FINANCE

 

Oct 28 - Nov 03 , 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF


ADB TO APPROVE $270M PACKAGE

The Asian Development Bank will approve a new investment package worth $270 million for Pakistan in November this year.
This new ADB assistance is an integral part of the proposed Decentralisation Support Programme (DSP) that the ADB has been preparing with input from the government over the last two years.

 

The new assistance will support the legal, institutional and capacity-building costs of devolution and related reforms with a focus on local government performance, accountability and service delivery.

According to an announcement made by the local office of the Asian Bank, the ADB over the last two years has been assisting the government of Pakistan in its efforts to create an enabling environment for service delivery and poverty reduction through reforms in legal, technical and fiscal domains in support of decentralisation. To date, the ADB has provided $1.4 million in grant for fiscal decentralisation, an essential component of the decentralisation reforms.

In addition, it has provided a grant of $600,000 for gender reform programme, which is essentially linked to the larger reform menu leading to decentralisation of financial and administrative functions from the provincial to local governments.

As further support for fiscal decentralisation, the ADB in September this year has approved an additional $450,000 technical assistance grant to support implementation of decentralisation reforms.

This technical assistance grant is scheduled to become effective in October 2002 and will be implemented over a period of 18 months from October 2002 to March 2004. The support to implementation of devolution technical assistance is designed in the context of the requirement to mobilise and direct an array of technical, institutional, and fiscal resources in support of devolution in Pakistan. This assistance will reinforce the federal government's efforts to coordinate development assistance for decentralisation.

EFFECTIVE YIELD ON PIBS FALLS

Banks and corporates continue to buy 10-year Pakistan Investment Bonds at high premiums foreseeing a drop in its yield in future.

Banks and corporate funds bought these bonds for up to Rs110.75 per every Rs100, thus accepting 9.3 per cent yield per year against the fixed coupon rate of 11 per cent. The State Bank sold Rs12.2 billion bonds to mop up Rs13.5 billion from a fairly liquid market.

DOLLAR SLIPS BELOW RS59

The US dollar fell below Rs59 in the inter-bank market. This was not unexpected. Senior bankers said they were anticipating this amidst rising inflow of foreign exchange.

Dealers at leading banks said the dollar closed at Rs58.96-Rs58.97 for buying and selling against the previous close of Rs59.01-Rs59.02. They said earlier in the day the dollar traded as low as Rs59.04.

ISLAMIC TFCS MAY HIT MARKET

Three leading modarabas are likely to come up with Islamic term finance certificates by the end of this year if the regulators clear way for their introduction.

Modaraba managers say they badly need TFCs to raise money because borrowing funds from banks is becoming unfeasible, particularly after the entrance of the banks in the leasing business.

MASHREQ ACCORD WITH CRESBANK, IHFL

Mashreq Bank the foreign bank operating in Pakistan has entered into an amalgamation agreement with Crescent Investment Bank Limited (CresBank) and International Housing Finance Limited (IHFL), CresBank announced.

The agreement signed and sealed, stipulates that CresBank and IHFL would be amalgamated with Mashreq Bank, as joint venture partners. The arrangement would create a "locally incorporated banking company," which would be a stock market listed entity.

PICIC DECLARES DIVIDEND

Relying on the steadfast clientele, Pakistan Industrial Credit and Investment Corporation (PICIC), set a new record among the banks and Development Finance Institutions by declaring highest dividend of 33.5 per cent for the year ended June 30, 2002.

PPL SELL-OFF

The Privatization Commission has finalized a financial advisory services agreement with Merrill Lynch for disinvestment of Pakistan Petroleum Limited (PPL).

According to the Privatization Commission, Merrill Lynch was the top ranked firm amongst the five firms participated in the bidding process for the financial advisory services contract. An agreement will be executed shortly in this regard.

ENGRO'S PROFIT RISES TO RS854M

Engro Chemical Pakistan posted a net profit of Rs854 million for the period January-September 2002, up 21 per cent from the level of last year.

PRIVATE SECTOR

The demand for the private sector credit is not picking up pace leaving banks with no choice but to invest surplus liquidity in the government securities.

In the first quarter of this fiscal year all commercial banks combined saw credit retirement of Rs28 billion from the private sector. Heads of credit of leading local and foreign banks say that in October net credit disbursement has started but the pace has been very slow.

METROPOLITAN

Metropolitan Life Assurance Company of Pakistan Limited the smallest of the four private sector life insurance companies said that the Board of Directors had recommended issue of right shares in the ratio of 2:3.

The company expects to raise Rs40 million through the current right, which it said would enable the company to meet the statutory requirement of minimum paid-up capital.

SINDH TO GET RS600M MORE

The Sindh government will get about Rs600 million more than budgeted share of the federal divisible pool in the current fiscal year following the decision to refix provincial ratios of resources distribution on the basis of population census in 1998.