associated Press of Pakistan, he said for the current financial year Pakistan had been offered roughly $2.5 billion by the donors which included $1.6 billion International Development Assistance (IDA) funding on a marginal interest rate.

Mr Afzal said that the World Bank which used to offer $200 million annually on an average had now increased its funding to $1 billion for Pakistan. Nevertheless, he said, all the three donors expected Pakistan to achieve 6 to 7 per cent GDP growth rate. "Donors believe that Pakistan has the potential to manage 6 to 7 per cent growth rate," Moeen Afzal said, adding that Pakistan hopes to have a gradual increase in the growth rate.

He said had there been no persistent drought conditions and Sept 11 incident, Pakistan would have achieved a better growth rate.

The secretary-general stated fundamental structural changes had been made in the tax system to collect adequate revenues during 2002-2003. "I believe Rs460.6 billion revenue will be collected during the next financial year," he added.

He said that the government would now be relying on income tax and sales tax to collect considerable revenues. "They will be the two major taxes of the future."

RS25.38BN EARMARKED FOR 16 DISTRICTS

The Sindh government has allocated Rs25.38 billion revenue expenditures for all 16 districts of the province during the financial year 2002-2003. According to the break-up salary and non-salary expenses are estimated at Rs20.88 billion and Rs4.51 billion, respectively.

This revenue expenditure is earmarked for nine general head of accounts, which include organs of state (excluding law department and others), finance department, tax management board of revenue, planning, administration (works), education, health, community and development department and agriculture and food administration.

THREE MAJOR UNITS SELL-OFF TO FETCH $2BN

The government is expecting to earn $2 billion by privatizing Karachi Electricity Supply Corporation (KESC), Pakistan State Oil (PSO), Oil and Gas Development Company Limited (OGDCL) and some other minor units by December 2002, says the privatization minister. "And this $2 billion amount excludes the privatization of Pakistan Telecommunication Company Limited (PTCL), whose evaluation is still to be done," Privatization Minister Altaf M. Saleem said.

He said PTCL's earning would be additional, which otherwise could have given better price, had it been sold six years ago.

Briefing reporters on Thursday about the major transactions, he said that OGDCL's 51 per cent and PSO's 45 per cent shares would be offloaded within this year.

GHEE MAKERS RAISING PRICES

One of the leading ghee and cooking oil makers has decided to increase the price of ghee and cooking oil by Rs9-10 per kg in a couple of days, while others may follow suit following the levy of 15 per cent general sales tax (GST) at factory level.

SBP, KSE FIGURES FALL POLES APART

In defiance of the trend of the first four months of the current calendar year, foreign portfolio investment recorded net outflow of Rs297 million or $5 million during the month of May. But the numbers released by the stock exchange on Tuesday, would neither gladden nor sadden some of the equity traders, who view them with skepticism.

"In the final analysis, these would fall poles apart from the foreign stock investment figures compiled by the State Bank of Pakistan," one analyst pointed out.

The argument has a grain of truth. The recently released SBP report for the third quarter (Jan-March 2002) observed: "Foreign investment in stock market registered an inflow of $55 million in Q3 (reflecting positive trends in stocks) as compared to an outflow of $61 million during Q3 last year."

GOVT AIMS SINGLE DIGIT LENDING RATES

Finance Minister Shaukat Aziz said on Tuesday that lowering the banks' lending rates to a single digit, narrowing down of the spread and cutting down on the intermediation cost in the banks are some of the objectives he is pursuing actively.

DOLLAR SHEDS 20 PAISA IN KERB

The US dollar on Monday fell by 20 paisa in the kerb to hit a four-month low against the rupee amid falling local demand from the general investors and steady inflow from the formal sources.

According to Forex Association of Pakistan, the dollar was quoted lower at Rs60 and Rs60.05 for buying and selling, respectively, as compared to Rs60.20 and Rs60.25 at the weekend.

SSGC, SAUDI PAK LEASING TFCS

Sui Southern Gas Company Limited (SSGC) and Saudi Pak Leasing Company Limited announced on Monday that their respective Term Finance Certificates (TFCs) had stood oversubscribed.

SSGC said it had received subscription in the sum of Rs350.54 million against the offer of Rs200 million to the general public.

The SSGC's 2nd tranche of the second TFC issue of the aggregate amount of Rs1.05 billion offered to Institutional investors, had earlier been fully subscribed.

GOVT TO ADVANCE RS79BN LOANS

The federal government has projected to make total gross loans and advances, both for current and development, to the tune of Rs79 billion during 2002-03.

This would be around 14 per cent higher than the budget estimates of Rs69.4bn or 26 per cent more than revised estimates of Rs62.55bn during 2001-02, budget documents suggest.