POLICY

 

Aug 19 - 25, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

PLAN TO BUY $1BN PLANES FOR PIA APPROVED

A meeting on Monday approved PIA's $1 billion financing plan to buy new and old planes to upgrade the airline's fleet.
According to official sources the meeting, which was presided over by Minister for Finance Shaukat Aziz

 

and attended by PIA Chairman, Managing-director and its Board members, approved $1 billion financing plan for which the federal government will provide $150 million in three instalments.

Initially, $30 million would be extended this year while two instalments of $60 million each would be provided in 2002 and 2003 by the federal government, informed sources said.

The sources further said while the federal government would extend sovereign guarantee for buying planes, it had made it clear that there would be supplier's guarantee that no commission, no fee or consultancy would be offered to anyone to borrow or take planes on lease.

The finance minister made it clear that his ministry had nothing to do with the fleet selection but the government would not tolerate any under-hand deal to benefit any individual or group.

"You may borrow or get planes on lease but everything should be transparent," the sources quoted the minister as saying.

The sources said the meeting was told that US Exim Bank would offer loaning to PIA on behalf of Boeing Company while Airbus Company had its own financing consortium to deal with the issue.

The ten-year business plan envisaged gradual replacement of old aircraft with the induction of new technology aircraft to fulfil the requirement of the airline to compete with other world's airlines.

GOVT, IMF AGREE NOT TO REVISE TAX TARGET

The government and the IMF have agreed that Rs460 billion revenue collection target set for the current financial year will 'not' be revised downward.

Head of the five-member IMF review mission Klaus Enders held first formal meeting with Finance Minister Shaukat Aziz, Governor State Bank Dr. Ishrat Hussain and the secretary general Ministry of Finance, and discussed with them revenue generation, export growth and inflation performance.

SPECIAL CASH RESERVE CUT TO 15PC

The State Bank has lowered the special cash reserves on new foreign currency accounts from 20 to 15 per cent. But it has kept intact the mandatory reserves at five per cent.

The central bank conveyed this decision to all banks and non- bank financial institutions through a circular (BSD No 16) issued on Saturday. The decision would take immediate effect.

The circular told all the banks and NBFIs that from now onwards they would maintain cash reserves in the US dollars equivalent to not less than 20 per cent of their total fresh foreign currency deposits instead of 25 per cent. Of this five per cent would continue to be treated as mandatory reserves and the remaining 15 per cent as special cash reserves.

FOREIGN FIRMS WITH LOCAL STAKES UP

The trend towards withdrawal of foreign companies with stakes in Pakistan seems to have been reversed with new entrants outnumbering those folding up.

Despite the renewed interest of more foreign firms, the volume of fresh investment however remains subdued.

PLATINUM BANK

The office of the Foreign Assets Control (OFAC) of US Department of Treasury has lifted the blockade of the financial assets of Platinum Commercial Bank, the chief spokesman of the State Bank said on Thursday.

CUT IN FARM INPUT PRICES UNDER STUDY

The government is considering a proposal to reduce the prices of agriculture inputs aimed at providing some relief to farmers.

Official announcement issued on Thursday said that to consider the proposal a high level meeting was chaired by federal minister for food, agriculture and livestock, Khair Muhammad Junejo on Thursday.

The meeting was attended among others by secretary general finance, Moin Afzal, chairman, Central Board of Revenue(CBR), Riaz Malik and secretary, MINFAL, Shafqat Ezdi.

The prices of agriculture inputs increased following the imposition of General Sales Tax (GST) on all agriculture inputs fertilizers of all kinds, pesticides and increase in the rate of GST on the actual price of urea and levying of duties and the rates of utility rates.

WITHHOLDING TAX

The Central Board of Revenue has said that the rate of withholding tax was reduced from 30 per cent to 20 per cent on profit arising on securities issued by the federal, provincial governments or a local authority.

NZ COOPERATION

Commerce Minister Abdul Razak Dawood has sought New Zealand collaboration in textile sector. Textile is a large industry in Pakistan and we look for ways and means for collaboration with New Zealand in textile sector, particularly in the textile machinery, the minister said.

HBL SELL-OFF ATTRACTS LOCAL, FOREIGN INVESTORS

State-run Habib Bank is a "jewel" that has been offered for sale as Dr Ishrat Husain, Governor of State Bank, puts it and sources say it has attracted domestic strategic investors as well as multilateral agencies , interested in acquiring stakes in the bank.

A consortium of leading local businessmen the Aga Khan Foundation, Habib Bank A.G. Zurich and Bestway Holdings Group of Abu Dhabi are among those who have submitted EoIs (Expressions of Interest) to the Privatization Commission. The last date for submitting EoIs was July 31 and the process of pre-qualification of prospective bidders is expected to be completed by August 15.