Jan-28 - Feb-03, 2002
Discount rate lowered to 9 per cent
The State Bank of Pakistan on Tuesday cut its
discount rate by another one per cent to 9 per cent to pull the
economy out of slump. This is the fourth cut in a row so far this
fiscal year. The new rate will be effective from Wednesday (January
The State Bank had earlier cut the discount rate
from 14 to 13 per cent in July and then to 12 per cent in August. On
October 20 the central bank had made a huge two per cent cut to bring
down the rate to 10 per cent.
Economists and bankers say the recent cut in the
discount rate was very much expected. They say that a low inflation
and stable exchange rate had created room for the central bank to
lower the discount rate.
Discount rate is the rate at which banks can borrow
money from the SBP for up to three days against approved government
securities. As such it is regarded as one of the best benchmarks of
lending rates. Bankers say the recent cut in the discount rate would
encourage the banks to cut their own lending rates. The previous cuts
in the discount rate had not drawn such a response from the banks for
a number of reasons.
One of the reasons was that a large amount of banks
profit was stuck up with the Central Board of Revenue in tax refunds.
As the CBR has only recently promised to release part of that amount
(Rs22 billion out of more than Rs55 billion) the banks are now able to
respond to the cut in discount rate by lowering their own lending
Finance Minister Shaukat Aziz had grilled top
bankers this month for their failure to respond swiftly to changes in
the monetary policy. President Gen Pervez Musharraf had also taken
notice of high lending rate of banks that had a crippling effect on
the private sector business activities.
T-bill yields fall sharply
The State Bank on Wednesday cut the weighted
average yield on treasury bills by 1.39-1.51 per cent in line with a
one per cent cut in its discount rate announced on Tuesday.
The twin steps are aimed at reinforcing earlier
signals about easing of the monetary policy to enliven the sagging
economy. A senior central banker said the banks should translate the
cut in discount and T-bills rates into lower lending rates and help
the private sector accelerate investment and production activities.
The SBP on Wednesday slashed the weighted average
yield by 1.51 per cent to 6.13 per cent on three-month T-bills and by
1.42 per cent to 6.34 per cent on six-month T-bills. The central bank
cut the weighted average yield one-year T-bills by 1.39 per cent to
6.81 per cent.
$109m second IMF tranche in March
The International Monetary Fund (IMF) will disburse
second tranche of $109 million, out of $1.3 billion poverty reduction
and growth facility (PRGF), in March due to improvement in the
Official sources told on Saturday that the Fund
officials appreciated the current state of the economy, specially
increase in the foreign exchange reserves to about $5 billion, and
said there should not be any problem to offer next tranche of $109
million to Pakistan by early March.
FDI up by 39pc in July-Dec
Foreign direct investment (FDI) has increased by
around 39 per cent during first six months of the current fiscal year,
notwithstanding a declining trend in imports, exports and revenue
Foreign remittances amounting to $982.32 million in
first six months also increased by 61 per cent when compared with
$609.20 million during the same period last year.
Sugar prices fall
The unsold stocks of white refined sugar with sugar
mills have risen to 0.459 million tons as the lifting, both from
commercial traders and general wholesalers, is not in consonance with
the rising production.
As a result wholesale prices in the open market
have fallen to Rs1,920 from Rs1,980 per bag of 100 kgs.
NBP to offer 5pc more shares
The National Bank of Pakistan (NBP) will issue five
per cent more shares for public subscription in the first week of
February, said bank chief Ali Raza after signing a Rs195 million loan
facility for the Saigols Qingqi Motors Ltd (SQML) on Wednesday.
PTCL posted after tax profit of Rs8.501 billion for
the half year ended December 31, 2001, up 19 per cent from Rs7.156
billion earned by the monopoly utility in the corresponding period of
the previous year; most analysts had worked out a figure of between
Rs8.5 to Rs9 billion.
Scope of KIBOR expanded
Bankers on Monday wrote some history again by
expanding the scope of KIBOR or Karachi inter-bank offered rates to
one-week and two-week tenures and increased its validity from five to
Senior bankers said one-week and two-week KIBOR was
worked out at 3.04 and 4.15 per cent but they would not say whether
any deals were struck in the new tenures. One-month, three-month and
six-month KIBOR stood at 5.53 per cent, 6.70 per cent and 7.30 per
HBL offers finance in dollars
Habib Bank Ltd (HBL) will provide pre-shipment
finance in US dollars to its customers against Letters of Credit (LCs)
or firm contracts for up to a maximum period of 180 days.
Lever Brothers Pakistan
Lever Brothers Pakistan Limited announced fourth
quarter (October-December 2001) — after tax profit amounting to
Rs331 million on sales valued at Rs5,397 million.
Canada converts debt into grant
The Canadian government has decided to convert
Pakistan's entire debt of 447 million Canadian dollars into grant for
development. This was disclosed by the Canadian Deputy Prime Minister,
The government has decided to abolish withholding
tax levied on telephones, outstation cheques and petroleum products
from July 1, 2002. Official sources told that the decision was in line
with the International Monetary Fund's (IMF) conditionalities for
getting the poverty reduction and growth facility (PRGF).